Attorney
Divorce is not only an emotional transition; it also reshapes your financial life. From deciding how to divide property to determining support obligations, the process requires thoughtful planning. When you take the time to prepare, you can move forward with a clearer picture of your financial future.
Reviewing Shared Finances
The first step in financial planning during divorce is understanding what you and your spouse currently own and owe. This involves collecting records and creating a full picture of your financial situation. Documents that are especially helpful include:
- Bank statements and retirement account balances
- Mortgage, loan, and credit card records
- Tax returns and pay stubs
- Insurance policies
With this information, we can better evaluate what is considered marital property and what might remain separate under Texas law. In Midland and Odessa, where oilfield investments, small businesses, and real estate holdings are common, these records can be important in reaching an accurate financial picture.
Property Division in Texas
Texas follows community property rules, meaning that most property and income acquired during the marriage belongs to both spouses equally. While this might sound simple, dividing property fairly is often more complex. Courts consider factors such as earning power, fault in the breakup, and the financial needs of each spouse.
Property that may need to be divided includes:
- Real estate, including the family home or investment properties
- Retirement accounts and pensions
- Business interests
- Personal property such as vehicles, furniture, or jewelry
Having an accurate valuation of assets is critical to reaching a fair division. For example, a retirement account must be divided correctly through a Qualified Domestic Relations Order (QDRO) to avoid tax penalties. Similarly, a business or professional practice often requires a professional valuation to ensure fairness and accuracy.
Planning for Support Arrangements
Support after divorce often takes two forms: spousal maintenance (alimony) and child support. In Texas, spousal maintenance is awarded only in limited situations, such as when one spouse cannot meet basic needs due to disability, long-term caregiving responsibilities, or a lengthy marriage.
Child support is calculated using state guidelines that consider the paying parent’s income, number of children, and other financial obligations. In Midland and Odessa, as in the rest of Texas, courts prioritize the child’s best interests when setting support amounts.
Understanding these guidelines early helps you plan your post-divorce budget with more certainty. It also helps you anticipate how health insurance, extracurricular expenses, and college savings may factor into the long-term plan for your children.
Building a Post-Divorce Budget
Once support obligations and property division become clearer, it’s time to build a realistic budget. This should account for your new income, living expenses, and long-term goals. Key steps include:
- Listing monthly fixed expenses, such as housing and transportation
- Adjusting discretionary spending where necessary
- Setting aside emergency savings
- Continuing retirement contributions
A detailed budget provides structure and reduces stress during the transition. It can also help you adjust to single-income living, particularly if you were previously relying on a combined household income.
Considering Tax Implications
Taxes are often overlooked during divorce, but they can significantly affect your financial outcome. Under current federal law, spousal maintenance is not tax-deductible for the paying spouse and is not taxable income for the receiving spouse. This change, made in 2019, means that support arrangements should be evaluated with after-tax income in mind.
Child support, meanwhile, has no tax effect for either parent. The paying parent cannot deduct it, and the receiving parent does not report it as income.
Other financial issues during divorce may still create tax consequences, such as the transfer of retirement funds, the sale of real estate, or changes in filing status. Questions about exemptions for dependents and eligibility for credits like the Child Tax Credit are also worth reviewing before finalizing agreements.
Planning for the Future
Divorce is also an opportunity to reassess long-term financial goals. Updating your estate plan, reviewing beneficiary designations on insurance and retirement accounts, and adjusting investment strategies are all part of building stability. If you own property or investments in Midland or Odessa, making sure titles and ownership records reflect post-divorce changes is just as important as dividing them in the first place.
Why Work With Divorce Attorneys on Financial Planning
Every divorce is unique, and financial arrangements must be tailored to your family’s needs. At Navarrete & Schwartz, P.C., we understand the impact these decisions have on your future. We help clients in Midland and Odessa review assets, assess long-term needs, and reach agreements that protect financial stability. Our role is to guide you through the legal process while keeping your financial well-being front and center.
Creating Stability After Divorce
Financial planning during divorce may seem complicated, but you don’t have to do it alone. With clear records, careful budgeting, and experienced legal guidance, you can create a foundation for life after divorce.
If you are considering divorce or are already in the process, contact Navarrete & Schwartz, P.C. to discuss how we can support you through each step. Our team is here to protect your interests and help you build a stable financial future.