713-333-4430Preparing Financially for a Texas Divorce
Divorce can be messy and stressful while also being transformative and (in the end) liberating despite the emotional ups and downs. However, it often also has significant financial implications on your life, especially if you go in without bracing yourself, examining your circumstances, and organizing. If you are contemplating obtaining a divorce in Texas, preparing yourself financially before you begin the process is pivotal. Here we will discuss some key measures you should consider to protect your financial interests during a Texas divorce.
Get Your Financial Documents Together
The first step in preparing for a divorce is to collect all your financial documents. Gather information about your income, assets, debts, and expenses. Some documents you may need include tax returns, bank statements, credit card statements, investment statements, retirement account statements, and mortgage statements.
Make copies of all these documents and keep them in a safe place. Consider making a backup copy for easier access. A complete picture of your finances will help you make informed decisions during divorce.
Assess Your Financial Situation
Once you have gathered your financial documents, you must assess your financial situation. List your assets and liabilities, including bank accounts, retirement accounts, real estate, and any debts you owe. Constructing a list will give you a clear picture of your financial situation and help you determine your financial capabilities moving forward. Texas Family Code, § 7.001, outlines the requirement to disclose all assets and liabilities during the divorce proceedings fully. Forming a precise list helps ensure that both parties clearly understand the financial situation and arrive at educated insights regarding property division and support.
Tip: Financial advisors can help evaluate current finances and prepare for a steady future.
Create a Budget
Divorce can be expensive, and creating a budget to ensure you can afford to live independently after the divorce is crucial. Construct a list of your monthly expenses, including housing, food, utilities, and other necessary costs. Subtract your monthly expenditures from your income to determine how much money you will have available each month.
If your expenses exceed your savings and earnings, adjusting your budget or exploring methods to increase your income may be necessary. Analyzing your spending habits and costs can help you discover opportunities to save money or identify ways in which you are losing funds. For example, consider a hybrid work option if you are currently commuting a lot, resulting in high transportation costs.
You may need to temporarily or permanently adjust your budget to account for changes in living arrangements, child support, and other expenses.
Consider Hiring a Financial Advisor
Divorce is often a delicate and intricate process, especially concerning finances. Hiring a financial advisor may be beneficial when trying to navigate financial complexities. Such an advisor can help you create a financial plan for your future, analyze your assets and liabilities, and help you make informed decisions about your finances during the divorce process.
An experienced financial advisor can also assist you in understanding the tax implications of divorce and avoiding common financial mistakes that frequently arise during divorce proceedings.
Note: Some financial advisors may offer complimentary consultations, which can be eye-opening and point you in the right direction.
Understand Texas Divorce Laws and Marital Property
Having a solid grasp of divorce laws in Texas before getting deep into the divorce process is imperative. In Texas, any property obtained by a married couple is community property, which means that it is subject to division in the event of a divorce. Such assets include, but are not limited to homes, vehicles, bank accounts, retirement funds, and other possessions. It’s essential to clearly understand your marital property before you begin the divorce process. However, this community property rule has some exceptions, such as property acquired before the marriage or property acquired during the marriage through inheritance or gifts.
You should also be aware that Texas has a mandatory waiting period of 60 days after filing for divorce before the divorce can be finalized. This waiting period gives you and your spouse time to work out any issues related to the divorce. A family law attorney can help you understand how your property may be divided during the divorce.
Determine Your Debts
In addition to assets, you will also need to consider your debts, including credit card debt, mortgages, car loans, and other debts, during the divorce process. Comprehending your obligations will help you create a realistic budget and determine how much support you need during and after the divorce.
Explore Your Options for Spousal Support
If you earn less than your spouse, you may be eligible to receive spousal support. In Texas, spousal support is called spousal maintenance, and it’s generally available to spouses who have been married for at least ten years or have experienced family violence. After a divorce, spousal maintenance may provide financial assistance to cover your expenses and ensure you can maintain a reasonable standard of living. Alternatively, you may be required to provide your ex with spousal maintenance payments under the Texas Family Code. Educating yourself on the procedure and your rights is imperative for a seamless outcome.
Planning for Child Support
If you have children, you will also need to plan for child support. Child support is calculated based on the income of the non-custodial parent and the number of children involved. It’s integral to understand how child support is computed and how much you may be entitled to receive or how much you may be obligated to pay. Understanding the tax laws related to property division and spousal maintenance payments is also essential in planning for child support.
Review Your Insurance Coverage
Many individuals find their insurance coverage may need adjustments during and after a divorce. Such modifications may include health insurance, life insurance, and disability insurance. Understanding how your insurance coverage will be affected by the divorce and how you can protect yourself and your children is vital. Additionally, reviewing your insurance coverage may reveal any potential gaps in coverage that could impact your financial situation during and after the divorce.
Protecting Your Credit and Considering Tax Implications
A divorce can mean credit concerns or impacts, particularly if you do not prepare ahead. Paying your bills on time, monitoring your credit report, and avoiding new debt are wise during and after divorce. A Texas family law attorney can help you understand how the divorce process may impact your credit and how you can protect yourself.
Divorce can also have significant tax implications, especially regarding property division and spousal maintenance. Understanding the tax implications of your divorce and how you can minimize your tax liability is paramount.
Work with a Texas Divorce Law Attorney
Staying focused on your long-term financial goals and avoiding making decisions based on emotions that could negatively affect your financial future is essential. With careful planning, you can move forward confidently and with peace of mind. When going through a divorce, it is recommended to seek the help of a proficient Texas family law attorney who can guide you through the process, safeguard your interests, and identify any potential red flags. Your lawyer can assist you in understanding your legal rights and options and can help you negotiate a fair settlement. Although it may seem overwhelming, with a solid plan and the support of a skilled attorney, you can emerge from the situation with your finances intact. Contact an experienced divorce attorney to receive a confidential consultation.
Attorney Kevin Hunter at Boudreaux Hunter & Associates, LLC has experience with child custody, spousal support, high conflict divorce, and is fully equipped to guide you through the process. Learn more about Kevin on his profile here.
