Community Property vs. Separate Property
Community property generally consists of all assets and all debts accumulated during a marriage, with certain exceptions. Community assets can include real property such as a home, land, or rental houses; mineral interests; businesses; retirement accounts, 401(k)s, pensions, portfolios, investments; intellectual property; vehicles; and household items. Community debts include credit cards, personal loans, mortgages, and other debts incurred during marriage. Upon divorce, the Court must divide the community estate of the parties in a “just and right manner.” This does not mean a 50/50 division. It means that the Court may divide the community estate in any manner the Court determines to be “just and right” based on the facts of the case and the unique circumstances of each party.
Property that is not community property is called “separate property.” In most instances a Court cannot divide separate property and cannot divest one party of their separate property. For this reason it is important that any separate property claims be investigated and secured during a case. Separate Property generally consists of any property owned by a party prior to marriage; any property inherited by a party during marriage; any property acquired during marriage via gift; and certain personal injury recoveries. Separate property may also consist of assets acquired during marriage that can be traced to a separate property source.
Texas is a community property state, which means that all income and property acquired by either spouse throughout the marriage is considered community property, and therefore belongs to each spouse equally. As property division attorneys in Houston will explain, a court will make the presumption that any property held by either spouse during a marriage is community property, unless a party proves otherwise. Non-community property is considered “separate property.” This may consist of (1) property owned before marriage; (2) property acquired by gift; (3) certain damages recovered through personal injury lawsuits; and (4) property acquired by inheritance. All other items are considered community property, including income, commissions, and bonuses.
The difference between community property and separate property is important, because a Texas divorce court can only divide community property. If a party can demonstrate that a particular asset is separate property, then it is exempt from the division of assets. Your Houston divorce attorney can assist in proving that a particular asset or property is separate property that is not subject to a division of assets.
A “Just and Right” Division of Assets
While Texas is a community property state, this does not mean that all community property will be divided equally between the parties. Texas courts are required to weigh all of the facts of the case in order to reach a “just and right” division of both the assets and debts of a marriage. In many cases, this division may not seem fair to one or both parties.
There are a variety of factors that a judge will consider in coming to a determination of what is a “just and right” division of assets in a Texas divorce case. This may include anything from one spouse retaining primary custody of the children to fault for the divorce to a difference in the earning capacities of the parties. In those situations, the division of assets will not likely be 50-50. Instead, it might be 60-40, 55-45, or another division that the judge believes is “just and right” given the facts of the case.
Factors Impacting the Division of Assets
A judge will consider a number of different factors in deciding how to divide assets in a Texas divorce. These factors include, but are not limited to, the following:
- Fault in the Failure of the Marriage: if one spouse cheated or was cruel, the innocent spouse may receive a larger share of the assets.
- Physical Condition or Health: if one spouse is in poor health, he or she may receive a larger share of the assets.
- Difference in Age: a difference in the ability to work or receive retirement benefits may impact the division of assets.
- Disparity in Earning Capacities: if one spouse can earn substantially more than the other spouse, this can affect the division of assets.
- Size of Community Estate: if the community estate is particularly large, it will be more likely to be divided 50-50.
- Size of Separate Estates: if one or both parties has separate property, that will impact the division of assets.
- Gifts to a Spouse: a gift purchased with community property and given to a spouse makes that community property separate property.
- Anticipated Inheritance: if one spouse will receive a large inheritance, that will be considered separate property.
- Tax Considerations: the tax consequences of the division of assets may be considered by the court.
- Unusual Gifts to Third Parties: if one party has purchased expensive gifts for others, such as lovers, that may be considered in dividing marital assets.
- Custody of Children: the party with primary custody of the children may receive a greater share of the assets.
- Attorneys’ Fees: the cost of litigation, including attorneys’ fees, may be considered in dividing assets.
- Waste of Community Property: if one party wastes community property, such as by selling land for far below market value, it could be grounds for unequal property division.
These are just some of the issues that a court may consider when dividing assets in a Texas divorce case. A seasoned Houston divorce attorney will thoroughly investigate your case, and categorize each of your assets independently so as to make the best possible argument for a favorable division of assets.
Like property, debt is subject to division. If certain debt is incurred during the marriage, it is generally considered to be community property. Debt that is undertaken prior to marriage is typically separate property. In many cases, spouses may come up with a proposed plan to divide their debts, which may include car loans, mortgages and credit cards. Otherwise, a Texas court will decide who is responsible for paying each debt during the division of assets.
Committed to Obtaining the Best Available Property Settlement
The majority of cases, including those involving complex property issues, are resolved through settlement negotiations or specifically through mediation. Understanding the multiple issues involved in property settlements and having the experience necessary to craft a specialized property settlement which specifically protects your unique interests is imperative.
There are many options available to resolve property disputes. Property settlements often involve more than just dividing assets and debts. The attorneys of Moffett Law Firm understand the complex issues involved in our cases and have the skill and ability to guide clients through the process and work with you to address the many options available to achieve an equitable result for our client. Attention to detail is one of the hallmarks of our services and is paramount in any good property settlement. Our attorneys pride themselves on carefully drafting Property Settlement Agreements and Orders to insure their accuracy, clarity, and enforceability.
Our lawyers have extensive experience dealing with division of property claims and are committed to providing comprehensive divorce and community property division representation to clients in Houston, Kingwood, Sugarland, and throughout the surrounding communities. Call us at 713-333-5800 or contact us online to arrange for your confidential consultation with one of our experienced property division attorneys.