Asset and Property Division in Divorce Cases in Texas

Protect your assets in a divorce. We fight for you.

“Community Property” and “Separate Property” in Texas is confusing. We help you sort it out.

Dividing assets in a divorce under Texas Family Law can be a complex and delicate process.

One of the first issues that confronts married couples is the characterization of property. Is the property community property or separate property? These are legal terms of art, which means they have specific meaning under Texas Family Law.

In a divorce, the court can divide only what is in the “community estate,” the community property and debts taken on during the marriage. Each party’s separate property can be protected in this process if it is handled correctly.

This web page describes the issue of community vs. separate property and other factors that may govern your interests in a divorce. Please call Chris if you have any immediate questions about separation of property in a divorce under Texas Family Law.

Everything is Presumed to be Community Property

It is important to know is that all assets owned by the couple at the time of divorce are “presumed” to be community property.

What that means is, regardless of whether you and your spouse may be able to prove that certain property is your separate property, the court must treat it all as community property until it is proven to be separate property. If you have property that you know to be separate and your lawyer does not adequately prepare your case, your spouse may be awarded part of your separate property.

But What Is Separate Property?

Almost everyone has an opinion of what community property and separate property should mean, but only an experienced divorce lawyer can guide you through the ins and outs of Texas community property law. Whether your property is community property or separate property is something that is determined according to Texas Family Law statutes, Texas case law and the Texas constitution.

How The Courts Define “Separate Property”

Separate property is generally held to be property

  • owned by a spouse prior to marriage,
  • acquired by inheritance or gift at any time during the marriage,
  • compensation for personal injuries (but not loss of earnings compensation) received by a spouse during marriage.

Property acquired with any of the three items above may also be considered separate property. This is known as the “mutation” of separate property. For example, if you inherit $30,000 during the marriage and immediately take that $30,000 and buy a car for $30,000, the car is your separate property.

However, if you put the $30,000 in the bank, spend half of it on a nice trip, and afterwards build the account balance back to $30,000, that bank account will be half community and half separate property. However, under a new law passed by the Texas Legislature in 2023, you might be able to make a “claim for reimbursement” of that $15,000 from the community estate if it was spent for something that the community estate should have paid. This does not change the fact that your $15,000 is no longer separate property, you just have a potential way to get it back.

It is held generally that the appreciation of separate property continues to be separate. For example, if you own a separate-property house that increases in value during the term of the marriage, that increase in value is separate property. However, if payments of principal were made during the marriage with community property, the community estate could have a “claim for reimbursement.”

This would be similar to what is described in the previous paragraph, however, the claim being discussed here is a matter of settled law, not a potential statute.

And even though interest and dividends earned on separate property are considered community property, capital gains continue to be separate property. Capital gains are considered an “appreciation” of the value of property, much like the separate-property house mentioned above.

An example of capital gains would be the increase in value of separate property stock. Assume you owned 100 shares of stock at the time of the marriage. The stock was worth $100 per share. That means your 100 shares was worth $10,000 at the time of marriage. At the time of divorce, you still own the same 100 shares of stock, however, the stock is now worth $200 per share. That increase in value of $100 per share continues to be your separate property because we are still talking about the same 100 shares of stock you owned at the time of the marriage, it is simply worth more now.

The above example is true of any separate property asset. If you own a house prior to marriage, that house is your separate property. The only way that can change is if you deed part of the house to your spouse during the marriage. Some parties who have done this were shocked to find out during the divorce that, under Texas Family Law, they gifted half the house to their spouse. That means half the house is now their separate property.

There are many misconceptions about separate and community property. One of those misconceptions is the belief that if an asset is held in just one name, it is the separate property of that person. That is not true under Texas Family Law. Just because one spouse has his or her name on a title or a bank account does not mean it is separate property under Texas Family Law. The asset may be separate property because of other reasons (inherited property, received as a gift or the result of a personal injury settlement), but the name in which it is held has no significance.

For more information, read our Blog, “Characterizing property in a divorce settlement–community versus separate property.”

It Is Not Your Separate Property Until You Prove It

Chris A. Spofford has been trying property division divorce cases since he was admitted to the Texas State Bar in 1986. He has been Board Certified in Texas Family Law since 1993. He makes it his business to stay current with the most recent appellate court decisions in the area of divorce property division.

Texas family courts require clear and convincing evidence of separate property ownership within strict bounds of this legal definition. Courts may require proof by tracing the source of the separate property acquisition, and when funds are co-mingled in a joint account, it may become difficult to prove. Clear and convincing evidence generally requires documentary evidence of the separate property (e.g. bank statements).

Once a determination of separate property is made there must be a decision on how to divide the community property. In Texas there is no presumption that a 50/50 split is reasonable. The test for the court is to divide the community property in a manner that is “just and right.” Again, just and right is a legal term of art. There are many issues that a court may consider in dividing your property. Courts have made community property divisions that are anywhere from 50/50 up to 90/10. Read more in this blog about how Divorce Property Settlements are Not Always 50/50 in Texas.

How Community Debts Affect the Value of Your Assets

Before a divorce can be completed, the Court will usually require each party to file an inventory and appraisement that includes all property and debts of the parties and the value of each: what is in bank accounts, investments, the value of your vehicles, house, etc. Household furniture and furnishings are generally lumped into one line item unless there is something of extraordinary value, such as a valuable piece of art.

Be careful about debts incurred after separation but before the divorce is granted. A case can be pending for a year or longer before finally getting resolved. Courts usually have each party be responsible for debts incurred from the date of separation until the date of divorce.

How to Ensure You Get Your Rightful Share of Your Estate

Please do not gamble your rightful share of community property and risk your separate property being considered part of the community estate. Select a Houston divorce lawyer with the knowledge and experience to help you get the division of property that is that’s in your best interest.

As a Houston divorce lawyer dedicated exclusively to Family Law, Chris A. Spofford can navigate you through this maze and defend your rights as forcefully as necessary.

Contact Chris to learn about your family law options and how he can help you with your choices.

For more information about community property and separate property in Texas Family Law, please read our Blog, “Characterizing property in a divorce settlement–community versus separate property.”

A home that is sold in Houston, TX, and needs a property division lawyer

Property division under Texas Family Law can be a complex and delicate process.

Contact Chris A. Spofford, Family Law Attorney

Call 713-526-2400 to schedule time with Chris.