Factors In Deciding Property Division
The factors that a Texas court may consider in deciding property division in your divorce include, but are not limited to, the following:
1. The Ability to Pay:
The court can consider one’s ability to pay when making a property division. The ability-to-pay factor is pretty easy to establish. Are you struggling to make your rent and car payment? If so, you probably do not have the ability to pay. Do you own a successful company, four homes, a private jet, and an island in Antigua? If so, you likely have the ability to pay.
How old are you? Are you 22 years old? Or are you 72 years old? The younger you are, the less likely you are to have been in a long-term marriage and thereby in need of more financial support in the future. The younger you are, the less likely you are to rely solely on your spouse to financially support you. The older we are, the more our earning potential weakens.
3. Attorney’s Fees:
How much are you spending on attorney’s fees? Typically, attorney’s fees are paid from community funds. Because the payment of attorney’s fees are usually pulled from the sources which you stand to divide, the attorney’s fees will likely have an impact on your division of the property.
Do you and your spouse have children? If so, you know that children are expensive. The idiom, “the children are eating us out of house and home,” tells us that merely feeding a child can be costly. If the children primarily reside with one party, that party likely pays more to make sure that the children have a roof over their heads, clothes to wear, and food to eat. Additional factors for the costs associated with children can be considered if they have special medical, educational, and/or extracurricular needs.
5. Relationship to Creditor:
The court may consider your relationship to a creditor. If a creditor is a family member, there is a chance that the family member will not really make the spouse repay the debt. For example, you may owe $450,000.00 in liabilities, but they are only phantom liabilities because there was never an intent to repay the debt because of your relationship to the creditor. In this example, you and your spouse purchase a home from your mother- and father-in-law for $450,000.00 in 1999. Your mother- and father-in-law tell you both that you may slowly pay the note. One day, your mother- and father-in-law tell you and your spouse, “no need to make payments, just make sure and pay the property taxes each year.” Fifteen years pass by and not one single payment was ever made to your mother- and father-in-law for the home. In fact, it is never mentioned again. After one party files for divorce, suddenly the note for the home in the amount of $450,000.00 is being called due. The question for the court to decide is, given the relationship to the creditor (and additional factors in this example), will this debt actually be repaid to the family members? Or, is the calling of the note just a tactic that one spouse is using as leverage to secure a better property division?
What is your education level compared to your spouse’s education level? If one spouse has a PhD while the other has a high school diploma, there exists a possibility for a greater earning potential for the PhD. Also, if you have been out of the workforce for a while, the level of your education usually plays a role in the type of employment you can find when re-entering the workforce.
Who wants to hire you? Is McDonald’s turning you away? Or, do you own a few McDonald’s franchises? Do job offers fall in your lap on a monthly basis? Or, are you an undesirable job candidate because of age, education level, handicaps and/or illness? Employability translates into the ability to make money and to ultimately support yourself. If you are unable to do so, there exists a greater need for more support and thus a greater need for you to receive a larger division of the property.
Is the divorce your fault? Or, is it your spouse’s fault? Showing a fault-based ground for divorce can give the court a reason to grant one spouse a larger division of the property. Fault-based divorces are ones based upon cruelty, adultery, felony conviction, and/or abandonment.
9. Fraud on the Community:
Has your spouse unfairly disposed of property to your detriment? Did you discover that your husband paid for a condo, a Porsche 911, and a dozen pair of Christian Louboutin shoes for his mistress? Did you discover that your wife smuggled over $500,000.00 to her family members in another country in preparation for a divorce? The court can consider the bad acts, breaches of fiduciary duty, and the wasting of assets when making a property division by making the non-offending party whole again.
Are you as fit as a fiddle? The healthier a person, the greater their earning potential and ability to support oneself. If you have serious health issues, you deal with increased cost of medical expenses, medication, and insurance. Also, serious health issues can interfere with your ability to earn money because of time spent at doctor’s offices or simply due to the physical inability to maintain a full-time job.
11. Length of Marriage:
Generally, the longer the marriage, the greater the need for support. This is usually self-explanatory because longer relationships typically translate into more property being acquired, more assets combined and commingled, more debt incurred, and more dependency on the other spouse.
In dividing up your property, the court must also divide up liabilities. Sometimes parties owe more in debt than they own in assets. In order to determine what is a fair and equitable division, the court can consider what bills and debts you will be required to pay when the divorce is finalized.
Cash and liquidated assets are easier to split than a company or a piece of land. In order to move into a new home or apartment when you begin to form a separate life from your spouse, it is highly desirable to have more access to cash than an investment property.
14. Maintenance Costs
The court can consider how much was paid to maintain the community property while the divorce was pending.
15. Nature of the Property
The nature of the property factor stems from the idea that one spouse may be better equipped to keep, maintain, or manage a particular piece of property. For example, let us say that the property in question is a law practice. The court can consider the fact that the husband is not a lawyer, has never been involved in running the law firm, lacks the expertise and ability to run the law practice, and ethically cannot run the law firm.
A court can take into consideration any reimbursements to be awarded. If you spent your entire marriage building up an asset that is proven to be your spouse’s separate property, you may be entitled to a reimbursement from that separate property.
17. Size of Separate Property
Property that is proven to be your separate property will be confirmed as such, and you do not have to share that property with your spouse. If you have a sizable separate estate, the court can take that into consideration when making a property division. For example, let us say that one spouse has $3.2 million in their separate estate, and there is only $100,000.00 of community property to divide. The court can take into account that the spouse owning $3.2 million in assets is financially secure in comparison to what the other spouse stands to be awarded in the property division.
The court can take into consideration the tax consequences of dividing up your property. How much will one spouse be taxed for the division of a specific asset? Are there any tax penalties associated with dividing up your 401(k)? Is it ordinary income? Will the property be subject to capital gains or losses? Because the tax consequences can impact your bottom line, the court can consider the impact in the same manner they consider the parties’ liabilities.
If the generalities from the examples cited seem unfair, please consider that the themes can be covered under larger categories. The bigger-picture categories include these factors:
- Assisting the court in making a fair decision
- A spouse’s ability or inability to support themselves after divorce
- What can be accomplished based upon the amount of assets and liabilities involved in a case
When it comes to property division in a divorce, each state is different. A family in New York with the exact same assets and liabilities will have entirely different results than a family divorcing in Texas. Do not begin your search for advice on the division of your property for a Texas divorce by consulting a lawyer from another state.
If you have questions about the factors that come into play when deciding property division and how this will impact your share of the property in a Texas divorce, contact one of our experts at Orsinger, Nelson, Downing & Anderson.