What Happens to Investments During a Divorce?

When a couple divorces, many financial considerations arise. Assets take the form of cash, real estate and investments, such as stocks, bonds, mutual funds and other securities.

What a person brings into the marriage and the agreements between the marriage mates affect the division of property.

What is community property?

All assets and liabilities partners acquire during the marriage are community property under Texas law. That means that each spouse has an equal right to these assets and liabilities regardless of whose name they are in or who earned them. The court divides community property equally between the two spouses unless there is an agreement to do otherwise.

What is separate property?

Separate property is any asset or liability a spouse owned before marriage or acquires as a personal injury settlement, gift or inheritance during the marriage. Individual property remains with the owner after divorce.

However, any increase in the value of separate property during the marriage is usually subject to division unless the owner can somehow establish that the other spouse did not contribute to the preservation or appreciation of the property. Proving separate property is quite challenging when spouses commingle accounts.

What about prenuptial and postnuptial agreements?

If a couple enters a prenuptial or postnuptial agreement, those agreements typically take precedence over state law. Such contracts can specify which type of assets should remain separate from community property and thus not be subject to division upon divorce.

A married couple considering a postnuptial agreement or attempting to divide assets amicably must consider tax considerations and the legal implications of such contracts. If an individual has concerns about an estranged spouse trying to dissipate marital assets, a temporary restraining order may protect funds until the court can further intervene.

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