Divorce can be tough, especially when it comes to dividing property like houses. In Texas, there is a helpful thing they call and “owelty”. Here’s a simple breakdown of what they are and how they work:
What is Owelty?
Owelty is a lien used when one spouse needs to pay money to another to balance out property division, mainly for real estate during divorce. Balance does not mean it has to be evenly balanced because the owelty is a tool that creates flexibility in divorce negotiation.
How Does Owelty Work?
Let’s say a couple owns a house worth $500,000, and one spouse wants to keep it. To make things fair, they might pay the other spouse $250,000. This payment compensates the departing spouse for their share of the house’s value. This is the most simple example of how it can be used. If there is a mortgage on the home, you can still use it but the numbers change. Video Below includes basics and such an example.
Legal Side of Owelty
- Property Lien: Often, the owelty is secured by putting a lien on the property to ensure payment.
- Tax Considerations: While owelty payments themselves aren’t usually taxed, transferring property ownership might have tax implications. Talk to your CPA if you need clarity.
Advantages of Owelty
- Fairness: Owelty payments ensure both spouses get a fair share of property.
- Asset Preservation: They allow one spouse to keep valuable assets, like the family home, without selling them.
- Flexibility: Owelty agreements can be adjusted to fit each couple’s unique situation. THIS is one of the biggest strengths of the owelty.
Conclusion
Owelty liens are a helpful tool in Texas divorces, especially for dividing real estate fairly. Understanding how they work and their legal aspects can make the divorce process smoother for couples navigating property division.
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