Category: Property Division

Texas Divorce and Your 401(k)

Houston Divorce Lawyer 401k

Dividing a 401(k) in a Texas Divorce

If you are going through a divorce in Houston,Texas you naturally have concerns about your assets, including your 401(k) and any other retirement accounts. Other than child custody and visitation arrangements, the division of marital assets is typically the most contested issue in any divorce. Because your 401(k) is likely – in some part, at least – a component of your marital property, it’s critical to your financial future that you pay careful attention. To help ensure that your finances are well protected, you need the professional legal services of an experienced Houston divorce lawyer.

Separating Property: Separate vs. Community Property in Texas

Texas is a community property state, which generally means that any financial assets or debts that you accumulated during your marriage are marital property that, in a divorce, must be divided between the two of you in a manner that the court deems “just and right.” As such, any part of either of your retirement accounts that was earned before your marriage is considered separate property (and remains the owner’s), and any part of either of your retirement accounts that was earned during your marriage is considered community property and is subject to division upon your divorce.

Separate Property Must be Protected in Divorce

If part of your 401(k) or other retirement account was earned before you married, you will need to document this for the court. The court’s typical presumption is that all property is marital property, so the burden is on you to clarify via documentation that shows your 401(k) balances both before and after marriage. The goal is to protect your separate property, and the process of obtaining the necessary records can be lengthy and complicated – especially if the account goes back many years. Beginning the process of gathering these records as soon as you recognize that a divorce is in your future will help you better protect your personal assets.

Temporary Restraining Order for Retirement Accounts

During a divorce, the court will typically issue a temporary restraining order (TRO) or standard injunction to preserve the marital assets throughout the process. This means that you’ll both be prohibited from cashing out assets like your 401(k)s, IRAs, and other retirement accounts. Without the court’s express authorization, it is inadvisable to take a loan against or cash out your 401(k) during the pendency of your divorce. If you are experiencing financial hardship or have an urgent need, the court may consider your plight and allow you to move forward with a loan or withdrawal. Generally, however, Texas courts prefer that divorcing couples keep their marital property intact until the final division is determined.

Also read, “Property and Debt Division: What you Should Know“.

The Division of Marital Property in Texas

If you and your divorcing spouse aren’t able to come to an agreement related to the division of your marital assets – either on your own, through your attorneys, or via mediation – the court will make the final determination for you. While the court’s goal is to divide your marital property in a manner that is just and right, your idea of what is just and right may be very different from the court’s idea. In other words, when the division of your marital property is left to the court, it’s difficult to predict precisely what the outcome will be. Work closely with your attorney to help ensure that your personal assets and your share of your marital assets are well protected.

See our related article, “Property and Debt Division in Texas: What you Should Know“.

Qualified Domestic Relations Order (QDRO)

Sometimes, the court keeps retirement accounts intact in the division of marital assets – if you each have similarly valued 401(k)s, for example. In other situations, however, the court divides such accounts using a legal tool that’s called a Qualified Domestic Relations Order (QDRO). Such an order allows the transfer of funds from one spouse’s retirement account to the other spouse’s retirement account – in the amount deemed necessary to make the division of marital property just and right.

When the funds from one spouse’s retirement account are simply rolled over to the other spouse’s retirement account, the tax implications are usually minimal. If, on the other hand, you are interested in cashing out the value the court awards you, the financial and tax implications are much more complicated, and you’ll want to carefully consider your options with your experienced divorce lawyer before making any final decisions.

Your Divorce Case is Unique

It’s important to recognize that your divorce is unique to its own set of unique circumstances. What may be the best path forward for one divorcing couple is not necessarily going to work for you. The division of marital assets and debts is one of the most important elements of any divorce, and if you have retirement accounts that are a combination of separate and community properties, it makes things that much more complicated. Your dedicated Houston divorce lawyer will work closely with you throughout the divorce process to help ensure that you move into your post-divorce life with the best possible financial resolution.

The More Complicated Your Finances, the More You Need an Experienced Houston Divorce Lawyer

Keeping separate property separate and dividing marital property in a divorce can get complicated very quickly. How your marital property is divided in your divorce is likely to correlate closely with you and your children’s financial future, so it’s important that you do everything you can to protect your rights. The dedicated legal team at Rudisel Law Firm, P.C., in Houston, is here to help.

Read our related Houston Divorce articles, “High Asset Divorce: What you Need to Know” and “Divorce and Property Division in Texas: What Happens to the Family Business“.

