Dividing Property in Divorce – the Top Seven Questions
If you are going through a Texas Divorce and you have been married for more than a minute, you have property that you need to consider.
Many people think they don't have Community Property – even if they don't know the definition of Community Property. But since the presumption is that all property acquired during a marriage is Community Property, there is a good chance that everyone facing divorce has some.
So, how do you deal with it? How do you deal with all of your property? What questions do you need to get answered to get to the point of dividing it?
If you have an attorney, what questions should they be seeking the answers to – with your help?
Here is a pretty simple framework for thinking about all of it and at least knowing the questions, so that you can then start working on the answers:
1. What property is there?
You need to consider everything that you and your spouse own. It simply does not matter "whose name is on it." As we will see below, the name on something is not the sole determining factor to anything.
Start a spreadsheet. List everything. Include descriptions, serial numbers, etc. And do all of that regardless of when you or your spouse obtained the property.
2. What is the property worth?
You're looking for the Fair Market Value (FMV) here. Unfortunately, FMV is easy to contemplate but harder to know for sure. If you look it up, the definition of FMV is "what a willing buyer will pay a willing seller." Okay, but there's more.
Fair Market Value is just one way to value things. Even if you don't know it, you need to know that it is not "sentimental value," "replacement cost," "intrinsic value," or any other way to value things.
3. Whose is it – meaning characterization questions?
All property owned by a married couple has Character. In the law, that means either Separate Property, Community Property, or Mixed Character. That is, some things can be both Separate and Community. Understanding the differences in all this is not easy – it's one of the main reasons people need sound legal advice in a divorce.
Additionally essential to understand is that any property owned by an "entity" that is owned by the parties or either of them does not have Character. For example, suppose Husband and Wife own an incorporated business and both drive automobiles owned by the corporation. In that case, the cars are neither Community nor Separate nor Mixed. But the shares or interest in the corporation has a Character. In a divorce, the automobiles won't get divided – the interest in the business will.
4. How is the property held?
This question does not arise in most divorces, but it does in some. If the married couple has any Trusts in their estate, it will be essential to consider them.
A Trust is not an entity, so no property can be "owned" by the Trust in the same way that property is "owned" by a business.
Property can be "held in" Trust. If it is, it still has the Character that it would otherwise have.
5. What do you want?
A big question to answer is what you are hoping or wanting to get out of the property division. You can ask for everything, or you can be what you consider to be "reasonable" and only seek to get 50% or 55% or 60% of everything.
Regardless, you need to actually identify what you want with specifics, not just generalities.
6. Why do you want it?
This one is an optional question. You are never required to state "why" you want something in a divorce unless asked under oath. But it helps to think through the answer to this question so that your answers will make sense if they are challenged by your spouse, their attorney, or the Court.
7. Why is that fair?
Sometimes, lawyers, mediators, or even Judges will tell divorcing people not to seek "fairness" because achieving it will be tough.
In reality, "fairness" is exactly what the Court is supposed to be trying to accomplish if you take your case all the way to trial.
The Court is mandated by law to grant a "just and right, equitable division." That is a fancy way of saying "fair." But, of course, if you leave it to a Judge, it will just be their opinion of what's fair – and that may or may not align with yours.
Still, you will want to think through why your proposed division – in specific, not just general – is fair, in your opinion. Being able to articulate that can help significantly in getting you to the finish line, whether you negotiate a settlement, mediate to a settlement, or go to trial.
There you have it. Those are the Top Seven questions to have answers for. There is more, but we'll get to those later.