Texas is one of eight states that still uses community property laws in divorce cases. While it was designed for the old agrarian (farm) economy, many people think it is still the most equitable system today. The community property system rewards couples who helped each other prosper during the marriage. But, it doesn’t penalize spouses who acquired assets before the marriage or who got assets during the marriage that were meant just for them. The essential keys to dividing property in Texas cases are these:
Identifying the property
Property will be identified as either Separate Property or Community Property. These two terms are legal terms. The starting point to understanding these two terms is that property a spouse owned before the marriage is considered separate property.
- A typical example for younger married couples would be money they had in personal checking account before the marriage date and maybe a vehicle.
- Older couples may have cars or even a home they owned before the marriage date. They may also have investments and retirement accounts.
Property acquired during the marriage can also be considered separate property if a spouse received it by a gift or through an heir. For example, if an uncle leaves just the wife $10,000, the $10,000 would be considered the wife’s separate property. Also, if a spouse was injured and gets money for their pain and suffering, the pain and suffering award is considered the separate property of the injured spouse.
The presumption is that property is community property. The spouse claiming the property in question is separate property has to prove that it’s separate. Written documentation is crucial to showing the property is separate.
Dividing the Property
Each spouse will be able to keep their Separate Property. The Community Property will be divided between the two spouses. Sometimes the split will be 50-50. Other times the division may significantly favor one spouse over another. Some of the key factors (there are many others) used to evaluate the division percentages are these:
- The reason for the breakup. If one spouse is at fault, then the other spouse will benefit by getting a larger share.
- The current economic circumstances of the spouses. If one spouse has a lot more separate property than another, this will be taken into account.
- The ability of each spouse to make a living. Typical factors include the spouse’s education, present work situation and whether the spouse has a current interest in a business.
- The health and age of each spouse.
- Whether the couple has any children. When there are no children, each spouse can go their separate way. If there are children, then needs of the children will be of high concern.
- Some practical issues – such as the ability to divide assets. For example, a home can’t normally be divided into two parts. One spouse may then trade off the right to the house by giving up some other property.
- The debts of the spouses – such as mortgages, college loans and credit card debt.
Texas does allow spouses to agree to the division of all community property. The agreement can be made before the spouses marry or during the marriage. The bottom line is that the agreement has to be honest. If one spouse doesn’t tell the other spouse about all of the assets, the agreement may be attacked as being fraudulent.
There are many issues that can make property division in Texas divorce cases even more complicated. Some of the many questions a good lawyer will review are:
- How is the value of a business determined?
- What happens if separate property increases in value during the marriage?
- Does it matter if one spouse was a homemaker?
- What happens if the marriage took place in a non-community property state like Pennsylvania
- If my spouse causes a car accident, can the other spouse be liable for the bills.
The good news is that many property division cases are settled by agreement and not by trial. An experienced family law attorney will guide you through the process.