Property Division FAQs:
When you start talking about community property, clients automatically assume that it’s a 50/50 division, but that’s not what community property means. Community property really means that each property has undivided interest in the whole. The judge has the responsibility of deciding what their division is.
You could have cases with a 50/50 division of community assets. Or you could have a 60/40 split or 70/30—it’s all fact-driven based on the types of assets that you have. From an attorney’s standpoint, the first thing we look at is the type of property you have in your community estate and whether there are tax-laden issues associated with it.We also look at who will have custody of the children and why are you getting a divorce.
One thing that is often overlooked in this area is the economic disparity between parties. Do you have somebody who has been a stay-at-home spouse for 30 years and their husband is a high-wage earner? That factors into how you divide it, and could lead to a disproportionate division as well.
Is better for a client to take more of the matrimonial property, such as a house or an IRA,instead of getting more spousal maintenance?
Not necessarily. Depending on the type of asset, if it is an IRA, for example, and depending on your age, there are penalties and tax consequences associated with withdrawal of the money. If you have a client who is likely going to require immediate access to funds they are receiving, you are not going to focus on the retirement benefits as much as you are going to focus on the more liquid assets, such as a house that is going to be sold.
You really have to look at all of those issues, including the age of your spouse. What I get my clients to understand, especially if I am representing a spouse who has not been working, is that if we go for a division of retirement accounts as part of their settlement, we want to make sure that whatever they are getting out of that retirement plan, will be treated as an actual retirement account. In other words, they are not going to touch it. They are going to receive some sort of other division in the other assets that will allow them to have cash flow to where they can still maintain retirement beyond age 65.
You don’t really lose any rights, because Texas is a community property state. Ultimately, you have an interest in that home if it was bought during the marriage.
The tactical issue of moving out or not really has a lot more to do with custody issues. One of the things that judges will want to do at the beginning of the case if there are children involved is maintain stability for that child. And often stability translates as the child being able to stay in the same home, go to the same school, and associate with the same friends.
I don’t look at the family home as a property rights issues as much as I look at it from a tactical standpoint. If you want custody of your children, then don’t move out of your house unless the court orders you to move out.
Can spouses agree to divide property acquired during their marriage without actually going through a divorce? How can that be done?
In Texas, because you are essentially married until you get a divorce, there is no true legal separation. I’ve had a few cases where we have entered into post-marital agreements between the spouses and not do a divorce with the understanding that they are effectively partitioning their property now in the event that they get divorced in the future.
One example I can give is that I represented a woman who had separated from her husband, but she was 62 years of age so she couldn’t qualify for medical benefits under Medicare until age 65. Because of the nature of their estate, it would not be beneficial for either of them to go through a divorce while she was in that situation.
So we put forth in a post-marital agreement what each party was entitled to in terms of bank accounts, retirement accounts, and what they were going to do with their house and all of that. The couple essentially agreed that they were going to operate under that agreement for a period of number of years, so the divorce wouldn’t have to happen until after age 65. Then at that point, you’ve already agreed to what your property division is, so there’s really nothing to litigate from a point of community property issues.
What happens in a case where one of the spouses inherits a substantial amount of money during the marriage? How is that divided when they go through a divorce?
Inheritance is a separate property item. Even if you inherit during the marriage, your spouse is really not entitled to any of that inheritance.
The difficulty, especially in long-term marriages, is going back and tracing what happened with those inheritance funds, because, ultimately, you only retain your separate property interests if you can prove at the time of divorce that that money is still there. People receive inheritance and put it in a joint bank account or they use it to buy other things, and now you have this issue where the money was co-mingled with community funds and you can’t easily identify it.
It becomes more of a tracing issue to prove the separate property inheritance and, if you can do that, you are going to receive 100% of it. But it’s not always as easy as people would like to think.