Division of Assets in Divorce: Who Gets What?

Division of Assets in Divorce Who Gets What

When a couple decides to divorce, splitting assets in the marital estate can get complicated for a variety of reasons. Emotional attachment to assets can be an issue and the lack of liquidity of certain assets can pose challenges. Some clients want to maintain ties to an asset and ask, “can you divorce without splitting assets?” People also wonder, “what property is subject to division during divorce?”  We’ll get to the bottom of these questions and other property division divorce questions in the article below.

State laws and past agreements help guide the division of property in divorce

How division of property in divorce works depends largely on the laws in the state where the divorce is filed. Nine states, including Texas, base division of assets for divorced couples on the community property system, where any assets or debts acquired during marriage are presumed to be part of the marital estate.

Some community property states divide marital property equally, while other states like Texas consider other factors (like fault grounds) to determine a “just and right” division of the marital estate. The other 41 states use some version of the equitable property division system. In equitable property division states, marital assets are split based on what the court believes to be fair, not necessarily a 50/50 split, and factors like fault and fraud may be considered.

In many states (including Texas), assets and debts shown to be acquired prior to marriage are considered separate property, as are assets received as gifts or by virtue of certain financial settlements. Separate property usually stays in the possession of the party who acquired it, though some couples agree to award the separate property of one party to the other in order to come to an agreement about their divorce settlement.

When deciding who gets what in a divorce, the courts could consider any prior agreements or contracts the couple have entered into regarding property. These may include prenuptial agreements, postnuptial agreements and partition and exchange agreements, among others.

What property can be split if getting divorced?

Or as some folks strangely ask Google … “What property can be splitted if getting divorce?” Generally, all property and debts acquired during the marriage are subject to division upon divorce (except for the aforementioned gifts and certain financial settlements). Keep in mind, unless you and your spouse agree on what assets qualify as separate property, you may need to prove you acquired that property prior to marriage or received certain assets as gifts to keep them separate and yours.

When preparing to divorce or upon receiving divorce papers, it’s very important to create an inventory of all assets and debts in your marital estate. The court will scrutinize your and your spouse’s inventory lists to determine how to split assets when getting divorce terms finalized for your particular case.

Your inventory list for the division of property in divorce may include:

  • Homes, vacation properties, land;
  • Businesses, business interests, investment properties;
  • Financial accounts (banks, credit cards, mortgages, vehicle loans, other loans);
  • Stocks, bonds and other investment accounts;
  • Retirement accounts (401ks, IRAs, pensions, etc.);
  • Cars, trucks, boats, farm equipment, RVs, motorcycles, etc;
  • Livestock, horses, exotic animals, pets (visit our animal / pet custody page for details); and
  • Personal property (jewelry, artwork, furniture, electronics, musical instruments, family heirlooms, etc.).

FYI: In Texas, both spouses are required to share information and paperwork regarding property, assets and debts during the discovery process of divorce. Discovery occurs in the very early stages of divorce, so the sooner you start your inventory list, the better.

Can you divorce without splitting assets?

As a divorce attorney, I’m a big proponent of parties getting a divorce in its entirety. By that, I mean, it’s usually best not to stay married via the marital assets. However, in regard to the question, “Can you divorce without splitting assets?” the short answer is yes. Does it make sense for some couples? Sometimes.

For example, it may make sense for some divorced couples to not split assets in a family business. If you’re not touching the company and both parties in the articles of incorporation have a 50% ownership (or whatever share of ownership they agree on), not splitting the family business assets may be an option. Of course, this arrangement does come with risks, especially if details of the arrangement aren’t spelled out clearly.

The downside of getting divorced without splitting assets

While you can divorce without awarding one party an asset cart blanche or truly dividing it up, you run the risk of the other party filing an undivided marital asset claim later on. To avoid lawsuits for division of assets when divorced, you need to make sure the divorce decree adequately spells out what the division of the undivided assets looks like.

In the family business scenario, even if the parties simply want to confirm that both parties will maintain their roles as status quo in the company, those desires need to be put in writing. So, if the parties want to keep the business assets intact, while dividing the ownership, they need to define what the division of ownership will look like and clearly state which assets will be kept intact right in the divorce decree.

Staying married via asset (whether it’s a business, home or other piece of property) can also become problematic when one person has control over the asset. We often see cases where one spouse agrees to allow the other spouse to live in and take care of the marital home until their child graduates from high school. Their divorce decree stipulates the home will be sold and profit from the sale split equally once the last child enters college.

But what happens if the party residing in the home decides to stop working and doesn’t have the money to keep it up or pay the mortgage as promised? The equity in the house won’t increase as it should, and the other party could end up losing a good chunk of money—due to the other party’s actions (or non-actions). No good deed goes unpunished.

Have questions about division of property in divorce?

It’s critical to speak with a family law attorney with experience in complex property settlements. Proper legal representation is not about dividing assets alone. It’s also important to have the closing documents and ancillary documents to give you and effectuate your interest in those assets, so you can move on with your life post-divorce. An experienced divorce lawyer can help you maximize your divorce settlement and minimize the risks associated with undivided marital assets later on.

If you live in North Texas and have questions for a divorce attorney Fort Worth / Dallas about division of assets in divorce, we can help. To schedule a confidential case review with an attorney at the Sisemore Law Firm, please call our office at (817) 336-4444 or connect with us online.

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