Community Property vs. Separate Property

The division of property is one of the most contentious issues in most divorces. How a court splits assets between spouses can have long-term consequences on either spouse’s long-term financial standing. Thus, anyone going through a Texas divorce must understand what goes into the court’s decisions regarding the distribution of assets. At the Law Office of Jason Wright, we provide diligent, comprehensive and aggressive representation to individuals going through a divorce. Our focus is always on pursuing your best interest and ensuring that you are treated fairly throughout the process. We have extensive experience assisting clients through the various financial and emotional issues that come along with the divorce process.

How Do Texas Courts Divide Assets a Divorce?

When dividing up a couple’s property during a divorce, Texas is a community property state. This means that courts assume that most property acquired by either spouse during the marriage belongs to both spouses. However, separate property belongs solely to the spouse to whom it belongs.

What Makes an Asset “Community Property?

Generally, community property refers to any assets that either spouse acquired during the marriage. However, when it comes to community property, it is not important whose name is listed as the “owner” of an asset, only when the asset was obtained. On the other hand, separate property consists of either spouse’s assets before the marriage.

A few examples of separate property include:

• Rental properties purchased by one spouse before they were married;
• Assets in a retirement account earned before the marriage;
• Cars, boats, and recreational vehicles purchased before the marriage; and
• Balances in a bank account that were deposited before the account holder got married.

Examples of community property include:

• Homes purchased in either spouse’s name during the marriage;
• All wages earned by either spouse during the marriage;
• Any vehicles purchased during the marriage;
• Contributions to a retirement account made during the marriage; and
• Unemployment compensation and payment for lost wages during the marriage.

However, there are a few exceptions in which assets acquired during a marriage are considered separate property.

Inheritance

Any inherited assets, either through a will or a trust, belong solely to the spouse who inherits them. Thus, this property is not considered community property. For example, if your great aunt left you her priceless collection of Faberge eggs when she passed away, the collection would be considered your separate property.

Gifts

If one spouse receives a gift, the gift is not considered community property. This includes gifts between spouses as well as gifts to one spouse by their friends or family members. For example, if your parents give you a car as a birthday present, the vehicle would be considered your separate property, even if the gift was made while you were married.

Personal Injury Settlements

The proceeds from a personal injury settlement are not considered community property, regardless of whether the accident or settlement occurred during the marriage. For example, if you were involved in a car accident and recovered $150,000 in damages, the damages award would be considered your separate property.

Any assets classified as separate property are not subject to distribution and will remain with the spouse who owns them. However, the court will divide all community property between the spouses upon the conclusion of the divorce.

How Texas Courts Divide Community Property

The court will distribute community property with the understanding that it belongs equally to both spouses. The court must distribute the assets according to what is “just and right.” For example, a court will look at the following when dividing up a couple’s assets:

• Each spouse’s needs;
• The needs of the couple’s children;
• The age and health of the spouses;
• Each spouse’s level of education;
• Which spouse will be raising the couple’s children; and
• The employability of each spouse.

Notably, the court may, but does not need to consider one spouse’s fault in contributing to the breakdown in marriage when awarding community property.

Additionally, if the court awards a spouse community property that is burdened by debt, generally, the party receiving the asset will also take on the debt. For example, if you are awarded the family home after a divorce, you will be responsible for the monthly mortgage payment. That being the case, it is crucial to thoroughly consider your ability to continue making monthly maintenance payments associated with any assets you receive.

Are You Going Through a Texas Divorce?

If you are currently in the process of a divorce or anticipate divorce is on the horizon, it is imperative that you promptly reach out to an attorney to ensure your rights are protected. The court’s decision on how to divide the assets you have accrued during the marriage can have a significant effect on your ability to move on with your life after the divorce is final. At the Law Offices of Jason Wright, we have extensive experience representing clients going through a divorce, advocating on their behalf at every stage of the process. To learn more and schedule a consultation with Attorney Wright, call 512-884-1221 today. You can also reach us through our online contact form.