Dividing Marital Property
All assets and liabilities identified and characterized as the spouses’ community property (marital property) must be divided between the spouses in a “just and right” manner, taking into account the rights of each spouse and any children of the marriage. O’Connor’s Texas Family Law Handbook, 668 (2010). A just and right division of the community estate can be a 50-50 split or a disproportionate split, depending on whether the circumstances justify awarding one spouse more than half of the community estate. Id. In making its just and right division of the community estate, the court can consider a number of nonexclusive factors. Id. at 669. Generally, these factors can be divided into four categories: (1) the spouses’ abilities to support themselves, (2) a spouse’s wrongdoing, (3) the financial costs incurred by a spouse while the suit is pending or after final judgment, and (4) other considerations. Id.
(1) Factors based on need for support. In dividing the spouses’ community estate, the court can consider each spouse’s need for future support. Id.
(a) Children of marriage. The court can consider which spouse has custody of the couple’s children. Id. This factor is especially important when a community asset is particularly suited to a child’s needs, such as a house or a car. Id.
(b) Education and employability. The court can consider the disparity of earning power between the spouses, as well as the spouses’ respective business opportunities, education, capacities, abilities, and future employability. Id.
(c) Size of separate estates. The court can consider the value of the spouses’ separate property and their relative financial conditions. Id.
(d) Health. The court can consider the spouses’ health and relative physical conditions. Id.
(e) Age. The court can consider the spouses’ ages, usually as related to earning capacity and health. Id.
(f) Liquidity and income production. The court can consider the liquidity and income-producing potential of the property allocated to each spouse. Id.
(2) Factors based on wrongdoing. In dividing the spouses’ community estate, the court can consider a spouse’s wrongdoing or unjust conduct. Id. at 670.
(a) Fault. The court can consider fault in the breakup of the marriage. Id. For fault to be considered a factor in the court’s just and right division of the community estate, courts are split on whether fault must be pleaded as a grounds for divorce. Id.
(b) Fraud on the community. The court can consider one spouse’s actual or constructive fraud in transactions involving community property. Id.
(c) Torts. The court can consider one spouse’s tortious conduct against the other. Id.
(3) Factors based on financial costs. In dividing the spouses’ community estate, the court can consider the financial costs incurred by a spouse while the suit is pending and after final judgment. Id.
(a) Temporary spousal support paId. The court can consider one spouse’s payment of temporary spousal support while the case was pending, and offset this amount in the property division. Id.
(b) Expenses paid to maintain community property. The court can consider the expenses one spouse paid to maintain community property while the case was pending. Id.
(c) Attorney fees and costs incurred. The court can consider the attorney fees and costs each spouse incurred in litigating the suit. Id.
(d) Tax consequences of division. The court can consider the tax consequences that may result from the division of the community estate. Id. at 671. Family Code § 7.008 gives courts the discretion to consider whether a specific asset will be subject to taxation sometime after the community estate is divided, and if so, when the tax will be required to be paId. Some of the more common tax liabilities that property could be subject to in the future include: (1) capital gains or losses if an asset is sold or exchanged later, (2) income-generating property that generates income subject to tax liability, and (3) tax penalties that may be incurred in the future. Id.
(4) Other considerations. In dividing the spouses’ community estate, the court can consider other factors, including the following:
(a) Length of the marriage. The court can consider the length of the parties’ marriage. Id. at 672.
(b) Nature of property. The court can consider the nature of the couple’s property. Id. The nature of the property can affect the property division in the following ways:
(1) One spouse may be better able to manage a particular piece of property to generate income or avoid foreclosure, or the property may be associated with one spouse’s business. Id.
(2) Certain assets may require anyone holding an interest in those assets to be licensed; these assets cannot be awarded to a nonlicensed spouse. Id.
(3) One spouse may be better able to make use of the particular item of property. Id.
(4) The source of the property may be more closely associated with one spouse. Id.
(5) The property may have been acquired primarily by one spouse’s efforts. Id.
(6) Certain property may be more valuable than other property because it is exempt from being seized and sold to satisfy judgment creditors. Id.
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