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.
Retirement savings are generally pretax assets. People should not accept a retirement plan at face value because they will have to pay income taxes when they take a distribution. Therefore, retirement accounts might not be the dollar-for-dollar equivalent of assets that have already been taxed.
A soon-to-be ex must make decisions about many financial issues during negotiations for a divorce settlement. Legal counsel could explain the laws that guide property division. An attorney could also determine if some assets are nonmarital property and take action to separate them from the divorce. Suggestions from an attorney might also generate compromises that prevent prolonged disputes that could end in a court battle. If a divorce must be litigated, then the lawyer could organize financial records and strive to defend the client’s goals before a judge.