In family matters, Texas law recognizes two types of property: community property and separate property.
Community property includes all property and debts acquired or incurred during the marriage. By contrast, separate property encompasses all property that was owned before marriage or that was inherited or received as a gift during marriage. While separate property may not be divided by the divorce judge, a spouse’s separate property may be a factor in finding a fair divide of the community estate.
Problems frequently arise when the parties disagree on the value of a home or a business. In these cases, experts need to make the necessary appraisals. Ultimately, it is for the judge, not the jury, to split property and debt among the parties.
A number of factors may influence property divisions:
• the earning capacity
• education and ages of the spouses
• the length of the marriage
• fault in the breakup of the marriage
• wasting of community assets;
• contribution (or the lack of contribution) to the community estate
• the value of any separate property
What is separate property?
Texas is considered a “community property” state, which means that property possessed by either spouse during or on dissolution of the marriage is automatically presumed to belong jointly to both spouses, or, in other words, to be community property. In order for a spouse to claim that some property is not community property, he or she must prove that it is considered “separate property” under the Texas Family Code, and it must be proven by clear and convincing evidence.
Why is the classification of property important?
The classification of property is important in marriage in order to know who is allowed to control the property, and how and when it can be given to another – such as if you can leave it to someone in a will. Separate property is especially important when it comes to the dissolution of marriage, specifically dissolution through divorce. During a divorce, the court will divide community property between the parties in a way that the judge deems to be fair and just; whereas, the judge has no power to divide the separate property of the parties.
What constitutes separate property?
The Texas Family Code defines separate property as property owned or claimed by a spouse before marriage and property that a spouse acquires by gift or inherited during marriage. Additionally, any recovery for personal injuries sustained by the spouse during marriage is considered separate property, unless it is recovery for loss of earning capacity during the marriage. Items purchased during the marriage can be considered separate property, but it is very important that the spouse that can prove that the items were purchased solely with separate property funds.
In addition, one can have separate property in the form of cash or stocks, and the money that is earned through dividends, capital gains, and interest can be either community property or separate property. Typically, if the interest or dividends earned on separate property is earned without any action on the spouse’s part, it will be considered separate property. However, if the spouse that owns the separate property somehow has a hand in creating the appreciated stock, interest, or dividend, it could be viewed as community property because the spouse took action during the marriage to make it more valuable – just like all income earned while married is community property.
Property Division in Texas - Frequently Asked Questions
The court starts with a presumption that all the property earned or acquired by either spouse during the marriage is community property, owned equally by the spouses.
No. The court divides community property between the spouses in a "just and right manner." In most cases, that means a 50-50 split. In some cases, however, factors such as unequal earning power and fault in the marital relationship can affect the division of property.
Separate property must be proved by "clear and convincing evidence."
Yes, when separate property (e.g. an inheritance) is comingled with community property. If separate property remains in a separate account with only your name on it.