Non-Splittable Assets in Divorce Cases

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One of the most complex parts of the divorce process is the division of marital assets. However, understanding which assets are non-splittable and how the State of Texas treats them in a divorce can make the process more manageable. What assets cannot be split in a divorce? The Austin divorce lawyers from Smith & Bledsoe Family Law can help with your marital property division.

A non-splittable asset is an asset the court cannot split between the spouses during a separation. For example, if a couple shares a single vehicle, the court cannot split that vehicle so both parties can receive part of it in a divorce. Instead, the court will have to devise an alternate solution that’s fair and equitable for both parties.

Community vs. Separate Property

According to Texas law, there are two primary asset categories in a marriage: community property and separate property. Community property includes most assets acquired during the marriage, regardless of whose name they are in. Assets under community property include income, real estate, and any other personal property.

Separate property, however, includes assets acquired by each spouse before the marriage and a few post-marriage exceptions. These exceptions are:

  • Assets received as gifts
  • Assets received through inheritance
  • Money received through a personal injury claim

Understanding the distinction between community and separate property is crucial in divorce proceedings. Separate property is not subject to division in a divorce, while community property is.

However, complications may arise if you and your spouse mix your separate property with your community property, making it difficult to distinguish between them. For example, if you receive money through inheritance and use it to pay a shared mortgage, it may no longer count as a separate asset.

Prenuptial and Postnuptial Agreements

Prenuptial and postnuptial agreements in Austin can significantly impact how the court divides assets in a divorce. A prenuptial agreement is a contract signed before marriage that outlines the division of assets in the event of a divorce. A postnuptial agreement in Austin, TX, serves a similar purpose, but the spouses sign it after marriage.

These agreements can specify which assets are to remain separate property and how to divide community property. They can also address spousal maintenance (alimony) and debt division. When properly drafted and executed, prenuptial and postnuptial agreements can provide clarity and reduce conflicts during divorce proceedings.

There are a few circumstances in which the courts will not honor a prenuptial agreement, including:

  • If one party did not voluntarily sign the agreement
  • If one party did not have enough information about the financial obligations and assets of the other party to make an informed decision

Equitable Distribution of Assets in Divorce

Texas follows the principle of equitable distribution, which means that courts divide community property fairly, even if it’s not necessarily equal. The court considers various factors when determining how to divide assets between spouses, including the length of the marriage, each spouse’s earning capacity, contributions to the marriage, and the needs of any children.

Equitable distribution aims to achieve a fair outcome based on the circumstances of each case. A fair outcome could be one in which one spouse may receive a larger portion of the assets, depending on the court’s determination. Non-splittable assets, such as certain types of property that the court cannot easily divide, may require creative solutions to ensure a fair property distribution.

In some cases, the courts will award non-splittable assets to the spouses based on their value, so the total value each spouse receives is the same. In others, the spouses may have to sell the non-splittable asset and then split the money received through the sale. Other options may also be available depending on the specifics of your situation.

Dividing the Family Home in a Divorce

The family home is often one of the most significant and emotionally charged assets in a divorce. Since the court cannot divide the home itself, several factors determine how the totality of the assets will be divided.

The first factor to consider is whether the home is a community or a separate property. If you and your spouse purchased the home during your marriage, it will typically be community property. If the home came into the marriage with one of you, it may be separate property.

The second factor is whether one of the spouses will get primary custody of any children. If a spouse gets primary custody, they will often also get the home if it is community property. The state believes that having a stable home is in the children’s best interest.

In some cases, one spouse may buy out the other’s interest in the home, granting them full ownership. In other cases, spouses may choose to sell the home and include the proceeds as assets for the court to divide in the divorce.

How Divorce Affects Retirement Accounts

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Retirement accounts are another critical asset the court must often address in a divorce. These accounts, which may include 401(k)s, IRAs, and pensions, often fall into the community property category if a spouse contributed to them during the marriage.

Dividing retirement accounts can be complex and may require a Qualified Domestic Relations Order (QDRO) to facilitate the division. A QDRO is a legal order instructing the retirement plan administrator to divide the account between beneficiaries.

It’s essential to properly draft and get approval for the QDRO to avoid tax penalties and make sure each spouse receives their fair share. Additionally, some retirement accounts may have specific rules regarding division, so it’s crucial to understand the terms of each account.

Engage an Austin, Texas, Divorce Attorney

Asset division in a divorce is complicated and requires a thorough understanding of Texas law and careful attention to detail. An experienced divorce attorney can provide valuable guidance and representation by identifying non-splittable assets, drafting agreements, and advocating for the fair property division.

If you’re going through a divorce, call our law firm at (512) 277-3166 or contact us online for a free case evaluation with one of our experienced attorneys. We’ll help you understand your legal options and work hard to get you your fair share of assets in the split. Check out our success stories to learn why you should trust us with your case.

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