Guiding You Through Complex Legal Matters

Guiding You Through Complex Legal Matters

Three Misconceptions About Property Division

Texas spouses should avoid common misconceptions about the division of community property, retirement assets and commingled property during divorce.

During divorce, property division can have adverse financial impacts and result in the loss of cherished possessions. Not surprisingly, this process is a source of stress for many people in Plano. Some spouses seek to reduce this stress by learning about the relevant laws and the property division process, but unfortunately, they may still suffer from harmful misconceptions. It’s important for anyone divorcing in Texas to recognize and steer clear of the following misunderstandings about property division.

1. Equitable always means equal

The Texas Family Code requires an equitable distribution of community property, which consists of most property that a couple obtains while married. Many people assume that this means community property will be divided equally between spouses. However, a family law court may order an uneven distribution based on the factual circumstances of each case.

Due to this provision, the way that spouses present their financial standing and contributions to the marriage may be influential. A judge might award property unevenly if one spouse is significantly disadvantaged due to any of the following factors:

• Age and health

• Education, vocational skills and earning power

• Separate assets and liabilities

A judge may also award property in an unequal manner based on other factors, such as one spouse’s role as a caretaker or one spouse’s intentional depletion of marital property.

2. Retirement assets divide easily

Retirement benefits are treated like other community property in Texas, but dividing these assets can be considerably more complex. The administrators of pension plans and certain other funds are not required to honor the terms of a divorce decree that redirects benefits to a non-employee spouse. Therefore, divorcing spouses must draft a special legal document called a Qualified Domestic Relations Order to ensure the proper division of retirement benefits and funds, according to Forbes

These orders are highly technical, so spouses should take precautions to ensure no mistakes are made. First, spouses should work with an attorney who has experience dividing complex marital assets. Additionally, Forbes recommends that spouses submit a QDRO to the pension plan and make sure it is approved before finalizing the divorce. Spouses who learn later that a QDRO is not acceptable may not be able to revisit the divorce settlement to adjust the terms appropriately.

3. Mixed property isn’t recoverable

During marriage, many spouses may contribute separate property toward the purchase of community property or the reduction of the other spouse’s separate liabilities. Spouses often believe they cannot recover this mixed property. However, the Texas Family Code allows spouses to file a claim for reimbursement in various situations. For example, if separate or community property was used to pay down one spouse’s separate debt, the other spouse may make a claim for reimbursement.

Preparing for property division

These three beliefs are just a few of the potentially harmful misunderstandings that spouses may have about property division. To avoid further misconceptions or mistakes during this process, spouses in Texas may want to seek the advice of an attorney. An attorney may be able to assess a spouse’s situation, review his or her options and provide any other needed assistance during the divorce.