Our experienced divorce lawyers have the skill, knowledge, and compassion to help protect your separate property and to help ensure that your rights are well represented in the division of your marital property. We’re here to aggressively advocate for your best interests throughout the divorce process. To schedule a free consultation, please contact or call us at 713-781-7775 today.

Dividing a Business in Texas Divorce

Divorce and Property Division in Texas: What Happens to the Family Business?

This blog posts discusses divorce and property division where a business is involved in a Texas Divorce. Divorce can be complicated. After the issue of child custody arrangements, the division of marital property usually tops the list of complications. A family business can make an already complicated process that much more difficult. A family business is often a symbol of all the hard work and commitment you have put into both your family and your career, and walking away can be especially painful. If you are facing a divorce and you own a family business, you need an experienced Houston divorce attorney.

What is Martial Property in Texas?

In Texas, the property you acquire during your marriage is generally considered marital property. Marital property is divided between you and your divorcing spouse in a way that the court deems “just and right.” (See Texas Family Code 7.001). Suffice to say, however, that the court’s determination of what is just and right may be odds with your ideas of how to divide your property. Coming to terms with the outcome can be especially difficult. Unless you and your spouse are able to hammer out an agreement related to your business, the court will make the determination for you.

Read this blog post to learn more about “Property and Debt Division in Texas: What you should Know.

How Do I Value the Family Business in a Texas Divorce?

It is difficult to come to an equitable division of a family business in a divorce if you do not have an accurate valuation of that business. The thing about business valuations, however, is that they can vary widely. While reputable business valuators should ultimately come to similar values, there is plenty of room for your spouse to bolster the business’s value or to minimize the business’s value – depending upon his or her motivations. In other words, obtaining one business valuation that accurately reflects your business’s value and that both of you can agree upon can be a challenge. If you own a business chances are you have substantial assets.  For a more detailed discussion, check out our article “High Asset Divorce in Texas, What you Need to Know“.

Businesses are Sometimes More than Monetary Value

When your divorce involves a business, it is essential to recognize that the business likely has more than just monetary value. If you are involved in running the business, it is probably a labor of love that can be difficult to monetize. Further, the business provides you with a career and a means of supporting your family. This is something that a check written for an amount that equals roughly half the business’s value simply cannot do. If you are facing a divorce that involves a family business, there is a lot to consider.

Options for Dividing a Family Business in a Texas Divorce

If your business is a going concern that provides for your family, you have options when it comes to your divorce:

• You can continue running the business as business partners who are not married. If you ran the business together as a married couple, you still have the requisite experience, skill, and commitment to doing so that you had before you were divorced. However, if your divorce is plagued by acrimony – which nearly any divorce can devolve into – this path forward is unlikely to be successful.

• You can sell the business and split the proceeds. While this is often the cleanest approach, it has its own inherent difficulties. The proceeds from such a sale can vary widely due to a fluctuating market and to your ability to find the right buyer at the right time. Ultimately, selling for the sole purpose of divorce can be a financial setback.

• One of you can buy the other’s interest in the business. This option makes a lot of sense because it provides the business with continuity of ownership, it guarantees that the business will continue to be competently managed, and it bypasses the need to worry about the market and to find the right buyer right now.

The difficulty with this option is that it can be very hard to walk away from a business that you have worked so hard to manage and grow. Additionally, if your business continues on the successful path that you have helped set it on, your ex-spouse is likely to reap greater rewards (than you may have been compensated for) by selling in a strong market to the right buyer, which could take years but could also happen soon after the divorce.

When it comes to divorce and your family business, there are so many angles to consider that it is nearly impossible to formulate a “right” answer. Instead, a dedicated divorce attorney will help you see the big picture, will help you determine what options are likely to work best for you and your children, and will help you move forward with purpose – knowing that you have made informed decisions in your pursuit of life after divorce.

The Family Business and Mediation

If your divorce does proceed to court, the judge will determine how the division of your family business will be handled, and this is generally not in your best interests. If you and your divorcing spouse – with the guidance of your respective attorneys – cannot come to an agreement that is somewhat mutually satisfactory, formal mediation can help. The neutral mediator in the process will help both of you better understand exactly what your options are and what will likely happen if you take the matter to court. Hammering out a decision together that helps preserve the integrity of the business you built together can be an important step forward in the divorce process in Texas.

Divorce being what it is, however, mediation does not always accomplish its intended results. Your experienced Houston divorce attorney will work closely with you throughout the process and will help you keep your eyes trained for what is best for you and your children – whether that means continuing with the mediation process or proceeding to court.

