Financial Implications of Divorce
Divorce is stressful emotionally, physically, and unfortunately, financially. During the divorce process you and your spouse will have to make decisions that will have a significant impact on both your current and future financial situations. These decisions involve not just who gets the property, but a lot of other financial information as well.
You will no longer be sharing property, including income, with your spouse, so you need to be sure that you are going to be financially stable and secure once the divorce is final. This means that you will need to take into consideration property, income, debt, and many other financial aspects when determining the best course of action to take during your divorce.
Community Property or Separate Property?
Texas is a community property state. This means that all marital property must be divided equally between spouses. While this may seem rather simple, sometimes it is very complex. The longer a couple is married, the more they commingle what was once their separate assets. This means that property that might have once been considered to be separate property, or the property of only one of the spouses, may now be considered part of the community property that will be divided.
If you or your spouse have a retirement account, it will likely be divided in half during your divorce settlement. Most of the assets in the account were likely accrued during the term of the marriage making them community property and subject to being divided. Unfortunately, employers often require a special order called a QDRO to divide the accounts. These orders are extremely complicated and almost always require the help of an attorney.
People sometimes get so caught up in the property that they often forget about the tax implications of their divorce. This oversight can cost you thousands of dollars. You will need to determine who will be able to claim Head of Household status, who will claim the tax exemptions for the dependents, whether you can claim spousal support payments as a deduction, and whether child support is deductible.
The longer a couple has been married, the more likely they are to have created complicated debt arrangements. Some debts may be in both parties’ names and some may be in only one spouse’s name. While a court may order debts to be paid by one spouse or the other, the dilemma is caused when the creditor is only able to collect the debt from the person who initially created the debt. This means that the court must take special precautions when dividing property to try to match the property to the debt and give it to the person that incurred the debt.
Unfortunately, divorce can bring out the worst in some people and you need to educate yourself so that you aren’t cheated when it comes to settling your divorce. Having an experienced Texas divorce attorney on your side can help you ensure that you are receiving the best possible financial outcome for your divorce. The Houston divorce attorneys at Lindamood & Robinson, P.C. have years of experience to make sure the difficult process of divorce goes as smoothly as possible. Contact us today for a consultation.