Dividing Your Property and Debt in a Divorce

Community property and debt are divided in a divorce. Separate property and debt are not divided.

At the end of your divorce case, a judge will divide your property and debt by signing a Final Decree of Divorce (also referred to as Final Decree). The Final Decree of Divorce will:

• list the community property each spouse will keep or, in some circumstances, order community property (such as a house) sold and say how the proceeds should be split;
• list the separate property (if any) of each spouse;
• list the debts each spouse is ordered to pay; and
• order that the community property retirement benefits of each spouse are either:
  • awarded (given) 100% to the spouse who earned the benefits or
  • divided between the spouses.

Note: The Final Decree of Divorce divides your property and debt; however you may need to take additional steps after the divorce to transfer vehicle titles or real estate deeds.

Community property includes all property you and your spouse have at the time of divorce except property that you or your spouse can prove (or the both of you agree) is the separate property of one spouse.

Your community property may include real estate (a house or land), a business, cars, money, retirement accounts, furniture, and other things earned or purchased by either spouse during your marriage. It doesn’t matter which spouse’s earnings were used to purchase the property or which spouse’s name is on the title.

Community debt is debt you or your spouse acquired during the marriage.

The law says that community property and debt should be divided "just and right" when you get divorced. This does not necessarily mean a 50/50 split.

Note: There are exceptions to these general rules. If you have questions, it’s important to talk with a lawyer.

Read Texas Family Code chapter 7 for more information.

Separate property includes:

• property owned or claimed by one spouse before the marriage,
• property received as a gift or inheritance to one spouse during the marriage,
• money received by one spouse for personal injuries that occurred during the marriage (not including money received for lost wages or medical expenses), and
• stock dividends and capital gains on the separate property investments of one spouse.

Unless both spouses agree, a spouse must prove that something is separate property by “clear and convincing evidence.” If a spouse cannot prove something is separate property, it is considered to be community property. Read Gathering and Presenting Evidence to help you understand what is allowed in court.

Separate debt is debt one spouse acquired before the marriage.

The law says that separate property cannot be divided. Once something is proved to be separate property, the judge must confirm it as the separate property of that spouse.

Note: There are exceptions to these general rules. If you have questions, it’s important to talk with a lawyer.

If money earned during the marriage is spent to improve the separate property of one spouse, the other spouse might be able to argue that they should get credit for a portion of the money spent. Talk to a lawyer if this is an issue in your divorce.

If you and your spouse agree on how to split your property and debt, the judge will usually approve your agreement. You will fill out the Final Decree of Divorce form so that it reflects your agreement. Talk to a lawyer if you need help or have questions. You will find the correct Final Decree of Divorce form for your case in the appropriate guide:

• I need a divorce. We do not have minor children.
• I need a divorce. We have children under 18.
• I need a divorce. We have minor children. A final custody and support order is already in place.

Note: The TexasLawHelp.org Final Decree of Divorce form is written for people who do not have a lot of property or debt. If you or your spouse have property of significant value (such as a house, business, retirement account, or other financial accounts) or a lot of debt, it is important to have a lawyer review your Final Decree of Divorce before going to court to finish your case. When you have a lot of property, making a mistake can be costly. Hiring a lawyer now can save you time and money in the long run.

If you and your spouse have already separated your personal belongings, like furniture and clothing, you probably don’t need to include those items in the Final Decree of Divorce. The Final Decree awards each spouse the personal property in that spouse’s care, custody, or control unless specifically ordered otherwise.

You do need to include property of significant value like vehicles, real estate, businesses, jewelry, and financial accounts.

If you and your spouse cannot agree on how to split your property and debt, a judge will divide your community property and debt in a way that the judge decides is “just and right" in a final hearing. This usually means 50/50, but not always.

A creditor’s right to collect a debt is not affected by your Final Decree of Divorce.

This means if the judge orders your spouse to pay a debt that is in both your names (such as a car loan or mortgage) but your spouse does not pay it, the creditor can still seek payment from you. Ask a lawyer how to protect yourself in this situation.

It is important to talk with a lawyer if you and your spouse have a house or land. A lawyer can help you understand and correctly address the issues that come up in a divorce when you own a house or land.

