What is an Inventory and Appraisement and why is it so important to my divorce?

Your financial “selfie”

An Inventory and Appraisement (I&A) is basically a full financial picture of your life. So, for instance, If I asked you to take a snap-shot of what your finances and property look like right now, that would be an I&A. The I&A is a long fill-in-the-blank document that your attorney will provide to you to fill out during the process of your divorce.

I&A’s include your real property (house), vehicles, boats, ATV’s, rental properties, money in bank accounts, all of your debts including back taxes, credit card debt and student loan debt, stocks, bonds, annuities, 401k’s and all personal property including furniture and valuables. This list is not exhaustive, in fact, there are hundreds of other things that you might include in your I&A. Generally, the rule is to include anything over $500 in value or anything that you simply cannot live without. This could include things that you need to survive or things that hold sentimental value to you.

Why does your lawyer need it?

Well, how is your lawyer going to know what type of property needs to be divided without an I&A? Sitting down with your lawyer at the initial consultation and giving them information about what type of property you have does not cut it. Why? Because if you think about it, everyone owns more property than they think they do. Remember that old bank account that has only a couple hundred bucks in it? What about that old mutual fund account you opened and contributed to? What about the box of old baseball cards that your husband bought during the marriage? What if they were worth $20000? Are you willing to give up your half of that? To formalize a divorce properly, your lawyer must know everything that you own, all the way down to the nitty-gritty.

Community vs. Separate Property in Texas

Most people know that Texas is a community property state. What most people don’t know if what makes property community or separate. There is a legal presumption in Texas that ALL property (and debt) that was taken on during the marriage is community property. Basically, that means that anything you or your spouse bought, all the money that both of you made and all of the debt both of you took on is community property. This includes all wages that you made and put into the bank account, all the savings you put into your 401k, all the debt that either of you put on those credit cards and all the equity you built in your home. Of course, there are exceptions to property taken in during the marriage including inheritance, some gifts and personal injury awards.

Separate property is basically anything you had (including debt) before you were married. This goes with you after divorce and is not split with your spouse.

How is community property split in Texas?

Right down the middle… most of the time. All community property will be presumed to be split 50/50 upon dissolution of marriage unless one spouse claims that the other spouse is at fault for the divorce OR that spouse does not have the ability to earn an income that they need for their reasonable means and does not own sufficient property to make up the difference.

Most of the time community property will be split 50/50 which normally means that one spouse will have to compensate the other to make the split equal. Say for instance, husband and wife are divorcing and the marital estate is worth $500,000. This includes $50,000 in various bank accounts, $100,000 in husbands 401k (all community property) and a house that has $350,000 worth of equity. To finalize the divorce, both husband and wife must walk away with $250,000 EACH. But let’s say that husband wants to keep the house. In order to do this, he will need to “buy” wife out of her interest in the marital house. So, to do this, husband may give wife all the money in the bank ($50k) and all of his 401k ($100k). Then he would still need to compensate wife for the additional $100k. To do this, husband may offer to pay wife $10,000 for the next ten months. Or, husband may agree to pay the $100k after a “cash-out” refinance of the home. Or its possible for the wife to have an owelty lien on the house, which would basically make her the first lien holder on the house. Meaning if husband ever defaults on the mortgage, wife could take possession of the house or if the house was ever sold, she would get her $100k first.

What should I do when it’s time to fill out my Inventory and Appraisement

The I&A is a long document. It will take the average person a few days to fill it out completely. It will ask for full account balances and full account numbers. Inevitably, you will forget about certain pieces of property and will have to go back and fill that information in. We advise our clients to give it two full weeks to complete the I&A. Even if you think you’re done, its best to leave it alone for a couple days and see if any long-forgotten property or debt pop into mind.

By filling out your Inventory and Appraisement completely, you are ensuring that all the property and debt you accumulated during your marriage will be addressed and properly divided. A little bit of work at the outset will save you thousands of dollars down the road. The last thing you want after a divorce is to be stuck with debt that wasn’t yours or to not get the property that you think you deserved. If you have more questions about an Inventory and Appraisement, or if you are thinking about divorce or if you are ready to hire an aggressive and efficient divorce attorney in Fort Worth, call The Law Offices of Jayson Nag at (817) 900-2823 or send us a message online.