Property Division in a Texas Divorce Is Complicated

When it comes to divorce, Texas is known as a community property state. This means that anything you, your spouse, or you and your spouse jointly own while you’re married belongs to both of you and makes up your marital estate.

Upon divorce, these assets must be divided between you fairly, which may or may not mean evenly, and the matter can become very complicated very quickly.

If you are facing a divorce, the division of your marital property will play a key role in your financial future, which makes working closely with an experienced divorce attorney throughout the process paramount.

Separate Assets

The assets that you and your spouse owned prior to marriage belong to each of your separate estates. As long as you keep these assets separate throughout your marriage, they will remain the separate property of the original owner. While this definition sounds simple enough, there are several complications to keep in mind.

The State’s Presumption

The State of Texas begins with the presumption that all the assets in your divorce are marital property and should be divided in a just and right manner, which means fairly, given the circumstances.

In other words, if either of you is claiming separate assets, the burden of proving the property’s separate nature lies with that spouse. This burden of proof can be high.

Increase in Value

Over the course of your marriage, each spouse’s separate assets are likely to increase in value, and this increase will be included in your property division and will be treated like any other marital property. A common example is retirement accounts. Let’s say that you had a retirement account when you married. The value at the time of your marriage will likely qualify as a separate asset, but the amount that the account grew in value during your marriage is marital and must be divided between you fairly in the event of divorce.

The same is true of business ownership. If, for example, your spouse comes into the marriage with a business, they have a strong case for proving the business is a separate asset upon divorce. Any increase in its value over the years, however, will almost certainly be considered a community asset that must be divided between you fairly. Further, any income your spouse generated through the business throughout your marriage is also marital, just like the incomes you each earned are part of your marital estate.

How Commingling Happens

Commingling separate and marital assets can weaken the distinction between the two. The less effort you put into distinguishing separate assets from marital assets, the more likely they are to have commingled.

While every property division is unique to the specifics involved, the following actions are common ways that assets can become commingled:

• Depositing separate funds in a bank account that belongs to both of you
• Spending a substantial amount of time managing separate investments during the marriage
• Using marital assets to maintain or improve a separate property
• Depositing an inheritance in a bank account that’s shared by both of you
• Acquiring real estate in your joint names using a down payment from either spouse’s separate assets
• Using separate funds to pay off debts taken on during the marriage

When you’re married, you’re part of a team, and most spouses don’t carefully analyze every deposit or financial move they make moving forward. In fact, doing so would be pretty jaded and not a great sign that you’re fully committed to making the relationship work. As a result, there tend to be many shades of gray when it comes to distinguishing separate assets from marital.

Marital Property

Marital property refers to everything other than those properties that either of you can prove are yours alone. If you, your spouse, or both of you together came to own the asset while you were married, it is marital, with only these few exceptions:

• Any gifts from others that were made in one spouse’s name alone
• Any inheritances that were received in one spouse’s name alone
• Any gifts that either spouse gave the other over the course of the marriage
• The pain and suffering component of any personal injury claim that was initiated during the marriage

The Factors that Guide Property Division

A just and right division of property can mean an equal division in which each spouse receives exactly half of the marital assets, but in some circumstances, this isn’t the case. Texas courts seek a fair division of marital property, and as such, they take these important factors into consideration:

• Each spouse’s separate assets
• The size of the marital estate
• The length of the marriage
• Each spouse’s age and overall physical and mental health
• Each spouse’s income, earning power, and job prospects
• The contributions each spouse made to the marriage, including in terms of staying home and caring for the children
• Whether wrongdoing is a factor – even in some no-fault divorces
• Any fraud on the community estate by either spouse, which relates to spending down, giving away, gifting, hiding, or otherwise dissipating marital assets in the buildup to divorce
• The tax consequences of the proposed division
• Any terms related to property division set forth in a legally binding prenuptial or postnuptial agreement
• Any unique considerations regarding a specific asset
• Any additional factors that the court considers relevant to the property division in question

Proving an Asset Is Separate

If you owned a piece of real estate prior to marriage, proving that it’s your separate property generally isn’t too difficult. All you’ll need to do is produce the deed or title, which indicates that you came to own it prior to your marriage. There are, however, events that can make it a mixed-character asset, such as if you used marital funds to maintain it, to improve it, or to cover the related property taxes. Such actions can allow your divorcing spouse to make reimbursement claims.

