securities, money, and interest in a texas divorce

Divorce proceedings often involve complex questions concerning the division of financial assets such as bank and brokerage accounts. A key issue that arises in Texas divorce law is whether an award of these financial accounts authorizes an award of interest on their value.

Texas Family Code and Financial Accounts

The Texas Family Code allows for the equitable distribution of assets upon divorce as deemed “just and right” by the courts. This statute facilitates the division of community property but does not explicitly address the accrual of interest on these divisions.

Texas Finance Code and Postjudgment Interest

The Texas Finance Code, specifically § 304.005, outlines the conditions under which interest accrues after a judgment. Understanding the definition of a “money judgment” is crucial in this context.

Definition of “Money Judgment”

A money judgment, as defined by the Texas Finance Code Ann. § 301.002(a)(12), is “a judgment for money.” This definition helps determine whether an award from a divorce decree can accrue interest, as seen in cases like Long v. Castle Texas Prod., Ltd. P’ship, 426 S.W.3d 73, 78 (Tex. 2014).

Interpretation in Case Law

In City of Fort Worth v. Pridgen, 653 S.W.3d 176, 185 (Tex. 2022), it was noted that legislation permitting postjudgment interest on a “money judgment” does not necessarily extend to judgments for non-monetary assets.

Application to Divorce Settlements

An award of a bank or brokerage account in a divorce typically does not qualify as a money judgment, especially if the account includes a mix of investments and cash.

Securities vs. Money

Legally, money is defined as “a medium of exchange currently authorized or adopted by a domestic or foreign government.” This is distinct from securities, such as stocks, bonds, and commercial paper. Therefore, a divorce decree dividing an account with both investments and cash does not meet the money judgment criteria and usually does not accrue postjudgment interest unless specifically stated.

Conclusion

Understanding that financial awards in divorces, such as bank or brokerage accounts, do not automatically accrue interest is essential for those involved in such proceedings. This clarity aids in effective planning and negotiation during the divorce process.

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