Psychiatrists and psychologists rank divorce as the second most stressful life event behind the death of a spouse. In a divorce, one of the most frustrating parts of the process involves the division of the family’s assets.
Both spouses are concerned about how they will stretch the finances that have supported one household to now support two. One of the biggest pieces of the financial puzzle is “Who gets the house in a divorce?” In traditional divorce litigation, the focus is often on, “How much can I get out of this divorce?” the collaborative divorce process helps the spouses change the approach to “How can we both move forward in a positive way?”
The Divorce Process and Inventory of Finances
Texas is a community property state, which means that all assets the couple have accumulated during their marriage belong to them equally. Whether the couple chooses traditional litigation or the collaborative process, the first step in a financial settlement is to take an inventory of all finances with full disclosure by both spouses.
This means disclosing all assets including, but not limited to:
- Bank accounts.
- Real estate.
- Automobiles and all other vehicles, including boats, RVs, ATVs, etc.
- Retirement accounts. This is true even if the account is in only one spouse’s name or through one spouse’s employment.
- Investment accounts.
- A family-owned business or professional corporation.
The parties must disclose inheritances, personal injury awards, and gifts, even though generally the sole property of the spouse who was the recipient.
The Collaborative Divorce Financial Settlement
A collaborative divorce assists the spouses in reaching a settlement agreement without court intervention. The collaborative divorce team of professionals help to guide the couple to a divorce settlement.
Some ways this is different from traditional litigation include:
- In a collaborative divorce, the couple shares the expense of one financial professional who can go over their finances and create options for how to divide the assets. After both parties have a full understanding of their finances, they can work toward a settlement that is in both or their best interests.
The financial professional can help each party develop a post-divorce budget based on different asset division scenarios. When they make their own agreement, they are not bound by Texas law requiring certain financial decisions.
- The collaborative divorce professionals guide the couple through decision-making. They generally present the couple with options and make sure they each have enough information to make informed decisions.
So, Who Gets the House?
The house is likely the biggest asset that the family owns. Understanding the finances and options for moving forward help in decisions about keeping or selling the home.
One spouse may decide to keep the home and buy the other spouse out of their share of the home’s equity. They can do this by offsetting other assets of the family in exchange. Sometimes when you have seen your whole financial picture, the couple will decide to sell the home and divide the proceeds.
The collaborative divorce process helps the couple make good decisions about what to do with their house and start their post-divorce lives with a sound financial plan in place.