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Issues with real estate and retirement funds during divorce

Marriage weaves together the financial lives of spouses in Texas. Unfortunately, the divorce process requires pulling the threads apart on everything. Real estate and retirement plans represent two major assets that many former couples must divide. Before making decisions, people should consider the expenses, debts and potential taxes related to every asset.

Many divorces involve a family home, but people might also have rental properties, vacation homes, commercial properties or timeshares. Often, one or more properties are sold in a divorce. The parties must determine who will pay the expenses on the real estate until it sells as well as how to split the proceeds. If a sale does not cover the balance on the mortgage, then one or both of them must pay off the rest of the loan. Sometimes, one person stays in the family home and assumes the responsibility for the mortgage. The other party, however, could still be liable for the mortgage debt in the eyes of the lender.

Gray divorce presents special asset division challenges

Gray divorces, or divorces among couples over the age of 50, are on the rise in Texas and across the United States. In fact, the Pew Research Center reports that these types of divorces have doubled since the 1990s. However, they can present special financial challenges, particularly in the area of retirement plans.

Because individuals going through gray divorce are getting close to retirement, there is little room for error when dividing up assets. High-earning couples could own multiple pensions, 401(k)s and annuities, which could complicate matters. As a result, financial experts say that it's essential for such people to obtain quality legal, financial and tax advice before dividing things up.

Planning for divorce makes sense

With the divorce rate remaining at about 50 percent in the country, Texas couples might want to think about and prepare for the possibility of divorce. While most happily married couples would dismiss this idea, it makes sense to be prepared for the future because there are many unknowns.

If a divorce does happen, the negotiation for separation of assets during divorce mediation might come as a surprise for residents who were not clear about their finances during the marriage. For this reason, experts recommend extensive preparation before the process even starts. The way to begin this is with some soul-searching to figure out if divorce is the right option. Divorce is expensive, emotional and a very difficult decision to make. Making the decision is then followed by research. It is a good idea to become knowledgeable about divorce laws within the state, the options available for divorce and how much the divorce will cost.

Do you want to keep the house in your Texas divorce?

Splitting up your assets is commonly a source of contention in a divorce. Spouses rarely agree on who should get what. The more valuable an asset is, the more likely you are to both want to lay claim to it. One of the assets most commonly fought over in divorce is the marital home.

The house that you lived in during your marriage likely represents the biggest single purchase and largest asset you share with your spouse. It is common for people to want to retain the home after the divorce. Depending on circumstances, that may or may not be possible. Learning more about how Texas divides property can help you determine the likelihood of retaining the home in your divorce.

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