Reality TV - What's it got to do with divorce?

Because of real estate market woes, many of my family law clients are finding it more difficult to sell their homes as quickly as they hope, for the price they hope to obtain, or to simply refinance. Apparently, reality TV shows are feeling the housing market woes as well. The Learning Channel begins airing a new reality TV show called “Hope for Your Home” on Saturday, August 9, 2008 at 7:30 p.m. CDT (check your local listings for time and channel). Unlike shows such as Flip that House or Trading Spaces, this show is aimed at assisting homeowners increase the value of their property so that they may sell or refinance. Though some of the episodes discuss harsh realities people don’t want to hear, in order to get the house sold you’ve got to get that reality check.  For more information, visit the article published in today’s Wall Street Journal. 

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Housing market and mortgage woes create troubles for divorcing couples

Though Houston is reportedly one of the areas least affected by the economic downturn, the city is not without its share of troubles. The quandary of what to do with the house has always been an issue in divorce cases, but my practice is encountering an increasing number of people in financial turmoil with respect to the house. Selling property and dividing proceeds was a good option for couples where neither could afford to stay in the house alone. Selling is still an option, but with the mortgage lending crisis and surplus of available homes, no one can predict how long the house will remain on the market.   

Unless you and your spouse are on exceptionally good terms during the divorce, usually someone has to move out. Before deciding on who stays and who goes, consult a real estate agent and educate yourselves on optimum ways to stage a house so it is appealing to potential buyers. For more information on realtors in the area, visit the Houston Association of Realtors.

Remember – if you and your spouse signed the deed of trust then you’re both responsible for the mortgage note regardless of who remains in the house. The court cannot make the mortgage lender remove either party from the agreement. Even though you may despise your soon-to-be ex, it’s in each party’s interest to make sure the house is sold and for the best possible value. 

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Pre-Divorce Estate Planning

If you anticipate a separation or impending divorce it is a good idea to revisit your estate plan. Most individuals' principal assets include their home, life insurance, retirement funds, bank accounts and securities.

Though unpleasant to consider, think about what could happen if you die before filing for divorce or during the divorce proceeding itself.

If you have a will, consider executing a new will or codicil bypassing the soon-to-be ex-spouse and leaving your share of the community estate to the children in trust, or other individuals. You may also wish to change designated beneficiaries on any life insurance policies. Because many retirement plans are subject to ERISA, it is unlikely that you will be permitted to change your beneficiary designation(s) without your spouse's consent.
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Dividing 401-k Accounts

Couples who are avid about saving for retirement, or who have been married for a long period of time, often have significant assets in 401-K accounts. At the time of divorce, the deposits each spouse made into his/her 401-K during the marriage is community property subject to just and right division. Employer matching made during the marriage is also community property, provided that the employee is fully vested in the plan. Whether couples have agreed on how to divvy up these accounts or if the court makes a division, that is far from the end of the story.

401-K and pension plans are governed by the Employee Retirement Insurance and Security Act (ERISA), a federal law. 401-K and pension plans are administered by a plan administrator. No matter what the text of your divorce decree says, the plan administrator must pre-approve a qualified domestic relations order (QDRO) in order to divide the assets between spouses. Having a QDRO kicked back by the plan administrator potentially delays the division of assets and distributions. Therefore, attorneys often outsource the preparation of QDROs to consultants having special expertise in this area. 

Though this is another person on the divorce “payroll,” outsourcing saves time and money because the consultants have experience with various administrators and know what items are likely to cause a QDRO to be rejected. Whatever the flat fee charge for QDRO preparation, it is almost always less expensive than having your attorney charge by the hour to draft a complex document. 

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Texas Marital Property - What is Separate and Community Property?

Texas marital property has rich history with roots from the Spanish legal tradition.  Texas is also unique in that its marital property rights are constitutionally based.  Article 15 Section 16 of the Texas Constitution defines separate and community property, and the Texas Family Code also provides guidance as to the differences between separate and community property. 

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