When it comes to divorce, one of the most time-consuming elements is determining what property goes to which spouse. This can be a frustrating experience, even for shorter marriages, but can be especially daunting when the couple has shared a lot of life together.
Texas is considered a community property state, which means that any assets brought into the marriage—by either spouse—belongs to couple equally. On the other hand, anything that the individuals brought into the marriage is considered separate property, and would (theoretically) leave with whichever spouse it came with.
This might sound like a simple process, but it rarely is. Property classification can be clouded by any number of things, including a lack of documentation, the mixing of assets over time, and disagreements over what an item is worth. All of which is to say nothing about the problems that can arise during fault-based divorces, where things like infidelity and cruelty can be used to influence how much community property each partner takes away from the marriage.
With all the uncertainty surrounding property division, it is essential to have an attorney you trust by your side. The team at North Texas Family Lawyers has overseen hundreds of cases, and this experience has helped us develop a keen intuition for identifying assets, and the skills to protect our clients’ property rights and ownership.
Here’s a further look into how Texas classifies marital property, and some of the most common property division problems our team will be able to help you solve.
Community and Separate Property in Texas
As a community property state, Texas law dictates that any assets acquired during the marriage belong to the spouses equally. It doesn’t matter whose name is on the paycheck, who stayed home to help raised the kids, or whose name is on the car loan, all assets and debt acquired by either party belong to you both.
On the other hand, whatever property you owned prior to marriage (such as a house, car, or bank account), is considered separate property. Similarly, any inheritances or gifts (whether acquired prior to or during marriage), are also considered separate. And since they aren’t owned by the partnership, they should be able to leave with you upon divorce.
We say “should” here, because sometimes proving separate property can be tricky. Say you brought a car with you into the marriage, but sold it for ten thousand dollars after you were married. Theoretically, this money should follow you out of the marriage as separate property. But what if you put that cash into a bank account and mixed it with marital funds? What if you used it to put a down payment on your house—a mortgage secured by community assets as well? This is where commingled property comes into play.
Commingled and Transmuted Property in Texas
Assets comprised of both separate and community property are considered commingled property. When dividing commingled property, a judge will attempt to trace the asset’s ownership back through time, in order to determine what percentage is owned jointly, and how much belongs to a single individual. Once that’s determined, the item’s worth would then be divided accordingly. Meaning, if you have paperwork showing that ten thousand dollars of your home loan came from the sale of your pre-marriage car, then ten thousand dollars of your home automatically belongs to you as separate property, before community worth is even determined.
Few of us are very good at keeping track of what items belong to which spouse, though, especially when comfortably married. And without proof showing that ten thousand dollars of your home was separate property, a court might be forced to rule that your separate ownership stake became transmuted.
Simply put, transmuted property is an asset that has changed classification. Usually, this is done on purpose, by mutual agreement of both parties (like with a post-nuptial agreement). However, transmutation can also happen on accident, say, if proof of separate property cannot be provided.
At North Texas Family Lawyers, we understand the stress that can occur when your hard-earned property is being threatened by an unwanted change of status. Luckily, we have extensive experience dealing with these situations. Having worked through countless other property divisions, our attorneys are uniquely situated to help you identify which documents will be most essential to backing up your separate property claims.
Retirement Funds, Investment Accounts, Stocks & Bonds
Just because an asset might not be readily available, does not exclude it from division during divorce. Retirement funds, investment accounts, as well as stocks and bonds are just some of the many possessions that—while harder to access—are still subject to a community property division upon divorce.
This means, that even if you divorce in your thirties, and don’t access your retirement account for another thirty years, your spouse is still entitled to a portion of its value, for the time you were married. Does that mean you have to penalize yourself by emptying your retirement account early, just so you can split it equally? Not necessarily, and here’s why.
Community Property Division in Texas
Here’s the thing: equal ownership doesn’t mean everything will be split 50-50. That kind of mentality might work alright when dividing utensils in the silverware drawer, but splitting the baby doesn’t always translate well when dealing with larger items, such as a house, car, or 401k account.
Instead of each spouse walking away with exactly the same amount of every item they own, the focus of a community property division, is on making sure the value is equal. For some, this might mean one takes the house, while the other gets the car and boat. For another, one spouse might take the bulk of the debt, in exchange for the entirety of the retirement account. Exactly how these divisions are made will vary by situation, and are largely left up to the individuals to negotiate. However, knowing the value of an item or account—as well as its potential for long-term financial security—is crucial.
This is why North Texas Family Lawyers provides its divorce clients with more than just a century’s worth of combined legal experience. When it comes to property division, our attorneys work in close tandem with a certified financial expert, ensuring that our legal counsel—and your property division—is backed up by strong, economic principles.
Texas Divorce Attorneys
Over the years, North Texas Family Lawyers has helped countless clients through a wide range of property division issues, involving homes, cars, and investments accounts, luxury items, inheritances, trusts, and even complex assets, such as family-owned businesses. If you or a loved one is facing the daunting prospect of divorce, we can help you, too. Call us today at (972) 436-8000, or schedule a consultation online to discuss your specific situation. At North Texas Family Lawyers, we know that divorce is more than just an end, but the beginning of a new life, and it’s one we want to help you start right.