How Divorce Effects Property Division

The divorce rate in Texas has been on the decline for the past several decades. However, if recent trends are any indication, there will still be 42,000 divorces in 2022. Because divorce affects a considerable number of married couples and families, pre-divorce planning is often something that they have to consider. Thousands of couples worry about dividing their property fairly and equitably — and in a way that complies with the divorce laws in Texas.

The entire divorce process can be complicated and overwhelming. Having an experienced Texas divorce attorney work with you through the process can be extremely helpful. The Law Office of Chris Schmiedeke helps couples work through the very complex process of division of property in a divorce. Contact our office for more information by calling 214-643-8904 or using our online contact form.

The divorce rate in Texas has been on the decline for the past several decades. However, if recent trends are any indication, there will still be 42,000 divorces in 2022. Because divorce affects a considerable number of married couples and families, pre-divorce planning is often something that they have to consider. Thousands of couples worry about dividing their property fairly and equitably — and in a way that complies with the divorce laws in Texas.

The entire divorce process can be complicated and overwhelming. Having an experienced Texas divorce attorney work with you through the process can be extremely helpful. The Law Office of Chris Schmiedeke helps couples work through the very complex process of division of property in a divorce. Contact our office for more information by calling 214-643-8904 or using our online contact form.

Does Divorce Affect Property in Texas?

Virtually every divorce has some effect on the property that the couple holds. In a divorce, the court (a judge) must divide a couple’s marital property based on equitable distribution. However, equitable does not necessarily mean equal. The division of property has to be “just and right,” which considers a wide variety of factors.
Texas is a community property state.

It is one of just nine states in the United States that uses this type of property ownership scheme. Essentially, any property a married couple acquires during their marriage is considered marital property — so both spouses own that property equally, even if the property is in just one spouse’s name. Marital property or community property extends to virtually any asset or liability the couple has, from bank accounts to real estate to retirement accounts and credit card debt.
What the court considers personal property, community property, or separate property will have a huge effect on who gets what in a Texas divorce.

What Is Considered Property in Dallas, Texas?

Property for purposes of equitable distribution in a divorce is any asset that any spouse holds. Property that the married couple holds together is community property or marital property. Property that only one spouse owns, from prior to marriage, is separate property.
The Texas Family Code sections that address community property law include a presumption that property is part of the community property estate. If one of the spouses asserts that the property is separate property, they have to prove that is the case with clear and convincing evidence.

Separate Property

Separate property is any property that the spouses held before they were married. This distinction matters because the separate property will not be subject to division in a Texas divorce. The spouse who owns the separate property will continue to own that property and hold all of their property rights, even as the couple goes through a divorce.

Separate property can also include other property acquired after the marriage if it meets certain qualifications.

• Property acquired by one spouse because of a gift
• Property acquired by one spouse because of inheritance or something similar
• Assets gained because of a personal injury sustained by the spouse during the marriage (except for any loss of earning capacity)

Married couples do not use these limitations often. In many cases, it must be apparent that whoever provided the property to the spouse meant for it to only go to one spouse and not the other.

An Example: The Martial Home

The concept of separate property is perhaps most pronounced when one spouse brings real property into the relationship. If, for example, one spouse moves into the other’s house that they owned before the marriage, that family home is still separate property. That means a couple’s home will not be considered in the division of assets in a divorce.
On the other hand, if the couple purchases a family home together after they get married, that changes how the property is handled. If the purchase occurred after the marriage, then it is community property, and the court will consider it as part of the asset division process in the divorce.

Community Property

The legal definition of community property is deliberately broad. State law provides: “Community property consists of the property, other than separate property, acquired by either spouse during marriage.” (Texas Family Code Sec. 3.002) Essentially, then, if the property is not separate property, then it is community property. Below are a few examples of community property.

• Real Estate and Vehicles. Any real estate or vehicle acquired after the marriage is community property, regardless of which spouse’s name is on the property. This rule also applies regardless of whose earnings or funds the couple used to make the purchase.
• Retirement Accounts and Employment Benefits. Retirement benefits are usually marital property, even if just one spouse contributed to the retirement account. These include 401(k)s, IRAs, and pensions.
• Bank Accounts. Even if both spouses have separate bank accounts, the funds in these accounts are considered marital property under state law.
• Income. Any income that either spouse earns is considered community funds in Texas. Part of the rationale for this classification is that the court recognizes that even if one spouse had no income, they likely contributed to the relationship through care and management of the household and emotional support.
• Insurance Policies. Insurance policies and the rights associated with those policies might also be community property if the couple made the premium payments during the marriage.

