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Property division is often one of the most contentious aspects of any divorce. The characterization of assets plays a crucial role in how they are distributed during the divorce proceedings. Importantly, Texas is one of nine states that is a “community property” jurisdiction. This means that if spouses are unable to reach an agreement regarding how their property should be divided, a judge will apply this rule to make a determination.
Community property is considered any asset or property acquired by either spouse during the marriage — other than that which would be characterized as separate property. Under the Texas Family Code, there is a legal presumption that property possessed by either spouse before the dissolution of the marriage is community property. However, this presumption may be rebutted with clear and convincing evidence.
Common examples of community property that must be divided in divorce include the marital home, vehicles, personal belongings, income earned by either spouse, collectibles, artwork, retirement accounts, investments, and real estate. Income derived during the marriage from separate property is also deemed community property in Texas. Additionally, all forms of debt that are considered community property must be addressed in the divorce process.
Separate property is not subject to division between spouses in a divorce. Rather, it remains with the original owner. Under Texas law, separate property is defined as:
Real estate and certain other assets acquired before the marriage can be established as separate property by relying upon the inception of title doctrine. However, the name in which the property is titled does not always determine whether it is community property or separate property. Rather, the rule specifies that the character of the property is based on the date it was first acquired.
It’s critical to be aware that separate property can be combined with community property, resulting in “commingling.” This can often complicate property division during divorce. If there is no prenuptial agreement in place that specifies which assets are considered community property, and there is no way to determine which portions are separate property, the law presumes it is community property.
Commingling can arise in a number of ways. For instance, if a spouse owned a house before the marriage and both spouses contributed to improvements or repairs, the other spouse may be entitled to reimbursement for their contributions in increasing its value. Commingling issues can also arise if a spouse uses separate assets to make investments, and the money earned is reinvested during the marriage. In such cases, dividends earned while the parties are married are typically considered community property.
Another example of commingled assets would be when a spouse deposits their inheritance into a joint bank account from which both spouses make withdrawals or add deposits. Texas law presumes that community funds are withdrawn from joint bank accounts first — if the account balance is greater than the inheritance amount, the funds that were inherited will be deemed separate property. But if the account balance is less than the amount that was inherited, the spouse who received the inheritance will be awarded the balance.
While couples may enter into a settlement agreement to determine how their property will be distributed upon divorce, a judge will equitably divide the property in accordance with what is “just and right.” Even though Texas is a community property state, property division isn’t always 50-50. If an even division would not be fair based on the circumstances, the court will adjust the presumption of equal division.
When deciding how property should be divided, a court may evaluate a variety of factors. These can include the education, vocational skills, age, and health of the spouses, and the amount of separate property owned by each spouse. A court may also consider whether one spouse is the children’s primary caregiver and a spouse’s marital misconduct.
Texas courts will also divide debts that are characterized as community property. Both spouses are generally responsible for debt incurred during the marriage, regardless of which spouse acquired it. However, a court will usually rule that the spouse who spent the money will be accountable for any debt in connection with the purchase.
Divorce can be confusing and overwhelming — especially when it comes to understanding what property is rightfully yours. It’s essential to have a skilled divorce attorney by your side who can advise you regarding your legal and financial rights.
Stacey Valdez is a board-certified Houston divorce attorney who offers compassionate counsel and aggressive advocacy for a wide variety of matrimonial matters, including property division issues. Schedule a consultation with Stacey Valdez & Associates by contacting us online or calling (713) 294-7072.
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