- December 24
- Evans & Herlihy
- Family Law
When a marriage ends, many questions need to be answered, including “what is considered an asset in divorce?” A general rule for determining what are considered assets in a divorce settlement is any property of value purchased during the marriage. Some assets are safe from divorce; but otherwise, a majority of assets acquired during the marriage are considered community property by the state of Texas and owned equally by both spouses. The division of assets during a divorce is usually 50/50, but some circumstances can result in an unequal division. Here’s a look at what is considered an asset in a divorce:
What Are Considered Assets in a Divorce Settlement?
A married couple is considered to be joint owners of any property of value that they purchased during the marriage. That includes anything purchased by one spouse or when both buy something together. Assets can include:
- Home and property
- Money earned during the marriage
- Retirement accounts
- Investment portfolio
These are just a few of the items that are considered assets in a divorce settlement. Some assets may be more difficult to value than others, such as memorabilia and antique collections, but they need to have a valuation assigned to them all the same. Assets such as a business may not be easily liquidated to satisfy the terms of the divorce, but their value needs to be determined for the divorce settlement.
How Assets Become Marital Property
Two people who join together in marriage are doing more than forming an emotional bond. They are also creating a marital estate in which a majority of assets are owned equally by both spouses. Equal ownership also applies to assets bought in one spouse’s name. As an example, if one spouse buys a vehicle, but puts the title in their name only, that doesn’t prevent the other spouse from having equal ownership in the vehicle. The same goes for everything purchased while the marriage was still intact.
Marital assets include items such as silverware, cookware, draperies, furnishings, and even carpeting. However, the value of some of these items is so low that they may be pooled together to come to a valuation. That may not stop a spouse from wanting to claim the items as an asset during the divorce because they have an emotional attachment or are looking to be vindictive. When it comes to determining what are considered assets in a divorce settlement, it’s a good idea to consider almost everything brought into the household during the marriage as an asset.
The Division of Assets in a Divorce
Texas is a community property state, which means all assets acquired during a marriage are owned 50/50 by the spouses. The reasoning behind community property is to make it easier to determine who owns what for inheritance when one spouse passes and recognize that both spouses played a role in the acquisition and ownership of the assets.
One spouse may feel it’s unfair that they have to share 50% of their investments and retirement accounts with their divorcing spouse, especially if said spouse didn’t work during the marriage. The law feels that the unemployed spouse supported their working spouse in non-financial ways, and they deserve an equal share in the earnings of the working spouse. This reasoning extends to everything of value in the household, no matter who bought it during the marriage.
Part of negotiating a divorce settlement is getting a current value on all the assets and figuring out how to dispose of community property equitably. Both spouses are free to buy out the other’s share in an asset, such as a house, so they can keep the property after the divorce has finalized.
During the divorce proceedings, the judge has to divide the property in an equitable manner according to Texas law. The judge has the discretion to divide the assets in any amount they feel is fair to both spouses. The result is sometimes that the division of assets may not be 50/50. A judge can take into consideration circumstances that include:
- Health of each spouse
- Balance of earning strength between spouses
- Who bears more fault in the breaking up of the marriage
- Employability of both spouses in the future
- Education level of both spouses
- Custodial rights of children.
What Assets are Safe from Divorce?
Not all assets are considered community property, and Texas state law defines what assets are safe from divorce. Texas Family Code Section 3.00 defines separate property or assets to consist of:
- Property owned or claimed by the spouse before the marriage
- Property or monies acquired by the spouse through inheritance or gift
- Monies recovered from a personal injury lawsuit sustained during the marriage apart from recovery of lost earnings.
Assets Owned Before Marriage
Both spouses typically have property and assets they own before they get married to each other. The law views these items as being obtained outside of the marriage, and the other spouse can’t claim ownership during the divorce. The only way the separate property could be considered a marital asset in a divorce settlement is if the spouse gives the other spouse ownership of the item.
Inherited and Gifted Assets During the Marriage
Assets that are obtained through inheritance or gifting are considered separate property because the spouse is the intended owner of the asset. The nature of the asset doesn’t matter in this instance, as it’s owned wholly by the spouse that’s the recipient, and it is not considered community property.
Monetary Damages as the Result of a Personal Injury Lawsuit
Money received by one spouse from a personal injury lawsuit settlement is one of the assets that are safe from divorce. The reasoning comes down to the fact that the money is intended to recover damages that are owed to the spouse who was injured. That money is not considered income, but the money that is intended to cover lost income from injuries is considered marital property.
Contact Us at Evans & Herlihy for Help with Your Divorce
Going through a divorce can be a complicated and emotional process that doesn’t always proceed as planned. Before taking any action with regard to a divorce, contact a divorce attorney at Evans & Herlihy first. Call us at (512) 732-2727 to set up a confidential consultation to learn more about your rights, what you can expect from the divorce process, custody arrangements, and how assets are handled. We can help you with the negotiations as well as help you get the best possible outcome.