Specific Assets and How a Texas Divorce Affects Them

Image of SpreadsheetOutside of child custody determinations, one of the most important decisions in a divorce is what to do about big-ticket items such as homes, credit card accounts, and life insurance policies. A Houston divorce attorney offers the experience that clients need to understand the ramifications of a divorce and can provide the guidance to obtain the best result based on a client’s needs.

Family House

The easiest way to deal with the family house is to reach an agreement that either you or your spouse will keep the house. The spouse who gets the house, however, is solely responsible for the debt that comes along with it. Additionally, if you get the house, you will likely have to get the mortgage refinanced to remove your spouse’s name. If your finances are not in as strong a position as your spouse’s, you may have more costly terms when the bank refinances the mortgage, so, if you cannot afford to handle the mortgage payments and other costs, it is not a good idea to keep the house.

Conversely, if your spouse is the one keeping the house and you are on the mortgage, it is wise to get your name removed. If your spouse defaults and your name is still on the mortgage, you will find yourself still on the hook for the payments.

In situations where the two sides cannot agree on who is to keep the house and assume the payments and costs, the court will sell the house and split the proceeds evenly between you and your spouse. A Houston property division lawyer at John K. Grubb & Associates, PC can advise you on the best course of action regarding your family home.

Credit Card Accounts

In a community property state like Texas, if both spouses are co-signers on the credit card accounts, then both are responsible for the debt. This is true even post-divorce, because divorce decrees do not bind credit card companies. The people who agreed to the credit card companies’ terms are liable for the debt, and a divorce does not absolve them of this responsibility.

A spouse can ruin your credit scores with joint credit cards for which you are still technically responsible. It is important to attempt to reach an agreement yourselves or resort to mediation or arbitration to resolve joint credit card accounts so that the spouses can pay off the debt on the accounts, they can close the accounts, and they do not have to worry about these issues. At the beginning of the separation proceedings, you can also file documentation with the court to have the joint credit cards and the debt owed on them put on the record.

Life Insurance

In Texas, a court determines the ownership of life insurance proceeds by looking at the source of the initial premium payment. If the initial premium came from separate property, it is separate property and thus not subject to division during a divorce. Additionally, a divorce does generally void any life insurance payouts to a former spouse. In Texas, there are only three situations where a former spouse would still be entitled to a life insurance payout:

  1. The divorce decree specifically names the former spouse as a beneficiary.
  2. The life insurance policyholder designates the former spouse as a beneficiary after the divorce is final.
  3. A court named the former spouse as a trustee or custodian for a child or dependant.

Contact a Houston community property attorney at John K. Grubb & Associates, PC for assistance in determining the financial effects of a divorce in Texas.

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