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When going through a divorce in Texas, a main point of contention is often the division of property, especially if the parties own a home.

A Texas divorce court has a few options in dividing a real property asset but each case is different and it would be best to consult a Texas divorce attorney to discuss your specific property concerns.

Contested and Uncontested Divorces

If it is a contested divorce, the parties will first need to agree or the court will order who is temporarily responsible for the monthly mortgage and who has temporary use of the home while the divorce is pending. If at all possible, avoid vacating the residence as the court will consider that when temporarily or permanently awarding the home in a divorce.

In an uncontested Texas divorce, who gets the house and how property is divided will have to be completely agreed upon.

Once a divorce is ready for finalization, all assets, including the community estate’s real property, will need to be divided or awarded. This can be done by agreement or by court order after a trial. The division of real property can be handled in a number of different ways.

An Order for the Sale of the Residence

A Texas divorce court may decide that the best way to effectuate a just and right division would be to order the sale of the residence and then determine how the sale proceeds are divided. If it is an especially contentious divorce, the court can set the terms of the sale, including choosing a broker, setting the listing price, and deciding who is responsible for the upkeep and mortgage on the house during the pendency of the sale.

An Award of Partial Home Equity

The court must take into consideration the entire value of the community estate when handling the award of the marital residence. To resolve the decision of who gets the house during a divorce, a Texas court may award the house to one party, and equity from the home to the other.

A Texas divorce court is often reluctant to order the sale of the residence if one party is able to pay the mortgage. However, it may be necessary in certain cases. The party not being awarded the marital residence, assuming the home is a community property asset and there is equitable value in the home, is entitled to their community property interest in the home.

There are several ways a party can obtain their share of the equity from the marital residence, assuming the house is not ordered to be sold.

  • The party that is awarded the home can be ordered to pay the other party their portion of the equity, often by refinancing or getting a home equity loan.
  • The party that was not awarded the home could be awarded their portion of the equity elsewhere in the property division of the divorce. For example, getting more of a 401k account or being awarded all of another asset that has equal value to the equity value.

How the equity is divided often depends on what other assets are in the community estate.

If the house in contention has no equity or the mortgage is higher than the value of the residence, then the court may just award it and the associated debt to whichever party desires the residence.

Other Property Concerns

When the court decides who gets the house in a Texas divorce, the title will need to be transferred to the receiving party. This is normally done with a special warranty deed, where a party transfers their legal interest in the property to the other party so that the house is titled in only one party’s name.

If both parties are on the mortgage, that needs to be considered and addressed when deciding how to award or divide property during the divorce. A court cannot force a party to refinance as the court has no power over a lending or financing company, but a court can order the party who was awarded the residence to make a good faith attempt to refinance by a date certain. The divorce decree will typically also include language that obligates the party receiving the residence to pay the mortgage.

If the party who is awarded the home is unable to refinance the mortgage in their sole name, a Deed of Trust to Secure Assumption is typically executed. This will offer some protection to the party who remains on the mortgage if the party who was awarded the residence defaults on the mortgage.

Connect with an Expert

Who gets the house in each Texas divorce can depend on every factor of the case. Each divorce matter is unique and brings with it a variety of property concerns and financial implications.

It is best to hire a licensed Texas family law attorney with experience in handling property issues who can guide you through the process. If you are considering a divorce and want to discuss your specific property concerns, please contact the Ramos Law Group, PLLC to schedule a consultation.

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Many parties going through a divorce in Texas are concerned about how a divorce will affect their assets, especially a 401k or other retirement accounts. While it’s always best to consult with a divorce attorney, here are several things to keep in mind when thinking about how to protect your assets.

Separate vs Community Property

Texas is a community property state. If any part of a retirement account was earned during the marriage, it is considered a community property asset and is subject to a just division by the court. If any part of the retirement account was earned prior to the date of marriage, that would be considered a person’s separate property and could not be divided by the court.

When going through a divorce in Texas, it is important to have all of the documentation to show accurate balances for any accounts, both before and after the date of marriage so that a party’s separate property interest can be protected. There is a presumption that all assets are community assets, so the party alleging that an asset is a separate property asset has the burden to prove it.

It can be a lengthy process to obtain records, especially if an account was started many years ago, so to best protect your 401k when a divorce is on the horizon, it would be best to begin gathering relevant documents as soon as possible.

Restraining Orders and Injunctions

Typically, during a divorce in Texas, a court will issue a temporary restraining order or standard injunctions. These are put in place to preserve assets during the pendency of a divorce. This means that parties are prohibited from cashing out assets such as 401ks or IRAs.

It is inadvisable to cash out 401ks or take out loans against existing 401ks during the divorce process without express authorization from the court. If there is a financial hardship or urgency the court may consider that and allow an early withdrawal or loan, but typically a court prefers to keep the marital assets intact for a final division.

Changing 401K Account Details During Divorce

A person going through a divorce in Texas should consider the ramifications of altering their 401k contributions. Changing the level of your contributions can have a trickle-down effect, such as increasing income for child support calculations. It is important to discuss how changing the contributions can affect a divorce with a licensed Texas family law attorney.

Dividing 401k Funds

The actual division of the 401k funds during divorce depends on the totality of the community estate. If each party has a retirement fund of similar value, the court may not divide either and each party would be awarded their own retirement. If there is only one retirement fund, the court may divide it. If one party is awarded the marital residence with all of the equity, the other party may be awarded the entirety of a retirement fund to effectuate a just and right division.

Since the division of property is dependent on a couple’s specific facts and circumstances, it is important to discuss your individual case with a licensed Texas family law attorney.

How 401K Funds can be Transferred Between Accounts

Finally, if a 401k is divided in the final Texas divorce settlement, the court uses a legal document called a Qualified Domestic Relations Order. This order will effectuate the transfer or disbursement of the awarded funds from one party’s 401k account to the receiving party’s 401k account, IRA or similar account. There are typically minimal tax penalties or financial concerns if the funds awarded from a 401k are simply rolled over into another investment account. If a party declines to roll the funds into an investment account and prefers to cash out the value, then there will likely be financial and tax implications to consider so it will be important to discuss that option with a licensed Texas family law attorney.

Connect With a Specialist Who Can Help

There are an infinite number of issues that could arise relating to property division, and this article is intended only to give an overall idea and not to contemplate every possibility. To learn more, contact Ramos Law Group to consult with an attorney about your case.

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