Divorce can strain one's finances, but it is possible to plan for the potential monetary ramifications of divorce. Texas residents may wish to know important financial concerns when dissolving a marriage.
When people in Texas decide to divorce, they may face a challenge in determining how to handle the marital home. Texas is a community property state; in most cases, each spouse would be entitled to an equal share of the property. Even so, deciding how to evaluate the property in the divorce can be difficult. In the first place, it is important to determine the amount of equity that the couple has in the home.
When couples in Texas sign a prenuptial agreement, they must each have had their own attorney, the agreement must be fair and both people must have disclosed their assets. Fairness can be a somewhat subjective measure. As an example, if there is a big wealth disparity between two people, it might be unfair if they are married for a long time and the person with less money gets nothing in a divorce. A prenup could be thrown out if it does not meet these requirements.
One issue that divorcing couples often have to contend with is the division of retirement assets, including 401(k) accounts. It is important that they understand the correct process for dividing such retirement assets. By not taking the proper steps, an ex-spouse could have to pay hefty expenses and tax assessments.
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.
Sorting out financial and property division issues can be some of the most complex aspects of the end of a Texas marriage. This is especially true when the couple has significant assets or has been married for many years, as their property is often deeply intertwined or may be held in a number of investment accounts and funds. Retirement accounts are often among the most significant assets divided during a divorce and frequently represent the largest single part of a couple's marital property.
Texas divorcees should make sure that their beneficiary designations and other estate planning documents have been revised if they do not want an ex-spouse as a beneficiary. It is not uncommon for people to sign a divorce decree in which the spouse agrees to relinquish certain assets but forget to remove the spouse from those assets. In at least one court case, a court ruled that the divorce decree in which a man left his life insurance policy to his daughter overruled the beneficiary designation that still named his uncle. However, the process of correcting this type of error can be a long and expensive one.
When couples in Texas decide to divorce, the financial aspects of the end of a marriage can be the most contentious and difficult to address. Indeed, 62 percent of divorce lawyers surveyed in 2016 noted that retirement accounts are the most contentious issue faced by their clients. These accounts are often the largest single asset of a couple ending their marriage, and they are critical to both parties' financial health and futures.
Texas is a no-fault divorce state, which means that a spouse can ask a court for a divorce without a fault-based reason such as adultery or abuse. It also means that the other spouse's consent is not needed.
For many people, the home is their most expensive and important asset. That's why the question "What is going to happen to my home?" is at the top of many of our clients' minds when they first meet with us.