The Financial burdens of a divorce
Divorce affects all areas of each spouse’s life, but one area that is universally affected for all couples is finances. Spouses enter a marriage with clearly identifiable assets and liabilities, but these lines quickly become blurry in many relationships, as the couple starts to accumulate assets and debts throughout the marriage. Therefore, when divorce enters the picture, all this combining must be unwound, including figuring out whether assets brought into the marriage are now subject to division in divorce.
This financial separation will have long- and short-term effects that divorcing spouses must factor into their lifestyle once everything is finalized. Stepping into this new phase of life without a firm grasp on a realistic budget, and how to generate sufficient sources of income, can lead a divorced individual into a financial crisis. Recent studies have found that divorce is one of the most stressful life events a person can experience, and the financial repercussions of this decision are the principal reason for much of this difficulty.
Making financial adjustments following divorce is inevitable, but planning for the shift in advance and making sure you end up in a good spot should help to minimize the negative impact, and allow for faster recovery. Some key aspects of the divorce process that influence this issue, will follow below.
What are the grounds for divorce?
Texas has a “no-fault” divorce law. You do not need to prove a spouse did something wrong to get a divorce. You just need to say that there is an “irretrievable breakdown of the marriage.” This means that there is no hope that you and your spouse will want to live together again as spouses.
Because this is a “no-fault” state, a spouse who wants a divorce will be granted one even if the other spouse does not want a divorce.
It also means that when the court is deciding on issues like custody or property division it generally does not consider whose fault it was that the marriage broke down (unless there are circumstances of Family Violence).
What are my rights before the divorce?
Before there is a final decree both spouses have the same rights. Your legal rights are the same whether you are living with your spouse or living apart.
If there are children in the marriage, each spouse has an equal right to decide:
- where the children live
- where the children go to school
- whether the children should see a doctor
If there is no threat of harm, you should think about the children’s best interests. It is important for children to maintain relationships with both parents.
If you are worried your spouse will harm or not return the children, you do not have to let them go. But you will need a court order to keep them in your home.
Each spouse has the right to use or get rid of any property the couple owns. For example, either person can withdraw money from a joint bank account or charge on a joint credit card. Either spouse can use a car that is in both of their names. There are some exceptions to this general rule. Neither spouse has the right to cash checks made out to the other spouse. Neither spouse can withdraw money from a bank account if it is in the name of the other spouse only. Neither spouse can sell a vehicle that is in the name of the other spouse. Neither can sell real estate that is in both names or the name of one spouse.
A spouse does not have the right to get rid of any property or money in anticipation of divorce. For example, if a spouse cashes out their retirement accounts because they don’t want the other spouse to get it, the court can still make the spouses share the money from that account.
In many cases, the family court judge can require a spouse to share responsibility for the debts of the other spouse, even if he or she did not know about or agree to the debts.
Who Pays Legal Fees in a Divorce?
In the majority of divorce cases, each party is responsible for its own legal fees. There are a few exceptions to this rule but when you file for divorce, or when your spouse files, you should expect to pay for your attorney.
It’s a common practice for family lawyers to include the petitioner’s attorney’s fees as part of the original pleadings. For this reason, It’s important that you contact a family attorney if you’ve been served with divorce papers, if you do not respond by the time allotted by the court (usually 21 days from the day you received the petition) a default judgment can be entered against, and you may be obligated to pay your ex-spouse’s attorneys fees.
A common misconception is that you can petition to have your spouse pay your attorney’s fees if they have cheated on you, causing the breakdown of the marriage. This is not the case and even if you are the victim of adultery, likely, you will still be responsible for paying your legal fees.
In these situations, the court aims to level the playing field regarding finances during the divorce. Gender does not factor into these decisions and no law requires one side to pay the other’s legal fees based on gender.
How is alimony or spousal support decided?
During divorce proceedings, the family law courts look at many factors to determine if you or your spouse will receive alimony. Many of the things they consider relate to the number of years married (minimum 10 years married to be eligible) and your ability to work and provide for yourself, such as your age, health, and education level.
A general rule for alimony is that the higher a supporting spouse’s earning capacity, the more likely they may pay spousal support. The higher a dependant spouse’s earning capacity, the less likely they may receive alimony.
Alimony is possible under Texas Family Law. However, the laws and requirements for obtaining alimony vary. For instance, a Texas court cannot award permanent alimony. There is one exception – disability. If there is a permanent disability, the court can award permanent alimony subject to periodical court review.
To find out more about spousal support laws in Texas and how they may apply to your circumstances, reach out to our award-winning family law attorneys today!
The Cost of Supporting Two Households
For some, the fear of divorce comes from the expense of supporting two households. Covering the expenses of one household is hard enough, but when you add in a second dwelling, car expenses, child support, and other costs, it becomes almost too much to bear. However, it’s important to note that it’s unlikely you’ll be expected to shoulder the costs of two households.
Permanent alimony is very rarely awarded nowadays, as lower-earning partners are usually expected to increase their education or work experience to become more self-reliant. Furthermore, some people find that living without their ex-partner decreases their expenses. If you’ve taken on more and more expenses to keep your spouse happy, for example, you might find that divorce is less expensive than you think.
How is property divided after divorce?
Property division can be complex, especially if there are assets one party owned before the marriage. Many parties agree to property division without litigation. If there is no agreement, the court will determine how to divide property in the most equitable way possible. This requires consideration of each party’s current assets and earning ability. Some of the most common assets that are subject to division during a divorce are:
- Primary and secondary homes
- Checking and Savings accounts
- Retirement accounts
- Investment accounts
Equally, some assets are not subject to division, for example; inheritance, personal injury settlements, or property obtained before the marriage. Regardless of your specific situation, having a good family attorney will help you navigate this process and protect your best interest.
How is it determined who gets to keep the house?
Generally, whoever wants the house gets to keep it. Usually, that is the parent who maintains custody of the children as a way to minimize disruption in their lives.
There are three options you can consider for the marital residence:
- One is to continue holding it jointly for the benefit of the children. This is frequently visited when the custodial parent cannot afford to keep the house on their own and requires assistance.
- The second is to sell the home and split the equity between the parties. This allows for a fresh start and clean break, but it removes children from the only home they may remember.
- Finally, there is also the option to cash out the other party and keep the home as a separate asset. You can do this by refinancing the home in your name alone.
Even if one of these sounds very appealing, there are tax and financial impacts you may not anticipate. Discuss your best option with a Family Law attorney.
What happens if my spouse and I own a business together?
Generally, the business is evaluated both legally and financially and one partner may have the option to cash out the other based on the results of that analysis. If you remain amicable, it is likely you can continue running it together. Otherwise, you may have to agree to sell the business and divide the profits or arrange to cash out the other party. There are other options such as giving the other partner non-controlling equity or some sort of equity option. Having a team of family law experts and financial advisors will be detrimental you protect your interests in the business.
How are debts divided?
Just as property is divided, so are debts. When couples cannot agree on debt assignment, the judge will determine division based on the type of debt, employment skills, earning capacity, other liabilities, needs, and prospects regarding capital assets and real estate for each party. Division of debt is determined during the divorce process unless it was incurred before marriage.
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