You may wonder what happens to your finances during a divorce. Texas follows the community property rule, meaning that the state considers most assets acquired during a marriage as shared property. Both parties have equal ownership of these assets. However, any assets or earnings you had before the marriage often remain separate.
There are certain things you can do to protect your finances before going through a divorce.
Gather and document financial information
The first step in protecting your finances is to thoroughly document them. Gather all financial documents, including bank statements, property deeds and investment portfolios. Make copies of everything, ensuring you have access even if the original documents are inaccessible.
Open individual accounts
Consider opening individual bank and credit accounts. This action ensures that you have complete control over your personal finances. Moreover, it can prevent an angry spouse from recklessly spending or accumulating debt that you could become partly responsible for.
Keep inheritance and gifts separate
If you receive an inheritance or gift during your marriage, it remains yours as long as you do not mix it with shared funds. Keep such sums in a separate account to prevent them from becoming community property.
Settle debts
In Texas, any debts accumulated during the marriage are community property, so if possible, pay off some of the shared debts. When you enter a divorce with less shared debt, it can streamline the division process. If paying off is not an option, at least document the debt amounts accurately to ensure a fair division.
Avoid making significant financial decisions
Now is not the time to make significant purchases or invest in a new business. Such actions can complicate the division of assets. Wait until after the divorce to make major financial decisions.