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How people can address investment properties in a Texas divorce

On Behalf of | May 31, 2024 | Divorce

A Texas divorce entails formally ending the legal relationship between two spouses. Part of that process involves separating the finances of the spouses. Married couples typically live together and share most, if not all of their major assets and income.

Under community property rules in Texas, the money and any property that they accumulate belongs to both spouses. Some assets can be harder for people to address in a divorce than others. Investment real property holdings can be valuable in their own right while also representing future income.

People either rent the property out for monthly payments or intend to resell it for more than they purchased it for in the future. How can spouses preparing for complex divorces with investment real estate holdings address real property in their divorces?

By setting realistic goals

One of the most important elements of preparing for divorce in Texas is learning a bit about the rules that apply in family court. Those who can comprehend the basics of Texas’s community property statute can develop more realistic expectations for their divorce proceedings.

Contrary to what many people often claim, the community property law in Texas does not require an even split of assets but rather a fair division of the marital estate. There is no requirement to split investment properties evenly between the spouses. Instead, people need to know the overall value of the marital estate including any marital debts.

Spouses have to find a way of dividing all of their community property in a manner that they both agree is fair. If they cannot agree, then they may need a judge to weigh in on the issue for them. They need to consider what the property is worth and what either spouse might do with the property. If one spouse has historically taken responsibility for managing the investment properties, they might seek to retain them in the divorce.

Doing so usually requires agreeing to give up other assets or take on more marital debt. Someone facing a complicated property division process involving a high-value marital estate may need help establishing a fair market value for each of their real property holdings.

They may also need assistance looking at the totality of the marital estate and finding a reasonable way to address complex assets, including investment real estate. Those who rely on real property holdings as a source of income may have to review financial documents carefully to ensure that the same income doesn’t count against them for property division and financial support matters.

There are many challenges inherent in complex Texas divorces with large marital estates. Those who understand the rules that apply and what assets may be a source of contention can potentially limit how complicated and acrimonious an upcoming Texas divorce becomes.