Some divorces require the division of various marital debts and assets, and this can become more complex when there is complex property involved. The division of complex property in Texas can seem very complicated, but having the right legal team can help.
At The Law Offices of Richard C. McConathy, we have experience handling complex property divorces, including those involving business owners, high-profile executives, celebrities, and professional athletes. We understand the law well in this area and know when to engage independent experts to help strengthen your case.
We also understand that property often has a lot of meaning in divorce cases, and we will work to manage the division of property respectfully and conscientiously. Contact us today for more information.
Community Property vs. Separate Property
Texas is a community property state, which means that all property acquired by either spouse during a marriage will be presumed to belong to both spouses equally. This is true regardless of which spouse purchased the property or whose name is on the title.
However, there are some exceptions to this rule. Certain assets are considered separate property, which means that they belong to the spouse who owned them before the marriage or who acquired them through inheritance, gift, or personal injury award. All other assets will be presumed to be community property and thus subject to division by a court during a divorce.
Determining whether an asset qualifies as community property or separate property can have a significant impact on the outcome of a divorce, so it is important to work with an experienced attorney who can help you understand your rights and protect your interests.
Characterizing assets is a common dispute in marital property division. The Law Offices of Richard C. McConathy will make sure that all jointly held property is considered part of the estate while protecting our clients’ separate assets.
We advise clients on reimbursement and waste claims, particularly the complex issues involving the value of retirement funds and other assets during the marriage (and after divorce). We also sort out issues relating to debts that existed before the marriage, assets wasted on drugs, gambling, extramarital affairs, and liabilities incurred or assets acquired without the other spouse’s knowledge.
The Law Offices of Richard C. McConathy uses outside experts as needed to support our clients’ characterization of assets and ensure a fair division. We are experienced in all aspects of asset division and complex property division in divorce cases. This includes evaluating:
- The marital homestead
- Closely held businesses
- Securities, stock options, and deferred compensation
- Qualified Domestic Relations Orders, 401(k)s, IRAs, and pensions
- Real estate including residential, commercial, farm, and ranch properties
- Oil and gas royalties as well as other mineral interests
- Stock options
- Inheritances
- Economic contribution and reimbursement claims
- Insurance issues
- Intellectual property issues, copyrights, and patents
We are also aware of asset-protection strategies commonly used in divorce to avoid the law, and we use sophisticated methods to identify hidden assets.
Using the most up-to-date rulings on community property in Texas, we propose a fair settlement of marital property (not necessarily 50/50). If an acceptable division cannot be negotiated, our attorneys are thoroughly prepared and fully equipped to litigate the matter.
What Texas Courts Consider When Distributing Property
In Texas, which is a community property state, the court will divide all community property between the divorcing spouses. However, this does not mean that the court will split the assets evenly. The court is required by law to divide the property according to what is “just and right.” The court will consider the following factors when dividing community property:
- The needs of each spouse
- The needs of the couple’s children
- The age and health of each spouse
- The level of education of each spouse
- Which spouse will be raising the couple’s children
- The ability of each spouse to work and their expected income
It is important to consult with an experienced Tarrant County complex property division lawyer for assistance.
Proving Separate Property
The spouse claiming property as separate has the burden to prove that it is separate. If they cannot do so, the property will be considered community and will be divided fairly. This process of determining whether an asset is community or separate property is called characterization.
The standard of proof for separate property is clear and convincing evidence. This is a higher standard than the preponderance of the evidence standard used in most civil cases, and it is also higher than the proof beyond a reasonable doubt standard used in criminal cases.
The key to proving separate property is documentation. This could include things like bank statements, investment statements, and property titles. If the original separate property has changed form or has been sold during the marriage, the spouse claiming separate property will need to trace the asset to show that it is still separate.
Tracing can be complex, depending on several factors, such as the number of exchanges, the type of exchanges, the length of the marriage, the available documentary evidence, and the type of asset. A forensic CPA may be necessary to help trace the property and create a tracing report.
While most divorce cases are settled in mediation or before mediation, complex property cases can be more difficult to settle. However, if both parties are willing to work together, it is often possible to reach a settlement without going to court.
Business Ownership Issues
If your spouse started a business while you were married, it may be considered community property. Even if they started it before you were married, but you helped run or fund it in any way, it may lose its separate status. If the business increased in value during the marriage, it is also likely to become community property and subject to division.
You may be owed half of your spouse’s business if the court deems it to be equitable. They are likely to do so if:
- Your spouse founded the business while you were married.
- You contributed to the business in any way, such as working on it or donating money.
- The business expanded using marital funds.
If your spouse’s business is determined to be community property, it will be subject to equitable division. Once this has been established, the next step is to figure out how much the business is worth through a process called valuation. There are different ways to determine how much a business is worth, including:
- The asset approach, determines the value of a business by the worth of all of its assets.
- The market approach, compares the value of similar businesses in your area that have been sold.
