Division of Property in Texas Divorce
Community Property and Separate Property
Property division after divorce under Texas Family Law can be a complex and delicate process. The first issue is 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 is protected in this process.
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 exchanged for 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.
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.”
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.
There are many misconceptions about separate and community property. 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.
For more information, read our Blog, “Characterizing property in a divorce settlement–community versus separate property.”
You may have separate property, but can you prove it in a court of law?
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.
Community debts offset the value of community property
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 will property division laws in Texas affect you?
Please do not gamble your rightful share of community property. 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.”