Texas law requires marital property to be divided in a “just and right” manner upon divorce, a phrase that basically means the marriage dissolution must not be an unfair financial burden on either party. Statistics vary, but there is little doubt that this directive for financial equality mitigates in favor of women. Statistics vary significantly, but according to one study, divorced women are three times more likely to live in poverty than married women or divorced men.
So, a 50-50 split, even in a community property state like Texas, is not a sure thing. How does the judge decide what constitutes a “just and right” division?
The vast majority of civil cases, somewhere around 95 percent in most jurisdictions, are settled out-of-court. So, the judge’s role in many divorces is to basically act as referee: make sure that each side follows the proper laws and procedure while punishing those that violate the rules. In practical terms, this role means reviewing the agreements between the parties that are reached in mediation, collaborative law, or another setting, approving these agreements, and enforcing them as needed.
Most of the property division factors are in Section 7 of the Family Code, but how do these factors actually apply to some common marital assets?
If there are minor children, the primary managing conservator spouse typically stays in the home with the children. To divide the equity, the parties often use an owelty lien for partition. This document sets aside a certain amount of money for the non-occupant spouse which becomes available from the sale proceeds when the house is transferred. As for late-in-life divorces, or “grey divorces,” the parties often sell the marital residence and divide the proceeds.
If one spouse keeps the house, ownership must be sustainable for the occupant spouse, in terms of mortgage payment, taxes, insurance, maintenance, and so on. If there are minor children, the occupant spouse is generally entitled to financial concessions elsewhere so the children can stay in the house, but such a division is harder to obtain in grey divorces.
Also, some people are surprised that the divorce transfers the deed but not the note. So, both spouses remain financially responsible for the payments, if any, and both spouses must sign loan modification paperwork. About the only way to transfer the note is to refinance the loan.
In many relationships, the IRA, 401(k), pension plan, or other retirement account is the largest community property asset. Both the contributing and non-contributing spouses are entitled to a share. In most cases the formula is straightforward: the value accumulated during the marriage divided by two. So, if Wife’s 401(k) contained $20,000 on the date of marriage and $40,000 on the date of divorce, Husband is generally entitled to $10,000.
After a lawyer prepares a Qualified Domestic Relations Order (QDRO or quad-roh), the non-owner spouse can generally elect to receive a proportional share of benefits when the owner spouse becomes eligible, rollover the money into another retirement account, or take a lump-sum payment. There is nearly always a penalty with the third option.
For prompt assistance with a property division matter, contact an experienced family law attorney in McKinney. At the Law Office of Bryan D. Perkins, we offer convenient payment plans.