Texas is one of nine states with community property laws. This means that family law judges are required to divide marital assets and liabilities equally in divorce cases. In other parts of the country, equitable distribution laws give judges more discretion. However, judges are only called upon to make property division decisions when divorcing spouses are unable to reach an amicable agreement at the negotiating table. If traditional negotiations are unproductive, spouses may pursue alternative approaches like mediation or collaborative divorce.
Only marital assets and debts are divided in a divorce. Assets acquired and debts taken on before the marriage and gifts and inheritances received during the marriage are considered separate property and are not subject to division. Determining what is and what is not separate property can become challenging when assets that were initially separate become comingled with marital assets. This often happens when gifts or inheritances are deposited in joint bank accounts or marital funds are used to maintain or improve a home that a spouse owned before getting married.
Dividing debts is an especially thorny part of divorce negotiations because banks are not bound by the terms of divorce decrees. This means spouses who cede secured assets, such as homes with mortgages or automobiles with outstanding loans, during property division negotiations can be pursued by lenders if the spouse who received the assets does not make the required monthly payments. Spouses can prevent this by insisting that all jointly held loans are paid off.
Spouses who would prefer to avoid contentious property division negotiations and expensive and public court battles can act proactively by drafting prenuptial or postnuptial agreements. However, these agreements are often challenged in court, and they could be unenforceable if their provisions are unfair, negotiations were not conducted in good faith or one of the spouses involved was under duress. This is why experienced family law attorneys may encourage their clients to revisit prenuptial or postnuptial agreements periodically to ensure that the terms are still essentially fair. This is especially important if the couple’s financial situation has changed significantly.