Generally, proving that a separate asset is separate comes down to having clear and convincing evidence that you owned the asset prior to marriage or that you received it as a gift or inheritance in your name alone during your marriage – and that the asset didn’t become intermingled with marital funds in the process. In other words, careful record keeping is essential.

The Dissipation of Marital Assets

If either spouse engages in practices designed to decrease the marital estate (potentially to line their own pockets) in the buildup to divorce, it is known as the dissipation of marital assets. It is a form of fraud on the marital estate and can directly affect property division in the divorce. Dissipation can take a range of forms, and there are a range of considerations to keep in mind.

One Spouse’s Actions

Dissipation generally refers to one spouse’s intentional, reckless, or negligent actions that result in the concealment, waste, or transfer of marital assets in anticipation of divorce. The upshot is that these efforts or this recklessness on the part of one spouse harm the other financially, and the court can take action to remedy this fact.

In the Buildup to Divorce

What you or your spouse spend money on – either separately or together – during your marriage is fair game. And even if your spouse spends like there’s no tomorrow, it is unlikely to have any bearing on the division of your marital property if you divorce at some point in the future.

Once divorce is anticipated, however, any dissipation of marital assets for nonmarital purposes can directly affect property division.

Determining when divorce is anticipated is a critical element of dissipation. Once either of you has filed for divorce, the matter is established. However, a divorce can be anticipated for a considerable amount of time before anyone files, and in the duration, your spouse can do a considerable amount of financial damage.

In Texas, divorce can be described as anticipated when the marriage is irretrievably broken. The official definition for such a marriage is one in which “either or both parties are unable or refuse to cohabit and there are no prospects for a reconciliation.”

Even if you are not trying to dissipate marital assets, it’s important to be careful when purchasing major assets during the buildup to divorce. Such purchases can complicate the division of your marital property. For example, something as seemingly simple as buying a house for you to live in while your divorce is pending should only be taken on with professional guidance from an expert.

Nonmarital Purposes

In order for dissipation to apply, the money that’s disappeared in anticipation of divorce must have been used for nonmarital purposes, but this is more nuanced than the words imply. If a spouse purchases much-needed clothing for themself, such as if they are job hunting and need professional attire, the clothes are for them alone, but the purchase is unlikely to qualify as having a nonmarital purpose.

When it comes to determining if an expenditure is nonmarital in purpose, the matter is resolved on a case-by-case basis. And factors like the following are taken into consideration:

• The need for the purchase in question
• The amount spent on the purchase in question
• The purpose of the purchase in question

FAQ

Consider the answers to the following frequently asked questions about property division in relation to your own case.

How is debt divided in a Texas divorce?

Debt is addressed in the same manner as assets in a Texas divorce. Any debts that are racked up in the course of your marriage are marital debts that will offset the total value of your marital estate in the division of your marital property. Just like your assets, your marital debt will be divided between you fairly, which doesn’t necessarily mean equally.

Will I receive a portion of my divorcing spouse’s pension?

If your spouse’s pension was initiated during your marriage, it is community property, and the asset will be divided between you fairly upon divorce. If, on the other hand, your spouse owned the account prior to marriage, you’re entitled to a just and right division of the pension’s increase in value since the date of your marriage. And the same is true for your spouse, in relation to any retirement accounts or pensions that are in your name.

If only my name is on the title, is it my separate asset?

Any assets that you, your spouse, or both of you together come to own while you’re married are part of your marital estate and are not separate property. This is regardless of who made the purchase, whose name is attached, and who uses the asset. For example, if you purchase a car while you’re married, you alone drive it, and your name is on the title, it doesn’t alter the fact that the vehicle is part of your marital estate.

If, however, you owned the property in question prior to marriage and can prove it, it is your separate property. Any commingling of assets, such as using marital funds to improve said property, can alter its separate nature. 

An Experienced Divorce Attorney Can Help

The division of marital property during divorce can be one of the most complicated and contentious divorce terms you will need to settle during your case. However, you don’t have to go through the process alone. A skilled divorce attorney can help you navigate the complex laws surrounding property division, defend your financial rights, and help you support your post-divorce future.