- The income valuation approach, estimates the value of the business by considering how much income it generated over a specific period.
Dividing a business can be complex, and if your spouse is more involved with the finances of the business, you could be vulnerable. Your attorney may seek the help of a professional business appraiser to determine the value of the business.
There are several options for dividing a business after a divorce:
- Both spouses can continue to own the business. This is only a viable option if they can remain amicable and maintain a strong working relationship.
- The business can be sold and the profits divided. This can be a good option for spouses who want to invest in their own business ventures and remove financial ties between each other.
- One spouse can buy out the other spouse’s share of the business. This is often the best option if one spouse is running the business and the other spouse does not want to be involved.
- The spouses can enter a structured settlement where one spouse is paid out over time. This is often necessary if the business comprises most of the marital estate.
The best way to ensure that you receive your fair share of the business is to seek the advice of an experienced divorce attorney. They can help you determine the most appropriate option for your case and protect your financial interests.
Common Real Estate Issues
Couples who own large real estate portfolios may be able to agree on how to divide the portfolio, but often they find themselves arguing over how to do so. There are a few ways to deal with these disputes.
One option is for one spouse to buy out the other spouse’s interest. This is perhaps the easiest way to resolve the issue, but not all spouses have the financial resources to purchase their soon-to-be ex’s interest.
If the spouses cannot reach an agreement and one spouse cannot buy out the other spouse, the other option is to sell the property and divide the proceeds. Of course, while it is easier to divide liquid assets, this can still lead to disagreement over the best way to divide the assets.
Separate property cannot be awarded to the other spouse in a divorce. However, the spouse claiming it as separate property must provide clear and convincing evidence to the court.
Community property real estate must be divided during a divorce. Since it cannot be split in half, the parties must determine its value and decide how to divide the equity and debt. The property may be sold or one of the parties may keep it.
Perhaps the most common kind of real estate divided during a divorce is often the marital home. If one spouse wants to keep the home, they can agree to keep the house and the associated debt.
The parties could also agree that one spouse will keep the house and give the other spouse half of the equity. Divorcing parties might also agree that a spouse not keeping a house will then keep other kinds of assets to help offset the value of the house they were supposed to receive.
If both parties cannot agree on how to divide the house, the judge may order them to sell it or award it to one party. Moving out during the divorce does not give up your rights to the marital home. However, the judge may consider this when dividing the marital property.
If a judge orders or the parties agree to sell a house, both parties will have to sign the closing paperwork. The decree must include a highly detailed legal description of the house and how long the parties will have to make the sale.
Your divorce decree must include a detailed legal description of the house and who should receive it. It should also state who is going to be responsible for all expenses associated with the house.
Once a judge signs a decree awarding a house to a spouse, the other spouse has to sign a Special Warranty Deed that transfers all of their interest in the house to the other spouse. A Special Warranty Deed needs to be filed in the County Clerk’s Office property records.
The only way to remove a name from a mortgage after a divorce is for a spouse to refinance a mortgage in their name. Such a process can take significant time because the bank will look at the spouse’s income and assets to determine if they can refinance the mortgage.
The final decree should state whether a spouse keeping a house has to refinance a loan and how long they have to do so. A court cannot order a bank to give a loan, but having it in writing will allow you to file a motion to enforce a decree if your ex-spouse fails to refinance in time.
Both parties should sign a Deed of Trust to Secure Assumption that promises to pay the mortgage until the spouse ordered to be responsible for the debt can refinance. This should also detail what rights the other spouse could have if the spouse responsible for the debt defaults on the mortgage for any reason.
When a Spouse Is Hiding Assets
Unfortunately, some spouses try to hide assets during a divorce. This can be done for a variety of reasons, such as to avoid losing assets in the divorce or to gain an advantage in the negotiations. However, hiding assets is illegal and can have serious consequences.
There are many ways that spouses can hide assets, such as opening separate accounts, transferring assets to friends or family, or buying expensive items and underreporting their value. If you suspect that your spouse is hiding assets, it is important to speak with an experienced Texas divorce lawyer immediately.
A Texas divorce lawyer can help you take the necessary steps to protect your rights and ensure that all assets are properly divided. If your spouse is caught hiding assets, the judge may award all of the hidden assets to you. Additionally, your spouse could face criminal charges or be held in contempt of court.
In short, hiding assets in a divorce is not worth it. If you suspect that your spouse is hiding assets, speak with an attorney immediately.
Complex Property Attorney in Tarrant County, TX
Are you in the middle of a divorce that involves complex property division issues? You will want to have The Law Offices of Richard C. McConathy on your side to help protect your rights and secure all of the property which you are entitled.
Make sure to call (817) 422-5350 or contact us online so you can arrange a free consultation that will allow us to evaluate your entire situation and offer concrete advice. Our firm is also experienced in assisting people with all kinds of domestic violence issues in these cases, and we also assist people who are facing criminal charges relating to first-time arrests.