People in Texas who are embarking on a divorce may be having a hard time separating their emotions from the legal proceedings. Many times, individuals will spend more money fighting to keep a particular piece of property than they would have lost if they had simply agreed to a property settlement that they did not consider ideal. In a recent piece, one authority on divorce shared how she shows her clients the financial consequences of each possible course of action to help them see that the numbers may be more telling than their emotions.
For instance, some individuals are so eager to keep a community propertyhome that they will give up their right to other assets in exchange for the house. Rather than selling the home and splitting the proceeds equally, some people will agree to forego things like alimony to ensure that they get to remain living in the home. Since married individuals in Texas are entitled to one-half of all community property, both spouses in a divorce would be entitled to half of a family home’s value.
However, if someone gives up alimony in exchange for a home with a mortgage, the loss of monthly spousal support payments and the gain of monthly mortgage payments owed will result in a much lower total payout for the spouse keeping the home. Conversely, if a spouse agrees to give up a home in exchange for not needing to pay alimony, that spouse could lose out if the alimony payments would have been much less than what the he or she stood to gain from the sale of the home.
Texas residents who want to calculate the costs and benefits associated with each of their assets may want to work with both a CPA and a family law attorney in their divorce proceedings. Professionals in the field may also take into account the various tax consequences associated with different forms of property division.
Source: The Huffington Post, “The #1 Secret Weapon and Surprising Best Friend In Your Divorce“, Morghan Leia Richardson , June 27, 2014