What Are the Legal Considerations for Property Division During Divorce in Texas?

One of the toughest issues to face any divorcing couple is how to divide their property. Texas is a community property state, and that means the state assumes that all property acquired during the marriage by either partner belongs to them both, with some exceptions, but looks to divide this property according to what is “just and right” rather than just make a 50-50 split. A divorce attorney in Houston can help you understand how the laws are likely to apply in your divorce.

What Are the Legal Considerations for Property Division During Divorce in Texas?

Distinguishing Between Community and Separate Property

Perhaps the most important thing in the whole property division question is deciding what belongs to the couple as a couple and what belongs only to one of them. This question involves not just assets but also debts, and it includes not only assets like bank accounts and real estate but even assets that only one partner has been actively contributing to, such as a retirement account or a business.

Generally, community property will include salaries, real estate, vehicles, retirement benefits earned during the marriage, savings accounts, cryptocurrency and other digital assets, stocks and other investments, and businesses. All debts are included as well. 

For the most part, if either partner in the marriage acquired something during the course of the marriage, it becomes community property. The primary exceptions are for anything that was inherited by just one of the partners or gifted specifically to one of the partners. Any debt required by either one of the partners is also considered to belong to them both, with a very few exceptions. Debt that one of the partners had before entering the marriage is usually theirs alone, again with some exceptions. 

In most cases, a partner who wants to claim an asset as separate property will have to give definitive proof of this. A partner who wants to claim that they are not responsible for debt will also have to definitively prove this. 

Transparency of Assets and Debts

Another important legal consideration is properly inventorying all assets and debts, and this requires both partners to be completely transparent. If one partner tries to hide assets, this can be a huge issue and can even nullify a divorce settlement after it’s already been laid down, if the property is discovered later. 

One of the important things that your divorce lawyer will do for you is to ensure that you have not forgotten anything in the list of assets and debts: and help you investigate if you have any suspicion that your spouse might be trying to hide something.

Commingling and Vested Interest

 Commingling is a serious issue with property division in a divorce. If separate funds ever get mixed with community funds in a joint bank account, for example, it can become impossible to actually trace out which dollars are separate property. The courts use something called the “inception of title” rule to make determinations about some of this. This rule decides whether property is separate or community based on its character at the time it was acquired. If it was acquired before the marriage, it’s almost always separate. If it was acquired during the marriage, it is assumed to be community property unless proven otherwise.

Note that commingling can be more than just commingling funds. Separate property can become marital property when one of the partners invests time and effort into separate property, for example. For example, if one of the partners has a business before the marriage, but after the marriage the other partner spends time doing accounting for the business or working at it, the business will likely be considered shared property. The same might happen if the partner doesn’t necessarily work at the business but takes on a greater share of work at home to enable their spouse to put more hours into the business. Their sacrifice gives them a vested interest in the business.

Property In Other States

Under the Texas Family Code, all property is classified in a Texas divorce based on what it would be under Texas law, not what it is considered to be under the laws of the state where the property currently is.

Children

If there are children in the marriage, the Texas courts will also take them into consideration when dividing property. It’s not just a matter of what is just and right for the two spouses involved but what will be in the best interests of the children. 

As an example, if there is one marital home, and there are no children, the courts may order the home to be sold and the proceeds divided. But if there are children, the court may insist that the marital home go to the spouse who has primary custody of the children. Even if both spouses would prefer to sell the home, the court may determine that it is in the best interests of the children for them to remain in the home they have. A lawyer can tell you more about what might apply in your case.

Earning Capacity and Contributions to the Marriage

As the court decides how to divide assets, it does not just look at money. It also considers where each spouse is currently in terms of how well they can provide for themselves. If one spouse has enormous earning capacity because of an advanced degree or specialized experience, the court is likely to award the other spouse more assets. 

The goal is to allow both spouses to have a lifestyle as close to what they had during the marriage as possible. The courts will also consider contributions that were made to the marriage that have nothing to do with money. For example, if one spouse pursued a career while the other spouse was a homemaker, the courts will typically award more assets to the homemaker for their contribution made to the marriage and for their sacrifice of personal career opportunities.

Proving Separate Property and Smoothing the Road

Work With a Divorce Attorney in Houston

The most important thing you can do to keep the divorce and asset division process as smooth as possible is to work with a skilled lawyer who has experience in these areas. Particularly if you have a high asset divorce, you want a lawyer who has done this many times before. 

A lawyer will be able to advise you on every step you should take, explain how complicated legal rules and even precedents may apply in your case, and help you come to an equitable agreement with your spouse about property division that will be acceptable to the court.

Carefully Document Everything

The more careful you are about documentation, the easier it will be to prove what is marital property and what a separate property. To prove that something is separate, you will usually need not just deeds and bank statements but also copies of wills, sales records, and possibly reports from forensic accountants. Always bear in mind that the presumption typically favors community property and that any attempt to claim something as separate property requires a clear trail.

Maintain Separate Bank Accounts When Possible

If you receive an inheritance or gift or collect money from a personal injury settlement, if it’s at all possible, open a separate bank account. If you have a business that you acquired before the marriage, make sure that all business assets and accounts are completely separate from personal ones.