Property Division in Texas separate property community property

Property division in Texas follows some simple rules.  First, the court is supposed to divide the marital estate in a “just and right” way.  Second, separate property is retained by the spouse who owns it. Finally, community property is awarded to the spouses in a fair way.  However, there are many factors that affect property division during Texas divorces.  Experienced family law firms like Youngblood Law, PLLC earn their keep by sorting through the complexities affecting a just and right property division.

Separate Property

Generally, in Texas divorces don’t take separate property from one spouse to give to the other.  In fact, it is usually improper for the court to award a spouse’s separate property to the other spouse.  In other words, a just and right property division requires that separate property be awarded to the spouse who owns it.  Of course, in many divorces neither spouse owns separate property. Still, no proper division of property can be made in court without accounting for separate property if some exists.  Youngblood Law, PLLC,  makes sure the divorce court awards our clients their rightful property.

Separate Property: What is it?

The Texas Family Code defines separate property narrowly. There are only four ways separate property can be created.  If none of the following defining characteristics is met, then a possession cannot be separate property:

  1. Any property owned by a party before the marriage is that spouse’s separate property;
  2. Property inherited by a spouse during the marriage belongs to the spouse as separate property;
  3. Gifts to a spouse during the marriage become the spouse’s separate property.
  4. Judgments for pain and suffering resulting from a personal injury suit belong to the injured spouse.

Property Owned Before the Marriage

This type of property is easy to account for usually.  For example, it is common for a young couple to get married with each owning a car.   Each car, then, would be the separate property of the spouse who owned it before the wedding day.  Also common is for one or both spouses to own a home or other real estate when they enter a second marriage.

Youngblood Law, PLLC believes a solid divorce decree should properly assign any property owned before the marriage. However, people come to us regularly to try to fix their final decree of divorce that improperly awarded their separate property to their former spouse. Unfortunately, going back and fixing a flawed decree is often impossible. For this reason, it is always best to have a competent lawyer on your team long before the decree is finalized by the court!

Inheritance during the marriage is Separate PropertyInheritance

When a spouse receives property by inheritance during a marriage separate property is crea

ted. It makes no difference if the inherited property is cash, a life insurance pay-out, personal property, or real estate.  The spouse with the deceased relative takes ownership of the property as separate property. The Court should award inheritance to the heir in a property division. Proving the separate property nature of property in these cases is often as simple as documenting the inheritance for the court.

Gifts

There are two main types of gift during a marriage.  First are gifts from outside the marriage.  The second are gifts from inside the marriage.  In many ways gifts from outside the marriage are like inheritance.  For example, a spouse may receive a gift from his or her parent during the marriage. Or a spouse may receive a regular disbursement of stock from a grandparent.  Either way, the gift to a spouse becomes separate property.

Gifts from inside the marriage are soGifts during a marriage are Separate Propertymetimes harder to prove to the court.  Think of those holiday commercials on TV where one spouse surprises the other with a new car wrapped with a huge red bow.  The spouses will likely pay for the car together, but was it a gift?

In fact, proving gifts between spouses is difficult since both spouses use the property and pay for it. What was a gift at Christmas time suddenly becomes community property at divorce time–at least from the givers perspective! Consequently, proving gift separate property is not easy work in court.  That’s why we pour in the work necessary to show the court the facts surrounding gifts.

Judgment for Pain and Suffering

When people are injured during a marriage, sometimes they receive a money judgment for pain and suffering.  The judgment for the pain and suffering is separate property of the spouse.  Texas law reasons that only the injured person felt the pain, so awards for pain and suffering should go to the spouse who suffered.  In a divorce, the property division should account for this separate property.

Be careful not to misunderstand the law.  Only the pain and suffering award is separate property.  Any money awarded because for medical bills, lost wages, or other property damage is community property.

Converting Separate Property

Texas prefers community property, and the law provides many “opportunities” for spouses to convert their separate property to community property.  We say “opportunities” because we really mean dangers!  In fact, the law presumes that all property owned by the spouses at the time of divorce is community property.  More on this later, but a property division in a Texas divorce starts from the position that no spouse owns separate property.

A person can accidentally create community property by giving property to a married couple.  In this case, the legal question is whether the giver intended to give the property to one party as separate property, to both spouses as ½ owners in separate property, or to the couple? A spouse can accidentally convert separate property to community property simply by depositing a gift of money or inheritance into a joint checking account! There are many other ways for a spouse to lose his or her separate property during a marriage.

This is another area in which an experienced family lawyer can be a huge help.  Correctly awarding separate property requires proving where the separate property came from and where it went.  Unfortunately, in many cases, when the separate property is mishandled by the owner during the marriage, it cannot be recovered in the divorce.  Still, whenever there is a question of separate property, Youngblood Law, PLLC does our best to help our client retain it in a divorce.

