Are you to the point of no return in your marriage?  Nothing left of feelings, just apathy or indifference. Do you feel you must leave this place now or die trying? What about your financial security after the divorce? Divorce is an emotional roller-coaster. How will you take care of your debt, bills, and your children’s needs? 

Time to grab your laptop or pad of paper and start thinking smart about “the first day of the rest of your life. If your “I need a divorce” decision is now made, start work on learning your current family financial situation and what needs to be done to secure your financial security for Post-Divorce life!

Here is a list of some of your most important Financial Information that you need to address before the Start of the Divorce 

1. What are the Community and Separate Property Laws in Texas?  

Under the Texas Family Code, a spouses separate property consists of 1) the property owned or claimed by the spouse before marriage; 2) the property acquired by the spouse during marriage by gift, devise, or descent, and 3) the recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage.

The terms “owned and claimed” as used in the Texas Family Code mean that where the right to the property accrued before marriage, the property would be separate.  Inception of title occurs when a party first has a right of claim to the property by virtue of which title is finally vested.  The existence or nonexistence of the marriage at the time of incipiency of the right of which title finally vests determines whether property is community or separate.  Inception of title occurs when a party first has a right of claim to the property. 

Everything you and your spouse have earned in your marriage except for personal gifts or property from devise or descent will now, absent fault, be divided equally in the divorce. This could make a big difference in your post-divorce financial life! Gather all financial statements: income tax returns, insurance policies, bank statements, Investment Accounts summaries, Retirement Account balances, Bills, anything in your marriage that can show who owns separate assets or what constitutes the community property in this marriage.  

2. DEBT: Deal With it NOW!

Are you and your spouse in a bad financial situation? Do you both have to work to pay the bills or just barely make ends meet?  Now you want to get a divorce and HOW IS THAT GOING TO WORK? How can you be Post Divorce Happily EVER AFTER when you may not even be able to afford a down payment on an apartment? ORDER A COPY OF YOUR CREDIT REPORT now to see where the damage may exist.  You will be able to see what credit cards, loans, and other debt you all have created. If you and your spouse have be leading “separate lives” for a while, you may be surprised when there is more debt incurred for entertainment you never knew about. Review this CREDIT REPORT carefully. Find out whether you are a joint owner or just an authorized user. Except for your home, usually the DEBT will be in existing credit card accounts, personal loans, and car loans.  If possible, try to get as much debt as possible paid off before finalizing the divorce. Remember that joint debts remain both spouses’ legal obligation to the lenders, even when the divorce settlement states that only one spouse is responsible for the debt. If the responsible ex-spouse defaults on the payments, it will show up on both ex-spouse’s credit history. Some good advice? Get your own credit card in your name only. If you keep other credit cards take your spouse’s name off the credit card Now! Get your name off any credit card that your spouse uses NOW! Divorce causes financial upheaval to a family’s budget so protect yourself, so you don’t have to pay or be legally responsible for your soon to be EX’s Bills! 

3. Bank Accounts

Most married couples have at least one joint bank account. Many will have joint checking and savings accounts. You need to get a record of every family bank account in existence. Make sure you have copies of all monthly bank statement for 3 years.

Review these carefully and see if there has been a constant drainage of money from the accounts.

Now open a new account in your name. It is critical to establish your own financial identity when you divorce.
If your spouse does business with the bank in a business capacity or you have car/personal loans with the bank, you need to open a personal account with another bank of your choosing. 

4. What About Our Home? 

One of the hardest assets to deal with in a divorce.  This is where the couple lived as a family, with or without children. If there are children involved, their little lives have centered around their schools, churches, sports teams and friends.  It is heartbreaking to the entire family, but this decision is usually the final family break.

If the decision is for one spouse to take over the homestead and debt, the ideal situation is for such spouse to refinance the home in only their name. The single spouse will be responsible for the debt on the house and full title on the house. Otherwise if the spouse can’t afford to refinance the house, both spouses will have to work out a co-owner agreement and continue to have both names on the title and share the large financial burden. In such event, frequently, sale of the home is the best option.

This is one of the most serious real estate problems we encounter in a post-divorce situation.  Times get tough and the ex- spouse, who took over the house debt, cannot afford to pay the mortgage and the property falls into foreclosure, affecting both ex- spouses’ credit. Sometimes it is better, if one spouse cannot refinance the house loan, to sell the house and divide the proceeds.

Other “To Do” Items to Address Before the Start of the Divorce

1. Make sure your assets are protected. Check that your car, health, and homeowner’s insurance is up to date and enough for your and your children’s needs. Also start the process of changing beneficiaries on all life insurance policies/annuities and retirement accounts (IRA / 401k at work) you own from your ex-spouse to your heirs or other designees.
2. Change all passwords on your online accounts and all banking and credit card accounts. Time for some personal privacy!
3. Time to start thinking about your digital assets that you as a couple developed and shared? This is a community state and how will this affect this type of asset?
4. Think about reviewing your will and other estate planning documents. We suggest that when the divorce is final, you need to have a new will in place that will be only your heirs minus your Ex.
5. Very important! Establish your own credit in your single name

This list will give you a start on the financial items that you must be addressed immediately in an upcoming divorce. Be prepared before the divorce and know where you stand financially. This will hopefully give you time to talk with financial and legal experts so you can make wise decisions on addressing the financial aspects of the divorce for you and your other family members.  

The Nacol Law Firm P.C.