Understanding The Difference Between Community Property and Separate Property in Texas Divorce

What Constitutes Community Property in a Texas Divorce?

Property acquired during a marriage is considered community property. Community property in Texas includes all assets acquired by either spouse during the marriage, regardless of which spouse actually earned or acquired them. This means that real estate purchased and businesses that were formed during the marriage would be community property, unless you can prove by clear and convincing evidence that separate property was used for the purchase and/or formation.  Income and retirement earned during the marriage are also classified as community property.

What Qualifies As Separate Property in a Texas Divorce?

Property acquired before the marriage or by gift or inheritance during the marriage is considered separate property.  Money received by one spouse for personal injuries that occurred during the marriage as well as stock dividends and capital gains on the separate property investments of one spouse is also considered separate property. If one spouse receives money for lost wages and medical expenses, this is excluded from a separate property classification.

Additionally, any property explicitly agreed to be separate in a prenuptial or postnuptial agreement would also be treated as separate property.

The Importance of Classifying Community Property and Separate Property in Texas

It is important to properly identify assets in a Texas divorce because the way property is classified will determine how it is divided between the parties. Properly identifying assets in a Texas divorce is crucial because if assets are misclassified, it can result in an unequal division of property, which may not be fair to one party. An experienced family law attorney can assist by conducting a thorough investigation of the parties’ assets and debts, and by properly classifying them as either community or separate property. This includes reviewing financial records, interviewing witnesses, and hiring experts as necessary.

How Is Community Property Addressed in a Texas Divorce?

Generally speaking, community property is subject to a just and right division between the parties in a divorce. This means that any assets or debts acquired during the marriage will be subject to division between the parties, regardless of whose name is on the title or account. This includes things like the marital home, vehicles, bank accounts, and retirement accounts.  A “just and right” division of the community assets does not mean an equal division.

The court may look at a variety of factors, including but not limited to fault in the breakup of the marriage, future employability and earning potential of the spouses, the size of the estate, fraud or waste by a spouse, or reimbursement claims when determining the overall division of the estate.

How Is Separate Property Addressed in Texas Divorce?

Separate property, on the other hand, is not subject to division in a divorce. This means that any assets or debts acquired before the marriage or by gift or inheritance during the marriage will remain the separate property of the party who acquired it.  In Texas, all property is presumed to be community property unless you can prove by clear and convincing evidence that it is separate property.  This is a very high burden, so it is important to discuss any potential separate property claims with an experienced family law attorney as early in the case as possible so that they may be analyzed and successfully proven.

Can Separate Property Become Community Property During A Marriage in Texas?

Yes, in some cases, separate property can become community property through a process known as “commingling.” Commingling occurs when separate property funds or assets are mixed with community property funds or assets to such an extent that they become indistinguishable. For example, if one spouse moves separate property funds from a separate bank account to a joint bank account with community funds, and then invests some of those funds in a joint brokerage account with community funds, the separate property would be commingled and would need to be traced to prove that it is separate property. 

How Can I Protect Separate Property in A Texas Divorce?

To protect your separate property during a Texas divorce, it is crucial to keep thorough and accurate records of all separate property assets and their sources. Maintain separate bank accounts for funds that qualify as separate property, and avoid commingling them with community funds. It is also advisable to have a well-drafted prenuptial or postnuptial agreement that explicitly identifies certain assets as separate property. A prenuptial or postnuptial agreement can also help with other factors of your divorce, such as the amount of time it takes to finalize your divorce.

Working With a Lawyer For Divorce Property Division in Texas

An experienced family law attorney can assist by negotiating a fair and equitable division of the community property in Texas, and by protecting the separate property of their client. They can also assist in drafting a marital settlement agreement or litigating the issue in court if necessary.

If you are facing a divorce or have questions about property division in Austin, Texas, contact an experienced family law attorney at Deyerle Silva Smith for personalized guidance.