Navigating the choppy waters of a divorce poses a challenge, particularly when investment properties come into play. Texas has specific laws on property division during a divorce, directly impacting the future of your investments.
By understanding the approach Texas takes in the division of investment properties during a divorce, you can steer your way through the process with less confusion and stress.
Texas community property laws
Texas operates under community property laws, viewing all assets acquired during the marriage, including investment properties, as joint possessions of both spouses.
Therefore, if you added an investment property to your portfolio during your marriage, Texas law will generally include it in the marital estate and subject it to division. However, investment properties you owned before marriage or ones you received as a gift or inheritance during the marriage typically remain as your separate property.
The role of courts in property division
Texas courts strive to divide community property in a just and right manner, which may not equate to a 50/50 split. Factors such as each spouse’s income, earning potential, health and child custody arrangements can influence the court’s decision. If your earning potential is less than your spouse’s or if you have primary custody of your children, you may receive a larger part of the community estate, which could include investment properties.
When splitting an investment property itself, several scenarios are possible. You or your spouse could buy out the other spouse’s share, you could sell the property and divide the proceeds or you could continue to co-own the property with your ex-spouse.
With a grasp of the basics of how Texas law treats investment properties in a divorce, you can better prepare for how this part of your divorce may affect you.