Keep in mind that the property is still classified as community property even if one spouse used their individual income to purchase the asset.

How Is Community Property Divided in Dallas, Texas?

The court works toward a division of property that is “just and right.” That division rarely means that the property has a 50/50 split. Instead, Texas courts consider many factors to determine what type of property division is fair.

The Judge must look at the complete picture of all aspects of the divorce, including the rights of each party and any children of the marriage. Based on Texas common law, the court will often focus on the following factors as part of their decision regarding property division.

• Tax Concerns. If one spouse pays more in taxes, the court might want to award more assets or funds to that spouse to address those issues.
• Child Custody. Which spouse has custody of the children will affect how property needs to be divided. One spouse might need more funds or assets to ensure that the children’s needs are addressed.
• Income Discrepancies. The court will consider any disparity in earnings between the spouses as part of its property division award.
• Health and Medical Needs. The court usually considers each spouse’s health and medical needs. The judge will review these factors because medical bills are expensive, and a chronic medical condition will often affect a spouse’s ability to support themselves or get gainful employment.
• Fault in the Marriage. Unlike some other states, Texas courts consider fault in the breakup of the marriage when dividing community property. Fault could include things like adultery, waste of community assets, domestic abuse, or drug and alcohol abuse.
• Earning Potential of Each Spouse. The court looks at the future employability of each spouse when dividing property as well. It will often consider things like education, age, and prior experience and training to determine the likely future earnings of the married couple.
• Sole Property Ownership. Each spouse’s separate property will also affect community property division.
• Prenuptial Agreements. Property agreements made before the marriage will also usually be considered as part of the property division. Prenuptial agreements must meet specific requirements to be valid under Texas law.

The court will often also consider whether one spouse made any attempts to hide community property. Courts do not look favorably upon spouses who attempt to put community property into separate property, for example.

What Are Some Examples of Community Property in Dallas?

Community property can touch virtually anything a married couple owns. The definition is deliberately broad and includes anything that is not separate property. Examples of items that might be community property include:

• Vehicles
• Retirement assets
• Wages
• Furniture
• Investments
• Real estate
• Business assets

Even the value of a business you have developed might be considered community property. However, if you brought a business into the relationship, often only the appreciated value since the date of the marriage is a marital asset. Divorces that involve business ownership can be especially complicated, so talking to a Texas family law attorney about these issues is crucial.

How Is Debt Divided in a Divorce in Dallas, Texas?

Texas law treats marital debt very similarly to marital assets. In general, if the married couple incurred debt during their marriage, then those debts are usually part of the community property estate. Both spouses must repay those liabilities. As a result, the court will also divide debts as part of the community property estate.

The amount of debt each spouse must address will vary based on the circumstances of the divorce. Not every situation will result in a 50/50 split of debt. The court considers many of the same factors in splitting assets to split debt.

How Is Mixed Property Divided in Texas?

Not every asset falls neatly into either community property or separate property. Some property is considered mixed. For example, if one spouse sells their separate property and uses it to buy community property, there might be a dispute about whether that property is separate or community.

As a rule, the spouse claiming that they have separate property must be able to show the court that they purchased the property with funds from separate property. The court will review how the property was obtained and where those funds originated. Spouses might be able to request reimbursement for funds injected into community property.

These situations can be very complicated and having an experienced divorce lawyer can be helpful in presenting this type of argument to the court.

Is Inheritance Considered Community property in Texas?

No. Any property acquired by inheritance or gift is separate property, even if the spouse received that property during the marriage.

Still Wondering What Property You Need to Split in a Divorce?

Community property can be a complex concept, especially in marriages where both spouses came into the relationship with significant assets. If you are still confused about community property and how the term affects your divorce, the Law Office of Chris Schmiedeke is available to answer your questions. Contact us today by calling 214-643-8904 or using our online contact form for tailored legal advice for your unique situation.