Dividing Assets and Debts in a Collaborative Divorce

Why Collaborative Divorce Works Better for Property Division

Going through divorce means dividing everything you built together. Your home, retirement accounts, credit card debt—all of it needs to be split fairly. The collaborative process gives you control over these decisions instead of leaving them to a judge who doesn’t know your family.

In traditional divorce litigation, you fight over assets in court. In collaborative divorce, you work with your spouse and trained professionals to find solutions that work for both of you. This approach saves money, reduces stress, and lets you create custom arrangements that courts might not allow.

How Texas Treats Property in Divorce

Texas is a community property state. This means the law presumes that everything you acquired during your marriage belongs to both of you equally, no matter whose name is on the title.

Community property includes:

• Income earned by either spouse during the marriage
• Property purchased with income earned during marriage
• Debt incurred during the marriage

Separate property includes:

• Property you owned before getting married
• Gifts or inheritances received by one spouse
• Personal injury settlements (except for lost wages)

The court divides community property in a “just and right” manner—which often means 50/50, but not always. Collaborative divorce lets you negotiate creative splits that work better for your situation.

Gathering Your Financial Information

Before you can divide anything, you need to know what you have. In collaborative divorce, both spouses commit to full financial disclosure. This means gathering:

• Bank and credit union statements
• Investment and retirement account statements
• Tax returns (last 3-5 years)
• Credit card statements and loan documents
• Property tax records and mortgage statements
• Business financial records if applicable
• Vehicle titles and loan information

Your collaborative team may include a financial neutral—a CPA or financial professional who helps both of you understand your complete financial picture. This person isn’t working for either side; they’re working for accuracy.

The Collaborative Process for Property Division

Step 1: Create a Complete Asset and Debt Inventory

Working with your attorneys and financial neutral, you’ll list every asset and debt. This includes obvious things like your house and cars, but also retirement accounts, life insurance policies, and that timeshare you forgot about.

Step 2: Characterize Each Asset

For each item, you’ll determine whether it’s community property or separate property. This can get complicated. For example:

• You owned a house before marriage, but mortgage payments came from joint income during marriage
• One spouse received an inheritance but deposited it in a joint account
• A 401(k) has contributions from before and during the marriage

A family law attorney who understands Texas property law can help you characterize assets correctly.

Step 3: Value Everything

You need accurate values to divide fairly. This might involve:

• Professional appraisals for real estate or business interests
• Current account statements for financial assets
• Vehicle valuations from Kelly Blue Book or similar sources
• Consultation with retirement plan administrators

Your financial neutral helps coordinate these valuations and ensures both spouses understand the numbers.

Step 4: Discuss Your Priorities

This is where collaborative divorce shines. In a four-way meeting (both spouses and both attorneys), you discuss what matters most to each of you. Maybe you want to keep the house so your kids can stay in their school. Maybe your spouse wants to keep the business they built. You can trade and negotiate in ways that make sense for your family.

Step 5: Create Your Settlement

Once you know what you have and what each person wants, you work together to create a division plan. This becomes part of your final divorce decree.

Common Property Division Scenarios

The Family Home

You have several options:

• Sell and split the proceeds: Clean break, but requires moving
• One spouse keeps it: The keeping spouse typically refinances or trades other assets to buy out the other’s equity
• Delayed sale: One spouse lives there (often with children) until a specific trigger (kids graduate, remarriage, etc.)

Collaborative divorce lets you choose the timing and method that works best for your family.

Retirement Accounts

Texas law allows division of retirement accounts through a Qualified Domestic Relations Order (QDRO). Your collaborative team can help structure this so neither spouse pays unnecessary taxes or penalties. You might divide accounts proportionally, or one spouse might keep their entire 401(k) in exchange for other assets.

Debt Division

Community debt gets divided just like community assets. In collaborative divorce, you can negotiate who pays what based on:

• Who incurred the debt and why
• Each person’s ability to pay
• Tax implications of different debt structures

The collaborative process lets you address debt fairly without the blame game that happens in litigation.

What Makes Collaborative Different

In traditional litigation:

• A judge decides if you can’t agree
• Attorneys prepare for battle
• Financial experts work for one side or the other
• Creative solutions are limited by court rules

In collaborative divorce:

• You make the decisions
• Attorneys work to find solutions
• Financial neutrals serve both spouses
• You can create custom arrangements

The key is commitment. In collaborative divorce, everyone signs an agreement saying they won’t go to court. If either spouse decides to litigate instead, both attorneys must withdraw and you start over with new lawyers. This motivates everyone to find solutions.

When Collaborative Divorce Works Best

Collaborative divorce works well when:

• Both spouses can communicate respectfully (even if it’s difficult)
• You both commit to honest financial disclosure
• You want control over the outcome
• Complex assets need creative solutions
• You want to preserve a co-parenting relationship

Collaborative divorce may not work if there’s a history of domestic violence, hiding assets, or one spouse refuses to negotiate in good faith.

Next Steps

If you’re considering collaborative divorce for property division, start by:

1. Finding a family law attorney trained in collaborative divorce
2. Gathering your financial records
3. Thinking about your priorities for property division
4. Discussing collaborative divorce with your spouse

Property division doesn’t have to be a battle. With the right approach and professional guidance, you can divide assets fairly and move forward with your new life.

This information is for educational purposes only and does not constitute legal advice. Texas property law is complex, and every divorce is unique. Consult with a qualified family law attorney to discuss your specific situation.