Not talking to a lawyer can be very costly. For example:

• You could lose ownership of the property and still be responsible for the mortgage. A mortgage company’s right to payment is not changed by a divorce decree. If you and your spouse are on the mortgage and the divorce decree gives the house or land to your spouse and your spouse does not pay the mortgage, the mortgage company can still seek payment from you. This is true even if the judge ordered your spouse to pay the mortgage. A lawyer can help you figure out how to protect yourself in this situation.
• You could be unable to enforce an agreement or order that your spouse pays you part of the value of your house or land. An order for one spouse to pay the other spouse part of the value (equity) in a house or land should usually be secured by a lien on the property. If it’s not, you may not be able to get the money awarded to you. A lawyer can help you with this.
• You could be unable to sell the property later. If you are keeping the property, a Special Warranty Deed should be signed by your spouse and filed with the property records office. If that does not happen, you could have trouble selling the property later. You must hire a lawyer to write the Special Warranty Deed form.

TIP: You can hire a lawyer just to give you advice or draft any deed or lien forms needed in your case. You can then handle the rest of your case yourself. Hiring a lawyer for a limited purpose is called limited scope representation.

Read Divorce & Real Estate to learn more.

Yes. It is very important to include the complete legal description of your house or land in your Final Decree of Divorce. The legal description is the language used to legally identify real property.

You can find the legal description on the most recent deed for the property. You can get a copy of the deed at the county clerk’s office in the county where the property is located.

It is very important that the legal description be written in your Final Decree of Divorce exactly as it is written on the most recent deed for the property.

The address of the property is not the legal description.

The shortened legal description on your property tax records is not the complete legal description and may be incorrect.

If you’re not absolutely sure about the legal description, talk to a lawyer.

No. A house or land purchased during the marriage is community property – no matter whose name is on the deed–unless the house was purchased with the separate property money of one spouse.

Yes. It is important to include the vehicle identification number (VIN) for each vehicle. The VIN can often be found on the lower-left corner of the vehicle dashboard, in front of the steering wheel. Look through the windshield from the outside to read the number. You can also find the VIN on the vehicle title, insurance documents, or owner's manual.

If you are awarded a vehicle that is in both your and your spouse’s names, take a certified copy of the Final Decree of Divorce to your local county tax office and apply for title. Be sure to bring proof of current insurance and the application fee. Call ahead to learn the fee, or look it up on the county clerk's website.

If your Final Decree does not include the vehicle, you must have a properly assigned title to transfer the title. Your ex-spouse can assign the title to you by signing the back of the actual title or by signing a power of attorney.

TIP: You should not have to pay taxes on a title transfer because of divorce. Check the tax-exempt box on the title application form.

Your spouse must refinance the car loan to get your name off the debt. If your spouse is unable or unwilling to refinance the loan, you will continue to be responsible for the debt. Talk to a lawyer about your options.

Yes. Retirement benefits earned by either spouse during the marriage are usually considered to be community property that can be divided by the court. This is true even if you or your spouse has not yet retired.

Retirement benefits are often a couple’s most valuable asset. Retirement benefits include pensions, military retirement, 401(k) accounts, 403(b) accounts, employee stock ownership plans, profit-sharing plans, thrift plans, Keogh plans, stock option plans, individual retirement accounts (IRAs), annuities, and variable annuity life insurance.

If you want the judge to divide retirement benefits as part of your divorce, you must include specific information about the retirement benefits in your Final Decree. You must also ask the judge to sign an additional form, usually called a Qualified Domestic Relations Order (QDRO) (unless you are dividing an IRA). You should have the QDRO prepared before you go to court, so the judge can sign it when you finish your divorce.

After the judge signs the QDRO, send a certified copy to the retirement plan administrator. The retirement benefits will NOT be divided until the plan administrator gets a certified copy of the QDRO that was signed by the judge.

To learn more about this, read Dividing Retirement Benefits Upon Divorce.

Important: TexasLawHelp does not provide QDRO forms. You may contact the employer or retirement plan administrator to see if they have a sample QDRO form. If not, you should hire a lawyer to draft the QDRO form. If you use the employer or plan administrator’s form, you should still have a lawyer review it to make sure you are not giving up important benefits.

Yes. Check the boxes in the Final Decree of Divorce that give each spouse 100% of any retirement benefits in that spouse's name. You do not need a QDRO if you are keeping your own retirement benefits.