“Can my wife or can my husband take my car if it’s in my name?” is a question divorce lawyers hear every single day. While it sounds like a simple question, who gets the car in a divorce depends on a number of factors, including where you live, when the car was purchased, whether it was a gift and what other assets make up the marital estate, among other things.
Texas is a community property state, which means any property acquired during a marriage is subject to just and right division upon divorce. However, if a party can prove that a car (or other asset) is actually his or her own separate property—based on clear and convincing evidence—the vehicle may be excluded from the couple’s marital estate.
If a car is purchased during marriage, when is it considered separate property?
In Texas, if a car was purchased during marriage, it may be considered one spouse’s separate property if that spouse received the vehicle as a gift from the other spouse (and they can prove that fact with clear and convincing evidence). Other situations where a car may be considered separate property in Texas is where a spouse received the car as a gift (say from a parent or other family member) or purchased a vehicle for him or herself with money gifted to them by another party.
For example, if your wealthy uncle gifted you $50,000 and you use that money to buy yourself a new Ford Bronco Sport with all the bells and whistles for about $45 grand, that SUV would typically be considered your separate property, should you go through a divorce later.
Who gets car in divorce if the car was purchased prior to marriage?
If you owned a car, free and clear, prior to marriage, that vehicle would generally be considered your separate property and not be subject to division upon divorce. Now, if you financed a car prior to marriage and used marital funds to pay off the note for that vehicle while married, that car may be considered part of the marital estate should you divorce in Texas.
Does it matter whose name is on the title?
Many of the divorce car questions we receive pertain to whose name is on the title, like “Can my husband take my car if it’s in his name? If you reside in Texas and found this blog by searching related questions, such as divorce car in husband’s name, divorce car in wife’s name, divorce car in both names or divorce car in my name, this section is for you.
As noted earlier, any property purchased during marriage is subject to just and right division upon divorce in Texas. Unless you can prove the car is your own separate property, it generally doesn’t matter if your name, your spouse’s name or both of your names are on the vehicle title. That’s because the state of Texas operates under the rule of inception of title, meaning inception occurs on the date the title is issued. (Texas Family Code 3.006)
In a divorce who gets the car can be more complex than you think
During a divorce, the judge will consider all assets (and debts) included in the marital estate when determining who gets what, including who gets the car in a divorce. The reality is you need to think about your vehicle in association with your residence and retirement accounts, as well as any other assets and debts you and your spouse share. In other words, you need to be concerned about more than can your spouse take your vehicle.
Now, if your and your spouse’s only shared asset is a car, you will need to consider how much equity you have in that vehicle. If you have a small amount of equity in the car and a sizeable loan outstanding—which you are both responsible for paying—the party who wants to keep the car will need to refinance that vehicle and execute the required ancillary documents in order to transfer the motor vehicle—and the obligation to pay for it—solely to that party.
Permission from the party who is relinquishing claims to the vehicle is also required, which usually involves signing a power of attorney document that allows their spouse to remove their name from title and loan documents.
Of course, the parties will also need to consider whether or not the party who wants to keep the car can qualify for a loan and afford the car payment on their own. In addition, that party must also come up with the resources to reimburse the other party for their portion of the equity in the car.
Another option would be to sell the car, pay off the remaining balance of the loan and split whatever money is left. This is a painful consideration for many of my clients but it may be your only option if the car is the only asset you own together and money is tight.
Who gets the car in a divorce when other assets are in play?
It’s really important to speak to an attorney who has a financial background when you’re dividing marital assets because there’s so much more to consider than equity. A lot of attorneys just say, “Well, you’ve got a hundred thousand dollars equity here in your home, you’ve got $50,000 in a vehicle over here, and you each have your own retirement accounts. Let’s just chop these things up.” But that’s not the way it works.
You have to look at net present value of money, interest rates and what it’s going to cost to actually effectuate the transfer of that asset. All of those things come into play when you’re dealing with a negotiation and settlement offer. They also come into play when you’re putting forth evidence in a trial.
For example, say you filed for a divorce when interest rates were low, as they were for many years, but you and your spouse came to an impasse and held out for trial because both parties said, “I want the house.” Now, you go to trial when interest rates are much higher, and all of a sudden one of the parties has to pay double the interest to buy the other one out.
You really have to think through those things because economic fluctuations are not uncommon in today’s world. With the volatility of the markets, inflation, interest rates and the banks, you have to consider what impact those issues will have on what you will end up paying for vehicles and residences over the long term. Potential appreciation of property (often true for homes, usually not the case for vehicles) is another factor that comes into play.
Other critical considerations include how much money you could lose if you buy out the other party’s interest in an asset by taking out a loan or borrowing from your 401k. Interest rates directly correlate to valuation. These factors can all make a big difference when determining what the best option is for you during divorce settlement negotiations, which is why it is essential to hire a divorce lawyer with a strong financial background.
Don’t stay married via your car (or other assets)
Fighting to keep an asset that’s going to cost you a lot of wasted money, in the long run, isn’t worth it, especially if keeping your hands on that asset continues to entwine you with your ex. As a divorce lawyer, I always tell people, “I don’t like my clients to stay married via asset.” In other words, it’s generally better for all concerned if any assets from the marital estate are transferred to one party or the other (or sold), with the proper paperwork filed to effectuate any transfers of property.
In a bigger estate with plenty of money to go around, that’s typically not a problem. In the one-offs and two-offs involving a vehicle, oftentimes we’ll recommend our client buy out the note on the car but use other assets to do so when possible. Buying out a car is a much better idea than leaving the car in the other party’s name if they won’t be able to refinance it. Again, if neither party will be able to refinance, selling the car is typically the best option.
An experienced attorney with financial know-how can help you see the big picture
If you’re wondering who gets the car in a divorce that you’re involved in, it’s important to seek advice from a divorce lawyer who understands the intricacies involved with complex (and seemingly not-so-complex) property settlements. Whether you’re only asset is a Kia with $5,000 in equity or you own a Lexus, Mercedes and multiple residences, a Fort Worth divorce lawyer at the Sisemore Law Firm would be happy to help you weigh your options.
If you live in Dallas / Fort Worth or the surrounding communities, please contact our law firm to schedule a confidential case review today. You can reach our office by calling (817) 336-4444 or schedule a consultation online.
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