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Property Division – In-Kind & Division by Sale

February 10, 2022 by Divorce Concierge Leave a Comment

Property division concept.

One of the biggest issues couples deal with when they divorce is dividing up their property. Couples are very eager to know how this issue will be taken care of. This makes sense because there is often a great amount of value at stake. In this post, we will give a brief introduction to the topic of property division here in the State of Texas. As many people are aware, Texas is a community property state, and so this community property principle heavily informs how Texas courts approach the matter of property division.

Texas courts use two main methods in property division – in kind division and division by sale. We will discuss both methods in turn, and then discuss when periodic payments may be ordered.

Texas is a Community Property State

As mentioned, Texas is a community property state, and so this means that all property acquired during the marriage by either spouse will be considered “jointly owned.” If one spouse receives a sizable bonus from his or her employer during the marriage, that bonus is considered community property for purposes of asset division.

People need to be aware, however, that asset division in a community property state is guided by the principle that division should be “just and right” in all cases. This means that community property is more of a presumption than anything else. There is a presumption that all property acquired during the marriage will be jointly owned and therefore divided equally following divorce; but, in reality, marital assets may not be divided equally if a just and right outcome can only be achieved through an unequal division. Ultimately, everything depends on the specifics of a given case.

Property Distribution via In Kind Division

After a Texas court decides how marital assets will be divided, the next step is to determine the method of distributing the assets. The first method we will mention is “in kind division.” Basically, in kind division happens when the court actually assigns a particular piece of property to one party. This usually happens with certain types of personal property, such as automobiles, jewelry, and so forth. Again, everything depends on the circumstances, but in many cases the court will hold that selling off these pieces of personal property would be unnecessary or counterproductive. The court will then assign them based on the circumstances of the case.

Property Distribution via Division by Sale

In situations where property cannot easily be assigned to one party or the other, Texas courts will utilize the other main method of distribution: division by sale. This involves selling off the asset and then distributing the proceeds between the parties. This usually happens with houses. When a couple owns a personal residence, the residence may be sold following divorce because if it cannot be assigned to one spouse with a corresponding assignment of debt. This is because courts can award property, but cannot change the debt obligation between the creditor and the debtor. The court will order the house to be put on the market, sold and then the parties will share the proceeds. However, when one spouse has enough assets to compensate the other spouse, a house may be assigned and then the receiving spouse will simply pay off the other spouse’s interest.

Periodic Installments Payments May Be Necessary

Texas courts may also order one spouse to make periodic payments to the other spouse in order to balance out property interests. This may happen when a receiving spouse of a large asset, such as a house, doesn’t have enough assets to compensate the non-receiving spouse immediately. So, the court will order the receiving spouse to make regular, periodic payments to the non-receiving spouse over a period of time. This is not a preferable method of division, however, because enforcement can be difficult.

Contact Divorce Concierge for More Information

This is just a brief overview of these issues. We may return and discuss property division in Texas in greater detail in the future. If you need more information, contact Divorce Concierge today.

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