50/50 Divorce Property Division: Three Common Myths
by Kevin Segler as published by Dallas Bar Headnotes
Common misconceptions persist about how property is, or can be, divided in a Texas divorce case. These misconceptions are often held by clients, as well as by some attorneys, and are sometimes even perpetuated in media coverage.
Myth #1: Texas law requires property to be divided 50/50 in a divorce case.
This is perhaps the most common myth. Many believe that, in a Texas divorce case, a 50/50 property split is automatic and unchangeable. This is not true. The reality is that Texas law requires the division of property to be “just and right” taking into account “the rights of each party and any children of the marriage.” What a court considers a “just and right” division in one case might be wholly unjust and inequitable in another.
While a 50/50 property division is by no means mandatory, it is certainly a good place to start because of the seemingly inherent equitable nature of an even, 50/50 split. However, the circumstances of the parties must be analyzed to determine if a disproportionate share of the property should be awarded to one spouse over the other to arrive at a “just and right” division.
Courts can assess a variety of factors to determine a “just and right” division, such as: each spouse’s capacities and abilities, fault in the break-up of the marriage, benefits which the party not at fault would have derived from continuation of the marriage, business opportunities, education, relative physical conditions, relative financial condition and obligations, disparity of ages, size of separate estates, and the nature of the property being divided. This is by no means an exclusive list of the factors a court can consider as it may consider any relevant factor that could make a disproportionate property division “just and right” under the circumstances.
Myth #2: Texas law requires each individual asset and liability be divided according to the percentage awarded to each party, whether the division is 50/50 or otherwise.
Similar to the 50/50 myth, it is often believed that a 50/50 division (or whatever the percentage split is) means that each and every asset and liability is individually divided according to that percentage. The truth is that the community estate is divided on an aggregate basis and often only involves splitting some of the individual assets.
Property division in a divorce case generally involves three broad phases: (1) identifying all of the community assets and liabilities; (2) determining the value of each of the assets and liabilities; and (3) dividing the assets and liabilities in a just and right manner. The total value of the community estate is the sum of all the individual assets and liabilities. The portion of the total value awarded to each party constitutes the percentage division.
The Court divides the overall value of the community estate in a “just and right” manner – not necessarily each individual asset and liability. As such, one party could be awarded twenty different assets and the other party only two, but the value awarded to each is roughly equal. Similarly, an equal division can occur when one party is awarded the bulk of the assets but is also responsible for all of the liabilities and the other party receives a small portion of the assets and but is not responsible for any of the liabilities. It is the division of value that matters.
Myth #3: The face value of assets and liabilities at the time of divorce is the only thing that matters in determining the appropriate division.
The face value of the assets and liabilities at the time of divorce is unquestionably important. However, there are other important considerations to analyze in evaluating a “just and right” division and which assets and liabilities can, or should be, awarded to each party. The paramount consideration is the particular party’s circumstances, goals and needs. This is the lens through which all other considerations are analyzed.
Other considerations include, without limitation: (1) cash flow/liquidity needs; (2) costs of ownership/maintenance of property; and (3) tax implications. For example, if a party needs cash next month to pay bills, it makes no sense to award them all illiquid assets, even if those illiquid assets may have cash value at some point in the future.
Ultimately, numerous factors are involved in determining the overall split of a marital estate as well as which particular assets and liabilities should be awarded to each party.
Kevin Segler is board certified family law attorney with KoonsFuller, P.C. He can be reached at Kevin@koonsfuller.com, or you can learn more by visiting https://koonsfuller.com/attorneys/kevin-segler/.