Financial Disclosures in Texas: What You Need to Know
- Required initial disclosures in Texas
- Real property information
- Pension and retirement information
- Insurance policy information
- Bank account information
- Federal tax information
- Payroll information
- FAQ about Texas financial disclosures
Divorce is hard enough. Following strict state laws about legal procedures can seem overwhelming, especially when the laws change. That's exactly what happened in 2021 when Texas divorce disclosure laws changed.
In the past, you could wait to exchange financial information (disclose) with your spouse until later in the divorce process. Now, courts require disclosure of financial documents at the beginning of the divorce process. What’s more, they must be shared even if the other party does not ask to see them.
Watch: Everything You Need to Know About Divorce Financial Disclosures
Required initial disclosures in Texas
Completing your disclosure form in Texas isn't simple and may not be fast, but it's required and will help speed up your divorce by exchanging information at the start of the process.
Why is disclosure required? Mostly for increased efficiency. By exchanging all your information with your spouse without waiting for a request, you're both laying everything out on the table so you can negotiate honestly and efficiently. Even if you can't come to terms with everything on your own, a mediator or lawyer can help you reach a final resolution based on the exchange of information.
Free download: The Ultimate Guide to Divorce Mediation
Real property information
You might think sharing information about the property you own is unnecessary since both spouses should already know it. However, some spouses attempt to hide assets, including real estate. Other times, a couple may have separated for a long time and acquired additional property without the other's knowledge. All of these details must be disclosed so each party can negotiate openly.
What Should You Do With Your Marital Home in Divorce? Explore Your Options.
Pension and retirement information
Pension and retirement information can affect the division of assets, support payments, and other related matters in divorce. It is crucial that both parties accurately disclose their respective pension and retirement accounts so a fair settlement can be achieved.
If either party opts to conceal any funds or assets during this time, it could severely impact the overall settlement agreement between them. Both spouses are usually entitled to half of the account value during the marriage, so getting accurate records of all these accounts is vital during a divorce.
Insurance policy information
During a divorce, insurance information is critical in order to determine financial obligations and assets. Life, homeowners, auto, health, and child insurance all provide important protections for both parties during the transition. If one spouse's job provides healthcare coverage for the entire family, including children, this spouse may be required to continue providing coverage until the divorce is finalized. Knowing this information is critical to keeping the family safe during a divorce.
Bank account information
Like real estate, some people may try to hide liquid assets in a divorce. They may do this to try to set themselves up for financial success after divorce or to hurt their spouse for any number of reasons. But this is not the right way to go about divorce, as it doesn't allow for fair negotiation between spouses. That's why having a clear picture of each spouse's financial situation is so important during a divorce.
Texas is a community property state. This means that marital property is expected to be divided equally, or 50/50, between divorcing spouses.
Federal tax information
Divorce can have a major impact on one's federal taxes. That is why it is important for both parties to disclose their respective tax information during the divorce proceedings. This includes your tax return filing status, number of exemptions, income sources and deductions, and other tax items. Knowing these details is necessary for an accurate calculation of each party’s share of taxes, spousal support payments, alimony payments, and child support related to the divorce agreement.
It is also important to consider any potential tax implications that may arise from certain property division arrangements. For instance, if one partner transfers assets to the other partner as part of a settlement agreement, this could result in taxable gains or losses, depending on the situation. Without knowing each other’s federal tax information, it would be nearly impossible to accurately assess such scenarios. The disclosure of federal tax information thus helps ensure that all financial obligations are properly accounted for during the divorce process.
In divorce, payroll information is important for determining the amount of support payments each party may be responsible for. This includes alimony, spousal support, and child support payments. Knowing the content of each person’s pay stubs can help provide a more accurate assessment of what each party should pay in these areas.
Moreover, payroll information can also provide insight into other financial obligations that one or both spouses may have. This includes pension plan benefits, bonuses, stock options, and other benefits that could be subject to division during the divorce settlement.
FAQ about Texas financial disclosures
Can financial disclosures be waived in a Texas divorce case?
Yes. Despite the legislative changes in 2021, Texas does allow financial disclosures to be waived. The waiver must be in writing and signed by both spouses.
What should I do if I suspect my spouse is hiding assets?
Contact a family law attorney immediately. They'll be able to speak with you about your suspicions and take action to investigate.
Divorcing couples are often uncomfortable with the financial disclosure process because of the sensitive information involved. If you are getting divorced in Texas and would like to speak with an account coordinator about your concerns or the services and online divorce plans we offer, please schedule a free consultation by viewing our calendar here.