Divorce may provide an opportunity to reconsider financial goals and revise your budget to accommodate a new future. As noted by SmartAsset, Texas requires dividing all income, debts and assets acquired during marriage equally. You may find yourself tasked with some rather detailed inventory work; advance planning could help you navigate the process.
You may negotiate ownership of assets that provide stability by “trading” them for other assets or debts. The court, however, requires an agreement based on fairness. During the mediation process you may work out property divisions and trades, but the court may step in and decide if the arrangements do not appear fair.
How may I keep my residence?
As noted by Kiplinger’s Personal Finance, divorce may involve selling your home and splitting the proceeds, or it could require taking on a new mortgage. If you sell your home, it may incur a capital gains tax and affect how you divide the proceeds.
Most banks qualify you for a mortgage through a review of your income and ability to make payments. Depending on your single-household income, you may require financial support from your ex-spouse to cover mortgage payments, property taxes and insurance.
How may divorce affect joint accounts?
Credit card debt and funds in checking and savings accounts divide evenly. You may close joint accounts and open new ones in your own name. Most financial institutions require permission from both owners to close accounts.
Retirement account contributions generally belong to both spouses. Submitting a Qualified Domestic Relations Order may divide a retirement fund and distribute its funds. You may roll over proceeds into an IRA to avoid tax liabilities or withdrawal penalties.
Effective planning requires a new budget based on your earnings and divorce settlement. How you divide marital property may affect your future.