One of the more distressing activities during a divorce is the division of property and other financial assets. Like many states, Texas marital laws determine how assets are categorized and divided during divorce proceedings.
How marital property is divided in Texas
Texas is one of nine community property states, meaning that the division of marital property is an equal, 50/50 proposition with a few exceptions.
That means that financial settlements during divorce hinge on whether such assets were acquired before or after marriage.
For example, any bank accounts, real or personal property, and income earned after marriage is considered equally owned by both partners regardless of how they were owned or purchased.
That includes retirement accounts and pensions, except for the amount that was contributed before the marriage. However, if premarital funds were used to invest or make purchases after the marriage, the assets acquired become marital property.
Other assets that are restricted from community property division include:
- Gifts from one spouse to the other, such as jewelry
- A spouse’s inheritance
- Real or individual property acquired before marriage
- Personal injury awards
- Assets placed into a trust that was established pre-marriage
Marital assets are split evenly, but other factors may be considered, such as the earning potential of both spouses and how custody is decided. If control is shared equally, support will be apportioned accordingly.
One thing that sets Texas divorce law apart from other community property states is that fault is taken into consideration when it is included in the divorce petition. For example, spousal abuse or infidelity could be listed as a contributing factor when a spouse files for divorce.
In such cases, the courts will use what’s known as a “just and right” determination to divide marital assets. Under Texas Family Code Section 7.001, this is defined as the “division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage.”
Protecting assets during divorce
In community property states, one way to protect assets during the settlement process is to protect them before marriage by drawing up a prenuptial agreement that excludes certain assets. Changing the beneficiary of any remaining accounts as soon as the divorce is final would also prevent the former spouse from laying claim to any remaining portion of a 410k or other retirement accounts if the account owner should die.
When both partners have separate retirement accounts, the court could determine that a division is unnecessary. However, an exception would occur if one retirement account is larger than the other.