If you have been seriously injured in an accident, you may rely on compensation from a personal injury claim to provide relief for your ongoing medical expenses, lost wages, and pain and suffering. Going through a divorce while you are still suffering from the effects of an injury can be especially difficult, and you may be concerned that you are at risk of losing a large portion of this compensation to your spouse in the division of assets. If you find yourself in this situation, it is important to work with an attorney who can help you manage the legal complications of your divorce case and protect your financial resources.

Is Injury Compensation Considered Community Property?

In a Texas divorce, the couple’s community property must be divided, while each spouse is able to keep their own separate property. Community property usually includes any assets acquired by a spouse during the marriage, while separate property includes assets acquired before the marriage. As such, if you suffered an injury and resolved your claim before getting married, you are likely entitled to keep the full amount of the compensation you have been granted.

If you were injured during your marriage, however, it can be more complicated to determine whether your compensation belongs to you alone or to the marital estate. In this case, it is important to understand the types of damages that your settlement or verdict included. According to the Texas family code, injury compensation for your medical bills and pain and suffering is likely your separate property, but compensation for your loss of earning capacity is likely community property. An attorney can help you review the terms of your settlement or verdict to determine the specific amounts awarded for each type of damages.

When a couple’s assets are divided in a Texas divorce, there is an important distinction between community property and separate property. Community property refers to most assets acquired by one or both spouses during their marriage, and both spouses have a claim to it in the divorce. Separate property refers to assets that belong to just one spouse, usually those that were acquired before the marriage.

Though your spouse does not have a claim to a portion of your separate property during the divorce process, this property can still impact the terms of your divorce resolution in other ways. For example, you may need to prepare for your spouse to claim reimbursement for any contributions they made.

When Can a Spouse Claim Reimbursement?

According to Texas law, there are several situations in which a spouse may have a claim for reimbursement for contributions made to the other spouse’s separate property. Some of the most common include:

Texas law treats most assets acquired during a marriage as community property, meaning that both spouses have an ownership interest. If you are getting divorced, you may be concerned that this means that you will have to divide all of your assets in half, possibly even requiring you to sell some of your property to make this possible. You should know that although there are times when selling your property is necessary or desirable, there are often alternatives that may better suit your needs.

How Is Property Divided in a Texas Divorce?

Understanding Texas laws regarding the division of marital assets can help you determine whether you may need to sell some of your property. Texas courts operate under a general rule requiring the “just and right” division of community property. If the decision is left up to the court in a contested divorce, you may be ordered to sell property to achieve a just distribution. However, you can also negotiate a fair agreement with your spouse that minimizes the amount of property that must be sold.

Selling Your Home

The decision of whether or not to sell your home largely depends on whether you or your spouse wants to continue living there, as well as whether either of you can afford it on your own. Selling may be necessary if you are unable to work out an agreement with your spouse, if the mortgage and upkeep would be too much of a burden, or simply if neither of you has a compelling reason to stay in the house. If you do need to sell, your divorce resolution can establish the terms for dividing the proceeds after any remaining mortgage balance has been paid.

Getting a divorce in Texas requires dividing marital property between spouses in a way that the court determines is “just and right.” Unfortunately, spouses often have very different ideas about what is just and right, and this can lead to difficult, protracted settlement negotiations or the need for complex litigation. Properties with higher values, including homes and other real estate properties, have a greater impact on the division of assets, and you should be sure to understand all of the implications before deciding the outcome that you want to pursue.

Real Estate Property Details in a Texas Divorce

In either a negotiated or litigated property division agreement, all of the following details can have a significant impact on the outcome:

• Property value - In order to fairly divide real estate property, you will need to understand what it is worth. When it comes to both residential and commercial properties, the value is heavily influenced by the current real estate market, in addition to factors like the condition and features of the property. Obtaining valuations through an appraisal and comparative market analysis can help you prepare to sell the property if necessary, or prepare to compensate your spouse with assets of roughly equal value if you want to keep the property.
• Debt and other financial obligations - Debt belonging to the marital estate must also be divided in a divorce. Your real estate properties may still have outstanding mortgages at the time of your divorce, and a spouse who is granted a property in the divorce may also be ordered to take responsibility for the mortgage. In this case, it is important to include a provision in the agreement requiring a refinance of the property to protect the other spouse from liability to creditors.
• Income potential - If your real estate property earns a regular income, perhaps as a full-time or short-term rental, you will likely need to value it as a business, rather than simply a property for personal use. You should be prepared with documentation of the property’s earnings and expenses to help you determine an accurate value. If you want to keep an income property in the divorce, you may need to reimburse your spouse for contributions they made to the property during the marriage.
• Capital gains taxes - If you are pursuing a resolution that involves selling a real estate property, you should be aware that if the property has increased in value under your ownership, you will likely owe capital gains taxes upon selling it. This can decrease the overall value of the marital estate and harm both spouses in the division of property.

Contact an Austin, TX Property Division Attorney

Dividing valuable real estate properties in a divorce is often complicated. Working with an experienced Austin high asset divorce lawyer helps you ensure that you have considered all of the details. At Powers and Kerr, PLLC, we know how to handle property litigation during the divorce process, and we will work to protect your interests. Contact us today at 512-610-6199 to learn how we can assist with your case.

UPDATE: To avoid financial issues during divorce, spouses should take care when making any major decisions about money or property, including entering into any major transactions. To ensure that marital property can be fairly divided between spouses, the parties should fully disclose all relevant financial information related to their marital assets, as well as all forms of separate property. Spouses should not sell, give away, destroy, or otherwise dispose of any physical items, financial assets, or other forms of marital property. If a spouse does so, they could face consequences as described below.

Unfortunately, when a person commits fraud against their spouse, this may lead to the loss of assets, limiting the financial resources that are available during the property division process. To prevent this, a spouse may ask the court to issue a temporary financial restraining order. This type of court order will prevent both spouses from making any major financial transactions or taking any actions that could cause financial harm to their former partner. Spouses will be permitted to make regular expenditures to cover the costs of daily life, and as they work through the divorce process, they can ensure that the majority of their marital assets will not be affected, allowing them to reach a settlement that is fair and equitable for both parties. If you believe that a temporary restraining order is needed in your divorce, or if you need to address other complex property issues, an Austin divorce lawyer can provide you with legal help and representation.

When it comes to a high asset divorce in Texas, both parties need to take care when selling or disposing of anything that might be considered marital property. In other words, do not sell all of your jewelry or expensive electronics and keep the money hidden from your estranged spouse. If you do this, a court may consider such actions “fraudulent” and penalize you when making a final division of the marital estate.