Read this blog post for more information on mediation: “Houston Divorce Mediation and why it is better than Trial

If You Are Facing a Divorce that Involves a Family Business, You Need an Experienced Houston Divorce Attorney

Few things complicate a divorce more than a family business, but experienced legal counsel will help you find a solution that works for you. The dedicated legal professionals at Rudisel Law Firm, P.C., have the experience and fortitude to fight for your case’s best possible resolution. We care about your case, and we are here to help, so please fill out an online evaluation using the “Contact Us” link in the menu or call us at 713-781-7775 today.

Please read the articles below for more valuable information on the process of divorce in Texas.

Connect with me on Google+ at +Shawn Rudisel

Selling a home during divorce

Selling Your Home and Divorce

Maximizing Profits on Your Home Sale during Divorce

Divorce in Texas is complicated, and taxes are complicated. The combination of the two can be overwhelming. One of the most critical components of any divorce is the division of assets, and because your family home is likely your greatest asset, the sale of your home in the divorce process can play a significant role. As such, it’s important to have a working understanding of the tax basics as you move forward. Your experienced Houston divorce attorney will guide you through the process to help ensure that you minimize any capital gains taxes on the sale of your home.

ReadFrequently Asked Questions about Divorce in Texasfor more information on the divorce process.

Capital Gains Tax and the Sale of Your Home

The Internal Revenue Service (IRS) may allow you a tax exclusion of $250,000 on the capital gains you receive with the sale of your primary home. If you file jointly with your spouse (even a soon-to-be ex-spouse), you can potentially exclude up to $500,000 in capital gains received in the sale of that home. When you’re divorcing, of course, this can get complicated, and there are plenty of details to take into consideration.

The Home Exclusion Rule

In general, tax rules allow homeowners to exclude any profits made in the sale of their primary home from being taxed as income as long as two major conditions are met:

1. You and your spouse lived in the home as your primary residence for at least two of the last five years.
2. The profits you received from the sale of your home is not more than $500,000.

If your divorce is finalized before you sell your home and it remains your primary residence, the exclusion may still apply, but it will be divided in two, and your cap will be set at $250,000 in profits.

Further Details

As with almost everything else that involves the IRS, there are more details to consider:

• To capitalize on the tax exclusion, you cannot have sold another home and taken the same tax exclusion in the previous 24 months.
• If you remarry before you sell the marital home from your previous marriage, you may forfeit your eligibility for the tax exclusion.

Again, it’s imperative that you work closely with an experienced family law attorney before making any important decisions regarding the sale of your home during a divorce.

Divorce: Throwing a Wrench into the Situation

Divorce has a way of complicating things, and this is never more true than when it comes to your finances. If you’re divorcing, the home-exclusion tax rule continues to apply to either you or your spouse (or possibly to both of you, depending upon who is living in the home as a primary residence), but whether you sell the house during or after the divorce can have an effect. Let’s consider two scenarios by way of example:

1. If you and your divorcing spouse both continue to live in your marital home (as each of your primary residences) until the house sells and you jointly file your taxes that year, you should be able to exclude a total of $500,000 from any profits you make on that sale. If, on the other hand, you file separately, you should each be able to exclude $250,000.

2. Until your divorce is finalized, you and your divorcing spouse can continue to file joint returns, and as long as you both meet the residency requirement, you can both enjoy the tax exclusion. However, if one of you moves out of the marital home (as so often happens during a divorce) the two-year residency requirement (two years out of the previous five) will come into play.

Both of these considerations are important to keep in mind as you move forward with your divorce. If you do get the tax exclusion and your divorcing spouse misses out on the tax break, you may be asked to make up for the financial discrepancy in your divorce settlement.

The Optimal Approach

Optimally, if one of you will not be keeping the marital home post-divorce, it’s in the best interest of both of you to sell your house sooner – rather than later – in the divorce process. If your divorce becomes more financially complicated and/or contentious as it proceeds, the time component could leave you unable to collect on the full $500,000 (combined) tax exclusion. Consult with a skilled Houston divorce attorney to help ensure that you maximize valuable tax exclusions.

Your Divorce: Your Home

Every divorce is unique and uniquely complicated. After issues related to child custody, however, the division of your assets will likely be the most important issue you and your divorcing spouse will face. While your home is very likely the most significant asset you possess, it is also your home, and you may not be inclined to leave it – especially if you still have children at home. There’s a lot to consider. Some couples find a means of keeping the custodial parent in the family home – at least until the children have graduated from high school. Your dedicated family law attorney will help you explore the options that are available to you and will help you find the best resolution for you and your children. Divorce is stressful, but an experienced divorce attorney will prioritize your best interests and will aggressively advocate for a positive settlement resolution.

