Seperation of property question

[tbraquet]

What is the name of your state (only U.S. law)? Texas
I have been married for 7 years. We bought a house about a year 1/2 ago. The down payment was given to me as a gift from my parents. We have 3 cars of which are financed in my name, one of which is my stepsons. She has a CD of $15k which she had before we married but has switched it to another bank this year. My question is in the property separation how would the house be decided, I have been to told by friends that the equity is the only thing that needs to be separated not the whole house since we have not had it very long. It is at about $25k, and would I have to pay for the car that she uses or would she have to refinance it? Also is the CD separate or community property?

 

[mistoffolees]

What is the name of your state (only U.S. law)? Texas
I have been married for 7 years. We bought a house about a year 1/2 ago. The down payment was given to me as a gift from my parents. We have 3 cars of which are financed in my name, one of which is my stepsons. She has a CD of $15k which she had before we married but has switched it to another bank this year. My question is in the property separation how would the house be decided, I have been to told by friends that the equity is the only thing that needs to be separated not the whole house since we have not had it very long. It is at about $25k, and would I have to pay for the car that she uses or would she have to refinance it? Also is the CD separate or community property?

The home equity will be split. If you keep the house, you will need to pay her for her share of the equity. If her attorney is smart, you'll also need to refinance to take her name off the title and mortgage.

The CD is PROBABLY her separate property.

If she can refinance one of the cars in her name, she will probably be able to take one - just make sure she refinances it and gets your name off the title. You have no obligation to provide a car for the stepson - I would offer stbx or stepson to buy it (and, again, take your name off the title and refinance it) or sell it. STBX will be entitled to 1/2 of any marital equity - which may not be significant on a financed car.

 

[tbraquet]

1. The home equity will be split. If you keep the house, you will need to pay her for her share of the equity. If her attorney is smart, you'll also need to refinance to take her name off the title and mortgage.

2. The CD is PROBABLY her separate property.

3. You have no obligation to provide a car for the stepson - I would offer stbx or stepson to buy it (and, again, take your name off the title and refinance it) or sell it. STBX will be entitled to 1/2 of any marital equity - which may not be significant on a financed car.

1. My name is the only one on the mortgage, both are on the title.
2. Would the CD not be considered community since she has reinvested every six months and taken out loans against it since we have been married?
3. The car for the stepson is paid by him indirectly. He sends a payment to my account which is then deducted by bank to make payment.

So as far as the house goes I would only have to paid about half the equity and be able to keep the house?

 

[mistoffolees]

1. My name is the only one on the mortgage, both are on the title.
2. Would the CD not be considered community since she has reinvested every six months and taken out loans against it since we have been married?
3. The car for the stepson is paid by him indirectly. He sends a payment to my account which is then deducted by bank to make payment.

So as far as the house goes I would only have to paid about half the equity and be able to keep the house?

1. Then it's easier. If she agrees to take 1/2 the equity in the home, she signs a quit claim deed and you're home free. She is legally entitled to 1/2 the marital equity so she'd be crazy to argue over that. If she does, you can ask the judge to order for you to keep the house and pay her 1/2 the equity. Of course, then you may get into a fight over exactly what the house is worth.

2. If she took out loans against the CD, that MIGHT be enough to make it marital property - particularly if the loans are still open. Someone else will have to answer that.

3. I would suggest that the stepson needs to get financing to buy the car from you - so that you don't have to deal with it. In a divorce, he may well decide he doesn't want to keep making the payments - and you'll be stuck with them. The court can't relieve you of your obligations to the bank. I'd tell stbx that if stepson can't finance the car in his own name that you're taking it back and selling it. She'll get 1/2 of the equity, but you won't get stuck with the loan.

 

[tbraquet]

1. Then it's easier. If she agrees to take 1/2 the equity in the home, she signs a quit claim deed and you're home free. She is legally entitled to 1/2 the marital equity so she'd be crazy to argue over that. If she does, you can ask the judge to order for you to keep the house and pay her 1/2 the equity. Of course, then you may get into a fight over exactly what the house is worth.

I don't understand the last two sentences. What would the value of the house have to do with this. I thought only the equity is what is in question. Are you saying there is a possibly I would have to pay more than half the equity?

 

[mistoffolees]

I don't understand the last two sentences. What would the value of the house have to do with this. I thought only the equity is what is in question. Are you saying there is a possibly I would have to pay more than half the equity?

You're each entitled to 1/2 of the EQUITY. The equity is the value minus the debt.

Presumably, you have a pretty good idea what the remaining mortgage balance is, so you simply need to know the value in order to determine the equity.

Let's say the mortgage is $175 K. If you think the home is worth $200 K and she thinks it's worth $300 K, there's a huge difference in what the equity will be.

You'll probably need to pay a qualified real estate appraiser for an estimate (unless the two of you can agree on a value - which might be possible since you just purchased the home). Typically, to choose an appraiser, you would present her with 3 choices and she would choose one (or vice versa).

But if you can't agree on the home's value, there's no way to determine what the equity is.

 

[tbraquet]

Thanks for your replies. It will give me a better idea of what to expect. I do have another question. How likely would a judge order me to pay for the car instead of making her refinance it?

 

[mistoffolees]

Thanks for your replies. It will give me a better idea of what to expect. I do have another question. How likely would a judge order me to pay for the car instead of making her refinance it?

You will have to split marital equity 50:50. The equity in whatever car she takes will count as part of her share of marital equity.

The remaining debt goes with the car. So if she takes a given car, she is responsible for the debt. HOWEVER, if your name is on the loan, you are liable to the bank and would have to sue her to recover any payments the bank makes you pay. So you will want to make sure she refinances the car in her own name - or have it sold if she is unable or unwilling to do so.

 

[LdiJ]

Thanks for your replies. It will give me a better idea of what to expect. I do have another question. How likely would a judge order me to pay for the car instead of making her refinance it?

The judge will not order you to pay for a car that she is keeping. However, the judge may not order her to refinance it either. She may just be ordered to make the payments. Unfortunately, that means that your credit is going to hinge on her making the payments in a timely fashion.

Your stepson should not be punished for the fact that you and his mother are getting a divorce if he has been making the payments on his car. Try to find a way to work with him on that. Its fairly rare that a car could be sold while there are still payments due on it, and come out with any equity.