Things you need to know about asset division

On Behalf of | Jun 16, 2022 | Blog, Divorce

The most contentious issue in a Texas divorce is how property will be divided. This is because, beyond everything, your resolutions determine how easily you can move forward and plan for your future after your separation. Here’s a look at some of the critical factors you should know.

Texas is a community property state

In community property states, all assets and debts acquired during the marriage are considered jointly owned by both spouses and will be divided evenly in a divorce. Texas is not always a 50-50 state, however. The court will attempt to divide property in a manner that is “just and right,” taking into account various factors such as:

  • The earning capacities of each spouse
  • The physical, mental, and emotional conditions of each spouse
  • Each spouse’s contribution to the acquisition of property (including homemaking)
  • The value of the separate property of each spouse

You will need a separate property inventory and appraisal

If you want to keep your home or other separate property after your divorce, you will need to prove that it is, in fact, separate property. This will require an inventory and appraisal of all your assets and debts, as well as any documentation you have to support your ownership claims.

A QDRO may be required to divide retirement benefits

If you or your spouse has retirement benefits such as a 401(k) or pension, you will need to obtain a Qualified Domestic Relations Order (QDRO) to divide these assets during your divorce. A QDRO is a court-ordered document that instructs a retirement plan administrator on how to divide retirement benefits between two spouses. Without a QDRO, you would not be able to receive your share of the retirement benefits until the account holder retires or dies.

You will need to file a separate tax return

After a divorce, you will need to file a separate tax return. This is true even if you have not yet finalized your divorce. The IRS requires you to indicate your marital status as “divorced” on your tax return and attach a copy of your divorce decree.

You should remember that you can solve all matters of your divorce out of court through alternatives such as mediation, arbitration and collaborative law. These options often help you reach a settlement more quickly and privately and are much more cost-effective.