If You Are Facing Divorce, Consult with an Experienced Houston Divorce Lawyer Today

Divorce, in and of itself, is difficult. When you compound the issue with the sale of your home, things become even more complicated – financially, logistically, and emotionally. In fact, most of us have much more invested in our family homes than simply a dollar amount. If you are facing a divorce and are likely going to have to sell your home, you need the professional services of a Houston divorce attorney. The dedicated legal professionals at the Rudisel Law Firm, P.C., in Houston, focus exclusively on divorce and family law, and we’ll help you better understand your options and help you find a resolution that works for you. For a free initial consultation, please fill out an online evaluation using the “Contact Us” link in the menu or call us at 713-781-7775 today.

For more information on Divorce in Texas, check out the following articles:

divorce and property division

Property and Debt Division in Texas -What you should know.

The Division of Debt Is an Important Component of Your Houston Divorceexperienced houston divorce lawyer

If you are facing divorce in Texas, you are undoubtedly stressed and there is a good chance that you are unsure about how best to proceed. Cut yourself some slack, and remember that – no matter how you’re holding up – you’re not alone. Every divorce is difficult, and every divorce is as unique as the two individuals involved; you need an experienced Houston divorce attorney to help protect your interests. Other than child custody and visitation issues, the division of financial assets is typically the most emotionally fraught issue in any divorce in Texas. The distribution of marital debt is an important component of this division of finances.

Texas Takes a Unique Approach to the Division of Debt

The great State of Texas likes to go its own way a little bit, and this stands true when it comes to the division of debt in a divorce. While some states take a direct approach that simply divides the debt amassed during a marriage between the spouses, Texas courts look at each marriage’s unique circumstances individually. This means that the court considers the debts themselves – and their sources. It’s important to remember that any debt you are allotted in your divorce settlement can play an important role in the financial outcome of your Houston divorce.

Community Property

Texas, along with eight other states, is a community property jurisdiction. In brief, this means that most assets that a couple acquires during marriage are owned equally by each spouse. Notable exceptions to this rule include assets that were owned by one spouse prior to the marriage, gifts to one spouse, and assets that are inherited by one spouse. Marital debt is closely intertwined with marital assets, and as such, can greatly affect the outcome of a divorce. Property division in a Texas Divorce can be complex.

Debt and Your Divorce

Debt is most likely to play an important role in your divorce if you own a business or multiple properties together or if your finances are generally more complicated. If one or both of you entered the marriage with significant debt, it may ultimately be considered community property. Again, Texas courts are looking for what they consider an equitable distribution of debt – and not for a 50-50 division of that debt. A skilled family law attorney with experience in equitable debt division will fight to help ensure that you get the financial settlement you are entitled to.

The Division of Debts

In the course of your Texas divorce, the court will consider your marital debt as a whole and will determine which, if any, specific debts are solely attributable to only one of you. If such a determination is made, that specific debt will be assigned solely to that spouse in the divorce settlement. In a Texas divorce, marital debt isn’t simply taken at face value but is, instead, carefully considered in relation to a few key questions that help the court make its determinations related to whom the debt belongs to:

• Which spouse initially incurred the debt in question?
• Why was the debt originally incurred?
• When was the debt originally incurred?

The answers to these critical questions will help guide the court’s decisions.

Shared Debt in Divorce

Even in Texas, some debts are routinely considered shared debts. Typically, these include debts that were taken on to run your shared household. When the money you owe was used to feed, shelter, clothe, and generally support your family, the debt is considered a shared debt for divorce purposes. But as with so many things in a Texas divorce, there are gray areas. For example, even if you take out a credit card in your name alone but use the line of credit to support your household, the debt will likely be shared between both you and your spouse in your divorce settlement. If, on the other hand, you take out a credit card in your own name for the sole purpose of purchasing luxury items for yourself, it’s likely a different story. Few things in life – or divorce for that matter – are this black and white, and the court will use its considerable discretion in determination of debt responsibility.

The Discretion of the Court

Texas judges have considerable discretion when it comes to the division of debt in a Houston divorce. In fact, the allotment of marital debt in the divorce proceedings is often more complicated than the division of assets. Ultimately, Texas courts aim to divide marital debt in a way they deem equitable and fair. This determination, as discussed, is far from straightforward, however, and you need an experienced Houston family law attorney to help protect your rights.

