Tag Archives: assets

Top 3 Things People Don’t Know about Community Property

file0001248906240I got a question from a colleague who works as a financial planner: he wanted to know if a 403(b) retirement account was subject to division in divorce. The short answer to this question is probably yes. Many people don’t realize that in the absence of a premarital agreement, all assets obtained during divorce (with very few exceptions) are considered community property in a Texas divorce. Most people realize that a court may determine the division of their house, vehicles, and tangible assets, but there are some subtle nuances to the presumption of community property that could dramatically affect their odds for a positive outcome in divorce. It is always preferable for spouses to agree on the division of their property, but sometimes agreement is simply impossible, so I wanted to shed some light on the three most surprising aspects of community property division in divorce.

1. Inheritance is off the table.

If a relative passes away and leaves you a large sum of money, that inheritance is not subject to division as community property in your divorce. The money you receive in an inheritance is your separate property. However, if you mingle that money with your community funds (perhaps by using it to purchase other assets with your spouse), it could become a part of the community estate. This phenomenon is known as co-mingling. If you’re married and are on the verge of receiving an inheritance, it is a good idea to meet with a family law attorney to ensure your inheritance is definitively separate property.

2. Retirement accounts are subject to division.

As previously mentioned, retirement accounts (including IRAs, pensions, defined benefit plans, defined contribution plans, 401ks, and 403(b)s) are part of your community estate once you marry your spouse. If you’ve worked for decades at the same company,  you’ve likely acquired a substantial nest egg in your retirement plan. Most people believe if they work hard and obtain retirement benefits, they’re entitled to enjoy the fruits of their labor when they retire. However, once you marry, your contributions to your retirement plans become community property, and as the value of the plan increases over time, the balance of the plan from the date of your marriage becomes subject to division in divorce.

No one wants to lose their inheritance or their retirement. So what are couples to do if they want to avoid these outcomes? Thankfully, the presumption of community property can be overcome.

3. Couples can agree to define their assets as separate or community at any time.

Premarital agreements allow future spouses to decide what assets they want to keep as their separate property and which assets will be their jointly owned community property. Ideally, each party will have his or her own attorney to review the documents and advise as to the consequences of the agreement. This is a great opportunity for them to discuss their finances at their very onset of their marriage and establish clear boundaries about how their assets will be treated if they divorce. If you do not have a premarital agreement, do not despair. You and your spouse can create what’s known as a postnuptial agreement after you marry.

Unfortunately, finances are one of the primary motivating factors for divorce, so the sooner you and your partner get on the same page about the money in your relationship, the better off you will be as a couple. For more information about community property or to discuss your financial circumstances, feel free to give me a call at (713) 574-8626 to schedule a consultation.

Why It’s a Bad Idea To Write Your Own Will

 

Don't Let This Be You

Holographic wills can be trouble.

When discussing estate planning with people, I’ve heard it said a few times, “I could just write my own will.” While this is true, it is not as simple as it sounds. There are rules associated with writing a will, whether it is formally drafted by a professional, or if it is written by a person for their own benefit. For a moment, let’s take a look at the intricacies of a self-written, or holographic, will.

In Texas, a holographic will must meet two basic requirements.

1. It must be wholly written in the handwriting of the testator.

2. It must be signed by the testator.

Unlike a formal will, a holographic will does not need to be acknowledged by two witnesses, but it must still be readily identifiable as a will. The written document must be a final and lasting statement of one’s intent for their property. The courts call this “testamentary intent.” This means that a list of property, notes about what to do with said property, or a memo of thoughts concerning a person’s estate would not meet this test because these are considered intermediate steps, intended to be converted into a last will & testament.

With the increase in internet-based kits that claim to be “all you need” to write your own wills and legal documents, it is important to remember that very often these kits do not meet the basic requirements established by the state. It is very difficult and expensive to remedy a will that has been found to be insufficient, and that cost will be born by your surviving loved ones. Although the intent of a will is to clearly guide your family and loved ones, an invalid will could actually result in a hardship for them. To ensure that your last will and testament meets the standards set by the state of Texas, please contact an experienced attorney to discuss your desired wishes and protect your assets from excess taxation and obstruction.

The Law Office of Kimberly D. Moss would be glad to guide you in this process. Please call 713-574-8626 to schedule an appointment.