Tracing Separate Property

Texas law favors community property. Therefore, court never assumes any property is separate property owned by one spouse or the other.  All separate property must be documented and proven to the court or it will be awarded as community property.  It is up to the spouse who owns the property to prove it is separate property.  At Youngblood Law, PLLC, we present the evidence necessary to prove the true ownership of property for our clients.

Tracing Separate PropertyThe hardest separate property to prove is money.  Many people seize the “opportunity” to deposit their separate property money into the couple’s joint checking account.  We have also seen clients who took inheritance money and purchased a house with their spouse.  In this case, the Court presumes the heir intended to convert the money into community property. There are many more “opportunities” for people to unintentionally convert Separate property into community property.

In these cases, a competent family lawyer is critical to ensure a just and right property division.  While complex and often expensive, a good family lawyer may be able to “trace” the money in question back to it’s separate property origin.  Retaining the money in a divorce could be worth thousands or tens of thousands of dollars to a client.  Youngblood Law, PLLC stands ready to pour in the work needed to trace the funds and show the court who owns what.

Community Property

Community property in Texas is much easier to understand.  In fact, community property is defined in Texas law as any property that isn’t separate property!  Again, Texas law presumes that all property owned by the spouses at the time of divorce is community property.

Income of the parties is community property too.  Too many people mistakenly think of their paycheck as their money.  Think of it like this:  both spouses’ income goes into a big pot from which the couple pays their bills.  This is true even when one spouse significantly out earns the other.  In fact, even the income made by one spouse is community property even if the other spouse doesn’t work! Texas law figures that the working spouse wouldn’t be able to bring home the bacon but for the stay-at-home spouse handling the household.  In Texas, it’s not his or her money; it’s y’all’s money, and that’s how the courts divide it.

Community Property Presumption

All property accumulated during the marriage is presumed community.  That means that each spouse owns a ½ interest in every piece of property.  This is an important distinction.  Here’s an example: Say Husband drives a blue car, and Wife drives a green car.  Both spouses own ½ interest in BOTH cars! It is not correct that Husband owns his car and Wife owns her car.  The same goes for the house, the toaster, the TV, and everything else the couple owns.  See our blog for more on how Texas courts divide the marital residence.

Just and Right Division

The goal of Texas Courts in a divorce is a just and right division of the marital estate.  That does not mean the courts split everything down the middle.  Sometimes, under specific facts, one spouse receives more of one asset, and the other spouse is awarded more of a different asset.  For example, Husband might keep his whole retirement, while the Wife is awarded the equity in the marital home.  Experienced family lawyers will employ strategies to help their clients keep more of the assets they want.  Property division isn’t to be left to chance, and experienced lawyers help shape the property division for their clients.

Another Common Mistake

Separate property mistakes

Many people fail to consider retirement accounts as community property.  Most people think that because retirement is a benefit of their jobs, the retirement is theirs alone.  But like community income, retirement accrued during the marriage is community property.

Texas presumes that if the spouses stayed happily married, they would both retire on whatever retirement accounts they built during the marriage.   Additionally, it seems unfair that years or decades into a marriage, one spouse could be blindsided by a divorce and be left with no retirement at all.  As a result, a just and right property division will account for the community property ownership interest of the parties in any retirement accounts in the marriage.

The question people ask is “Do I Lose Half of My Retirement in a Divorce?” The answer is NO because the retirement accrued during the marriage is community property.  Both spouses have an ownership interest in the retirement accounts.  Thus, the retirement never belonged to only one spouse.  It always belonged in equal shares to both spouses.  So, the correct answer is “No.  You are entitled to your share of the retirement, while your spouse is entitled to the other half.” However, Youngblood Law, PLLC has aproven track record of helping our clients get more of what they want from a divorce.  Our strategies and tactics help uncover what both spouses truly want, and we often negotiate settlements so everyone wins.

Final Thoughts

As a Texas lawyer, the community property system in Texas makes sense to me.  Households in Texas frequently feature one working spouse and one home making spouse.  Community property makes sure a fair property division accounts for the agreements of the spouses throughout the marriage.  For example, it is unjust to enjoy the benefits of a stay-at-home parent for years, but then leave that parent without any resources in a divorce.  Likewise, in the Fort Worth area, many people make good money and benefits at big employers like Lockheed or Bell Helicopter. Meanwhile their spouses make smaller wages at more menial, lower paying jobs.  A just and right property division prevents financial ruin of either spouse if there is a divorce.

Youngblood Law, PLLC logoOur Firm

Youngblood Law, PLLC is a Fort Worth, Texas law firm dedicated to family law.  We help working people through divorce so they can start their new happily ever after.  We also proudly offer the collaborative divorce process for our clients.   This essay is intended for educational use only and is not a replacement for competent legal counsel.  If you are facing a family law matter, we recommend obtaining competent legal counsel like Youngblood Law, PLLC.  For more information, contact us at 817-601-5345, find us on the web at www.youngblood-law.com.

Paul Youngblood #beforeyournext #lawfw #youngbloodlaw #collaborativedivorce #beingdivorceddoesntsuck