Protecting Your Assets During a Divorce
During a divorce both parties feel vulnerable about their future. Their chief concern is usually whether they will have enough assets after the divorce to live comfortably and provide for their children.
It’s a rational concern, given that many people are financially worse-off after divorce. That’s why it’s critical to invest time and energy early in the divorce process (preferably before it begins) in gathering information about your assets and making sure you have an accurate picture of your family’s worth. Given the combative nature of many divorces, this can be easier said than done.
If you are considering or are in the process of divorce, your attorney is your best advocate in this area. He or she should be able to ensure that you have access to information about all your assets.
If you aren’t yet in the process of divorce, it’s a good idea to collect as much information now, before the divorce is filed, to prevent any information from being hidden from you.
Here is a non-comprehensive list of potential assets:
- Checking and savings accounts
- Investment accounts
- Life insurance policies
- Business entities, professional practices, partnerships, or interests in closely held corporations
- Pension, retirement or executive compensation packages
- Trust funds
- Real estate, furniture and automobiles
- Jewelry, art, china, silver, furs and collectibles
If you and your spouse signed a premarital, postmarital or partition agreement, have a copy of that as well.
Although Texas is a community property state, that doesn’t necessarily mean that the couple’s “community” property will be divided equally. The court can take into account issues such as uneven earning power and, even, misconduct, to make what it considers to be a fair division of assets and liabilities.
In most cases, the court cannot treat one of the spouse’s separate property as community property. Separate property is what each person:
- Inherits before and during the marriage
- Brings into the marriage
- Receives as a gift during the marriage
- Receives as personal-injury proceeds
Community property is everything acquired during the marriage regardless of whether one spouse bought it with her salary or placed only one name on the title document.
During a divorce it can be tricky to determine what is community and what is separate property. In Texas, the income earned on a separate property account is marital property. However, the increase in value of the separate property account can be separate property. It depends in part on whether or not the other spouse actively worked to increase the value of that property.
Depositing separate property money into a marital-property bank account creates a co-mingled account. Over the years, this can complicate the process of identifying how much is separate versus marital property. Add in a purchase of something like a vacation home with co-mingled funds, and you have an even more complex situation.
If you have assets that are clearly and cleanly separate property (i.e. they have not been co-mingled with community property), it is safe to remove those items or otherwise secure them during your divorce process. If the property is likely to be the subject of a dispute between you and your spouse, consult an attorney before removing it from your home.
Given the complex nature of property ownership after even a few years of marriage, it is absolutely crucial to secure the services of an attorney who is well-versed on complex property disputes in divorce.
If a divorce is highly stressful, It can be tempting to want to “wash your hands” of all remnants of your marriage in an effort to move on quickly. Your future financial stability, however, requires that you remain steadfast and resolute.
Unless you have a generous inheritance coming, you will most likely need an equitable share of your family’s assets to have a comfortable life post-divorce.