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You are here: Home / Blog / Divorce Planning / Dividing assets equitably in a divorce can get complicated

Dividing assets equitably in a divorce can get complicated

February 22, 2022 By Patricia Barrett

If you are facing divorce, it pays to know as much as possible about your marital assets and finances. In today’s complex financial landscape, it is increasingly difficult to assess the value of marital assets in a divorce. The characteristics of assets can vary tremendously, and each family has unique needs and goals.

Navigating your finances in order to work out an equitable and fair settlement requires careful evaluation and analysis of assets that also examines both short- and long-term outcomes.

DEFINING SEPARATE AND COMMUNITY PROPERTY
A good place to start is determining which assets are community property and which are separate property. Separate property is what is brought into the marriage, what is inherited during the marriage, what is awarded to an individual in a lawsuit, or received as a gift during the marriage. Community property is all the property acquired during the marriage, no matter whose name it is in.

The presumption in Texas is that everything is community property unless PROVEN otherwise. So, if you brought property into the marriage or received it through any of the above methods, and you want it to be considered separate property, you will have to produce documentation that proves it. Separate property is not included in the assets to be divided.

ALLOCATING PROPERTY INCOME AND APPRECIATION
In Texas, the income from separate property is considered community property, although the appreciation in value of the assets remains separate. For IRAs and qualified plans, the rules are different. The appreciation on IRAs and qualified plans is considered community property unless traced to determine accurately the appreciation applying to the separate estate.

The separate property of each spouse maintains its separate status throughout marriage as long as it is not mingled with community property. If mingling has occurred — say you’ve added community monies to separate monies over the years in a bank account — a Certified Divorce Financial Analyst may be able to trace what is separate and what is community property in that account if careful records have been kept.

Once you’ve determined which marital assets are community property, you can begin to evaluate the value of these assets as you strive to divide them equitably in the divorce settlement.

Filed Under: Divorce Planning, Uncategorized

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