Texas is a “community property” state. This means that each party owns 50% of all property accumulated during the marriage. This includes cash, real property, retirement accounts, personal property, and any other property.
Even though each party technically owns 50% of each individual piece of property, the court generally does not go about diving each item down the middle when it divides property. If the situation calls for a 50/50 split, the goal is to equalize the value of the property. For example, if the marital residence has $20,000 in equity in it and the investment account has $20,000 in cash, the court may award the equity to one party (especially if that party is keeping the house) and the cash to the other. If both parties have a retirement account that was accumulated during the marriage, you usually will not see both accounts split in half. Instead, if one is larger than the other, only a portion of the larger account will be split off to equalize the retirement property. If the accounts are substantially equally, then the court will likely not divide the retirement accounts at all.
Any property accumulated before the marriage is considered separate property. If one party has a retirement account that dates back to a time period before the marriage, only that portion of the account that was earned during the marriage is considered community property.
It can be helpful to consult a financial analyst when trying to determine how best to equalize or split property. What may look equal on paper today may be significantly different ten or twenty years down the road. Our firm often works with a certified divorce financial analyst, who can show you what various property divisions will look like years down the road.