Alright, now we know what community property needs to be divided between you and your soon-to-be-ex. The next questions are who divides it and how do they go about doing so? The “who” question is fairly straightforward, as there are two basic answers: you or the judge. The “how” part gets more complicated.
You and your soon-to-be ex of course have the option to divide up your own property. If the divorce is on reasonably civil terms, this may be the best option for you. It allows you more flexibility, and generally speaking, people tend to be more satisfied if they feel they have a hand in controlling their own deal. You may have your respective lawyers negotiate a settlement agreement directly, work out a settlement in mediation with a neutral intermediary, or come up with some other creative method of divvying up the assets. It is not unheard of for divorcing spouses to take turns picking assets for their share the way kids on the playground pick teammates for kickball. It should be mentioned that many courts will order divorcing spouses to at least attempt settlement through mediation (or otherwise) before allowing the case to go to full trial.
If you and your soon-to-be-ex simply cannot work out an agreement between yourselves, which is often the case, the judge will do it for you. Judges have a fairly wide range of discretion in deciding who gets what in a property division. It can be a bit scary when judges have a lot of discretion. It makes the result that much more unpredictable. However, on the upside, a lack of hard-and-fast rules gives your lawyer plenty of room to make arguments in your favor. One more reason to have a good lawyer!
The Texas Family Code tells us, “In a decree of divorce or annulment, the court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage.” This is what is called making a “Just and Right Equitable Division,” which I will abbreviate as JARED.
The most important and often-times misunderstood word in a JARED is “equitable”. Equitable does NOT mean equal. Neither you nor your spouse is automatically entitled to a numerically perfect half of everything. Instead, the judge will consider a list of factors, and make a decision on who gets what based on what the judge believes to be “fair”. The factors that the court will take into consideration include:
- You and your spouse’s levels of education
- How much money each of you is capable of making
- Any business or employment opportunities available to you
- How big a gap there is between how much money you make, and how much your soon-to-be-ex makes
- Your health
- Your age
- Whether either of you have a need for future support
- Who was awarded custody of the children
- How your amount of separate property compares to your soon-to-be-ex’s
- The condition of your personal finances in comparison to your soon-to-be-ex’s
- How long you were married to each other
- Any fault in the breakup of the marriage
- Whether either of you has been draining assets out of the estate, especially by wasting assets or by giving away community property assets as gifts
- If there was a fault in the breakup, any benefit the “innocent” spouse would have received from staying married
- The nature of the property to be divided
- Tax consequences
- Attorney’s fees
- Whether either spouse has committed fraud against the other
Remember, each one of these is only a factor for consideration. At least in theory, no one factor should completely decide the case; however, every judge is different. Some judges will put heavier importance on some factors due to their own personal opinions and experience. Your lawyer should know or be able to find out what your particular judge tends to put importance on, and how he or she tends to rule. This will help you and your lawyer strategize your case.
Determining what is “equitable” is never an exact science. Please keep in mind this each factor listed above is just one factor of many that the court considers. To illustrate, let’s look at a couple of the factors listed above in more detail, starting with “fault in the breakup of the marriage.” I have had a prospective client (no names – remember confidentiality!) ask me before if it was true that if she could prove her husband was unfaithful, she would automatically get a 90-10 split of the assets. No! There is no single automatic trigger that will get you a hugely disproportionate share of the community property; not adultery, not abuse, not drugs, not alcoholism. Everything gets weighed in the balance.
Another factor to take a deeper look at is “the nature of the property to be divided.” This means a couple of things. For one, it means the value of the specific assets. Say you have two cars. Do you just give one car to husband and one to wife? Sounds fair on the surface, but what if one car is a Rolls-Royce and the other a rust-bucket held together by duct tape? The monetary value of assets can have a big impact on how the assets get divided. In this example, the spouse getting the Rolls-Royce may not get much else, while the other spouse may get several more (but less pricey) assets.
The “nature” of the property can also mean whether it is capable of a physical division. If you just have one house, it is fairly difficult (and rather ridiculous) to saw it in half and award the left side to you and the right side to your ex. A bank account on the other hand can be cut in half (or any other proportion) much more easily. A large tract of land can be subdivided. When the court divides up an asset between the divorcing spouses, it is called “partitioning”. An asset that can be physically split up and part awarded to each spouse is said to be partitioned “in kind.” When assets are of relatively equivalent value so that one can go to one spouse, one to the other, this is another version of partitioning in kind.
Partitioning in kind is the method preferred by most judges (and divorcing spouses). However, this cannot always be accomplished. Take the example above of sawing a house in half: it makes more sense to just sell the house and split the proceeds between the spouses. This is called a partition by sale.
Partition in kind is preferable for several reasons. Humans have a psychological attachment to the stuff that makes up our everyday lives. Because of this, if we can’t keep something of “ours” we would rather see it in familiar hands, than have it sold to a stranger. Think about that house you’ve lived in for years. If your ex and kids are still living in it, wouldn’t that be less hurtful than to have it auctioned on the courthouse steps?
This raises the next reason: judicial sales rarely get you a happy result. Particularly for “big ticket” assets (like a house or car) they tend to pull in a much lower price than if the asset were sold on a “regular” market.
Let’s try to break all this down. You and your soon-to-be-ex can come up with your own property division, or you can have the court do it for you. If you do it, you can use any criteria you see fit, just remember you have to live with whatever you put on paper. If the judge does it, he or she will be trying to make a just and right equitable division (JARED), which does not mean “equal”. Judges have a list of criteria that they generally work off of, but each judge attaches different significance to different factors. Your lawyer should know how your particular judge tends to operate. At the end of the day, your judge has a great deal of discretion in making a decision. This can be great because it gives your lawyer lots of room to make arguments (that’s what you are paying for after all). And just so you don’t forget – the judge can ONLY divide up assets that are COMMUNITY PROPERTY.