The Presumption of Shared Liability

In general, the court will take the approach of considering your marital debt as shared debt – until it’s proven otherwise. This means, you may have to build a defense that illustrates why you aren’t responsible for your soon-to-be-ex’s debt. In other words, it’s complicated. And the more complicated your finances, the more complicated it gets. Paying careful attention to the debt in your divorce can help ensure that you get a truly equitable divorce settlement.

Further Complications

Even if the court assigns specific hefty debts to your ex in the divorce, this does not mean that the debtor involved won’t seek you out if the debt goes unpaid (and if your name is connected to it). You don’t want your credit rating to hinge upon debt that you aren’t responsible for and that you have no way of controlling. An experienced Houston divorce attorney can help.

Discuss the Division of Your Marital Debt with an Experienced Houston Divorce lawyer

Divorce is always difficult, and the division of your marital debt may be the furthest thing from your mind. Such debt, however, can play a pivotal role in your financial situation once your divorce is finalized. For this reason, you need experienced legal guidance. The dedicated legal team at the Rudisel Law Firm, P.C., in Houston, focuses exclusively on divorce and family law, and we’re here to help you. For a free initial consultation, please contact or call us at 713-781-7775 today.

Houston Divorce property division: To Sell or Not to Sell?

Property Division in a Texas Divorce

One of the most complex and difficult aspects of a Houston divorce is property division.  It is hard enough to figure out who gets the lamp, the couch, the car and the dog but it is even more challenging to determine what should happen to the house, or in some cases, homes.  The difficulty doesn’t solely lie in the fact that the house is often times the largest asset in the marital estate or that one party or both parties are emotionally tied to the property.  The biggest hurdle to disposing of one’s castle is the inability to sell real property (at least without taking a loss) in today’s uncertain housing market.

Property Division in Texas: What you should Know

Buying a Spouse Out of the Marital Home

I commonly hear clients tell me that their spouse can have the house so long as he or she “buys them out”.  Here is the problem.  How much does a person need to give you to buy you out of a house that is worth less than what you owe on it?  The answer…zero, zilch, nothing, nada.   When a house is worth less than what you owe on it there is no equity.  Equity is what the house is worth (what you could sell it for) less what you own on it (the remainder of the note).  When there is no equity there is no money to split, therefore, no buying out.  So if the house isn’t worth anything in today’s market what can you do?  A few things come to mind.

Selling a Home in a Texas Divorce

You can put the house on the market and hopefully get the most you can out of it.  If sold at a loss, the parties are responsible for paying off the remainder of the note which is generally considered community debt.  Now both parties have undoubtedly incurred the expense of moving out of the house and as a bonus, get to pay off a house they no longer own or live in.

Also read Selling Your Home and Divorce.

Transferring Interest in Martial Property after Divorce in Texas

Another option is allowing one spouse to keep the house as part of a settlement.  Yes, the house may be worth something later but many people who find themselves in a divorce just want out and aren’t interested in housing market speculation.  Allowing one party to keep the house has its own obstacles.  You may ask: How do I get my name off of the house?  Will it affect my credit if the spouse doesn’t pay the note on time?  Can I buy another house with my name still on the first house?

Taking your name off of the house is done through refinancing or assumption.  The spouse keeping possession of the marital residence can refinance the house into his or her own name or they can ask the lender to allow them to assume financial responsibility for the note.  Both options are possible with the first being more likely, assuming the spouse has good credit and a job.  Assuming a note is basically removing someone’s name from a note without a formal refinance.  I find that most banks are unwilling to let a liable party go without a new contract and guarantees from the spouse keeping the house.

If a party cannot refinance or assume liability for the house they may consider executing a deed of trust to secure assumption and a deed without warranties.  The first deed is executed by the person who keeps the house and is essentially allows the ousted party to reclaim the property in the event the bank initiates foreclosure proceeding on the other party.  Your name will still be tied to the financial obligation on the house but you have recourse if your credit becomes threatened due to non-payment of the note by your ex-spouse.  The ousted party will execute a deed without warranties to the party keeping the house thus giving up their interest in the real property.  In short, the ousted party will not be on the deed to the property even though they remain on the note.

If the deeds are executed and recorded properly, the only issue left is whether or not the ousted party can buy another house while still technically owing on the first.  That will be up to a finance company.  Your debt to income ratio may be in trouble because with a new house note added to what you already owe the bank may see it as a risky loan and thus deny your loan application.  Some companies may look at the divorce decree, the deeds, and certainly your income (some people can easily afford multiple home) to determine whether a loan is available to you.

In short, there is no easy way to divide a home in today’s market when it has no equity but you still have options.

Contact Shawn Rudisel today for a free consultation to discuss your Houston divorce property division issue.

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