Dividing property can become one of the most demanding parts of a divorce. In Texas, the principle of equitable distribution serves as a guide for dividing marital assets (community property) in a manner that is fair. To be clear, this is not necessarily equal, but instead, what the court deems as fair.
Definition of equitable distribution
Equitable distribution stands in contrast to a strict 50-50 split of assets, which is how many Texas think their community property (marital assets) will be divided. The court aims to find a balance that considers each spouse’s situation and needs. This approach allows judges to factor in elements such as child-rearing duties, household management and a spouse’s earning capacity.
Key considerations
Several elements are key in the property division process. Each spouses’ contributions to the marriage are factored, which includes both their financial and non-financial efforts. Examples include taking care of children or managing domestic tasks, in addition to how much each spouse earned during the marriage. The court will also examine the economic status of each spouse at the time of the divorce, the duration of the marriage and the future needs or health of the individuals involved.
Distinguishing separate and marital property
Only marital property, which includes items and income acquired during the marriage, falls under equitable distribution. Assets owned before the marriage, gifts and inheritances that were received during the marriage usually count as separate property and remain with the original owner. Sorting these categories accurately can have a substantial impact on how the final division unfolds.
High net worth complexities
When a couple holds significant wealth, there are complexities. These include professional valuations of business interests, real estate evaluations and investments that can add layers of additional work and the need for experts. In these high net worth scenarios, courts must often weigh expert opinions to determine how to divide assets fairly.
Many in Texas believe that because we are a no-fault divorce state and a state that uses the term community property for marital assets that the property division process is simply a 50-50 split. However, that is simply not the case. Understanding this prior to initiating the divorce process can save spouses a lot of heartache during the process, and help one prepare for it.