Dividing assets in a divorce can be one of the most complicated and contentious aspects of the process. In Texas, the law requires the equitable division of the marital estate, which can include everything from real estate and retirement accounts to personal property and even cryptocurrency. Understanding how these assets are divided, what can be considered community property, and how to protect your interests is essential for anyone going through a divorce.

At DeFord Law Firm, we have extensive experience helping clients in The Woodlands, Texas, navigate these complexities. Let’s break down what you need to know about dividing assets in a Texas divorce.

What Is Community Property in Texas?

In Texas, any property that is acquired during the marriage is considered community property. This means that all income earned, property purchased, and investments made during the marriage belong equally to both spouses, regardless of whose name is on the title. For example, if you purchase a car during the marriage, it is considered community property and will be divided in the divorce.

This also applies to assets like real estate, investments, retirement funds, and even income earned through work during the marriage. Texas courts will divide these assets in a way that is deemed just and right, but this does not always mean a 50/50 split.

How Is a “Just and Right” Division Decided?

A common misconception is that Texas law always requires a 50/50 division of assets. In reality, the law aims for a just and right division, which considers various factors beyond just the amount of money or property each spouse has contributed.

Some of the factors courts consider when determining how to divide the estate include:

• The earning capacity of each spouse
• Whether one spouse was the primary caregiver or homemaker
• If there was any misconduct during the marriage, such as adultery or financial waste
• The needs of any children
• The physical and emotional health of each spouse

This means that the division could be slightly skewed if one spouse has significantly less earning potential, or if one spouse was abusive or financially irresponsible during the marriage.

What Types of Assets Are Divided in a Divorce?

There are several types of assets that are subject to division in a Texas divorce. These include:

• Real Estate: This includes your primary residence, any vacation homes, or timeshares. If both spouses agree on who should get the property, it may be awarded to one spouse. If they can’t agree, the court may order the property to be sold, with the proceeds divided between the parties.
• Retirement Accounts: 401(k)s, pensions, and other retirement plans are also community property in a Texas divorce. These accounts can be divided using a Qualified Domestic Relations Order (QDRO), which ensures that the funds are transferred from one spouse’s account to the other’s.
• Bank Accounts: Checking and savings accounts are also considered community property, and any balances in these accounts at the time of divorce are subject to division.
• Investments: Stocks, bonds, and other investment portfolios are typically divided equally between the spouses. Special consideration may need to be given to restricted stock units or bonuses that are payable in the future.
• Vehicles: Cars, motorcycles, boats, and other vehicles owned by the couple will be considered in the division process. If one spouse is awarded a vehicle, the other spouse may receive other assets of equal value in return.

What About Separate Property?

Not all assets in a marriage are subject to division. Separate property refers to assets that were owned before the marriage or received as a gift or inheritance during the marriage. These assets are not considered community property and are typically not divided during divorce.

For example, if one spouse had a car or real estate prior to the marriage, that property remains theirs after the divorce, as long as it hasn’t been commingled with community property (such as using marital funds to pay for the property’s maintenance).

In addition to property acquired before the marriage, separate property may also include:

• Inheritance received during the marriage
• Personal injury settlements related to pain and suffering
• Gifts received from third parties

The Role of Stock Options and Bonuses in Divorce

One often overlooked asset in divorce is stock options or restricted stock units (RSUs) that a spouse may have earned during the marriage. These are typically not liquid assets, meaning that they might not have been received in full during the marriage. However, they can still be considered community property if they were earned during the marriage.

For example, if a spouse works for a tech company and is granted RSUs, those units can be divided in divorce, even though they might not be available to be sold until a later time. In some cases, it may require the assistance of financial specialists to ensure that these assets are properly valued and divided.

Likewise, future bonuses that have already been promised or are likely to be paid based on work performed during the marriage can also be considered community property and divided accordingly.

Dividing Cryptocurrency in a Divorce

In recent years, cryptocurrency has become a more common asset in divorce cases, but it can be difficult to value. Cryptocurrencies like Bitcoin, Ethereum, and others are often volatile, and determining their value at the time of divorce can be challenging.

However, cryptocurrency can be a valuable asset, and it is possible to divide it between spouses. This may require the use of financial specialists who specialize in valuing digital assets. If you suspect that your spouse owns cryptocurrency, it is important to discuss this with your attorney to ensure that this asset is properly accounted for in the division process.

Protecting Your Assets with Prenuptial or Postnuptial Agreements

While Texas law ensures that community property is divided justly, some individuals prefer to establish clear boundaries regarding what is considered separate property in the event of a divorce. This can be accomplished through prenuptial or postnuptial agreements.

A prenuptial agreement is signed before marriage and outlines what assets are considered separate property and how certain assets should be divided if the marriage ends. A postnuptial agreement serves a similar purpose but is signed after the marriage has taken place.

If you already have a prenuptial or postnuptial agreement, it’s important to review it with an attorney to ensure that your assets are protected and that the agreement is enforceable.

Ensuring a Fair and Equitable Divorce Outcome

When going through a divorce in Texas, understanding the complexities of asset division is crucial. Whether it’s real estate, retirement accounts, or digital assets like cryptocurrency, the division process can be complicated.

At DeFord Law Firm, we are committed to ensuring that our clients in The Woodlands receive a fair and equitable divorce settlement. We take the time to thoroughly assess all marital assets and liabilities, and we work with you to develop a strategy that protects your financial future.

Schedule a Case Evaluation Today

If you’re facing a divorce and need help understanding how your assets will be divided, contact DeFord Law Firm today. We can guide you through every step of the process and ensure that your rights are protected.