Key takeaways
- Texas divorce courts don’t necessarily split community property 50/50 but rather split the property according to what’s just and right.
- Texas law presumes that all property you acquire after getting married is community property unless you can prove otherwise with clear and convincing evidence.
- You may control how a Texas divorce court divides your property by entering a written settlement agreement with your spouse that is just and right.
Is Texas a community property state?
Yes, Texas is a community property state. However, typically, when people hear the words “community property” and “divorce,” they think about a divorcing spouse losing half of what they own. And this assumption isn’t always wrong—multiple other states handle community property that way. But Texas’s community property rules split marital estates according to what’s just and fair in a divorce and not necessarily 50/50.
If you want a peek into what effects a Texas divorce may have on your finances, take a look at the following article. Below, we go over the legal framework and considerations involved in property division in a Texas divorce.
How is Texas a community property state?
Even though Texas doesn’t require an even split of marital property during a divorce, it’s a community property state because Texas law calls marital property community property and married couples in Texas own community property equally.
What is community property in Texas?
In Texas, any property acquired by either spouse during the marriage is considered community property. Community property can include:
- Income
- Real estate
- Bank accounts
- Insurance benefits
- Personal property
- Retirement funds
- Investment accounts
- Business assets
- Debts incurred during the marriage
Community property is subject to division upon divorce.
What are the exceptions to community property in Texas?
In general, community property is any property acquired after marriage that isn’t separate property. Separate property in Texas includes:
- Assets either spouse acquired before the marriage
- Debts either spouse incurred before the marriage
- Gifts and inheritances received during the marriage
- Personal injury awards or settlements received during the marriage, except for money paid for earning capacity lost during the marriage
- Property the spouses agree in a premarital or post-marital agreement will remain separate
Typically, each divorcing spouse may keep all their separate property. But the burden of proof is on the spouse claiming an asset as separate property to prove their claim.
Pro tip: Before initiating a divorce, create a timeline regarding when and how you acquired each asset you own alone and with your spouse. This timeline can give you a good idea of what will likely be subject to division in your divorce and what you might have to fight to keep as separate property.
Presumption of community property
Texas law presumes that all property possessed by either spouse during or at the time of the divorce is community property. To classify property as separate, the spouse claiming its separate nature must provide clear and convincing evidence that the property is separate. Proof that property is separate might include:
- Property titles that include dates of acquisition
- Witness testimony or reports from financial experts
- Premarital or post-marital agreements
- Court documents regarding previous awards of property
When does separate property become community property in Texas?
Generally, separate property may become community property in a divorce case when the spouses agree to make the property community property or when they combine separate and community assets. However, commingled property may retain its separate nature if a spouse can trace and identify it among commingled assets. One way to trace separate property in commingled assets is to enlist the help of a forensic accountant.
Tip: It may be beneficial to have a discussion with your spouse about your commingled properties before either of you files for divorce. During this discussion, see if you and your spouse can agree in writing on how to share or distribute these properties. Even if you and your spouse can’t come to an agreement on all commingled assets, an agreement on some assets might help you avoid some of the expense and work associated with tracing separate assets and proving your right to keep them.
The division of community property
Unlike some community property states that mandate a 50/50 split, Texas courts aim for a fair but not necessarily equal division of community property. The court might consider various factors to determine what is fair, including:
- Each spouse’s financial needs
- Each spouse’s current and future earning potential—this could include considering factors like education, work experience and health
- The length of the marriage
- A spouse’s misconduct with regard to property in the marital estate
- Each spouse’s custody rights and obligations—a parent who gains primary custody of the children may receive the marital home or a larger share of other assets to provide stability for the children
- Each spouse’s age
- The contributions each spouse has made to the marriage—including contributions as a homemaker and contributions to the other spouse’s education or earning power
- The tax implications of awarding property to a spouse
- Any agreements the spouses have made regarding the division of property
The process of property division
When a couple seeks a divorce, the court must review their finances and needs and make a decision regarding the distribution of their property. Depending on the facts of your case, this process might have multiple steps.
Financial inventory
When filing for divorce, both spouses must prepare an inventory and appraisement of all assets and liabilities. This includes a detailed listing of all community and separate property, along with estimated values. Accurate documentation is crucial to ensure a fair division.
Financial disclosures
When spouses initiate a divorce, they typically must disclose their finances to each other. These mandatory disclosures may include:
- Tax returns
- Retirement statements
- Pay stubs
- Insurance policies
- Other relevant financial information
The spouses may agree to waive these disclosures.
Settlement
Texas law encourages many couples to resolve their property division disputes outside of court. You may achieve an out-of-court resolution by negotiating a written settlement agreement with your spouse. You may negotiate this settlement on your own, engage in mediation to facilitate the agreement or hire an attorney to help with the process.
If the court deems your final agreement fair and just, it will likely enforce the terms of your property division agreement, leaving one less issue to fight over in divorce court. If the court refuses to enforce your agreement, you may have a chance to rewrite the agreement and resubmit it for approval. However, couples who can’t agree on the terms of dividing assets in their divorce must allow the court to decide for them.
Pro tip: Before you get to the negotiation or trial stage of your divorce, make a detailed list of all your financial needs so that you know what financial resources you can and can’t live without. This list might help you identify your non-negotiables for a settlement agreement and avoid squabbles over less significant matters. With fewer fights over small issues and an increased focus on what you truly want in your divorce, you could be more likely to come to an agreement with your spouse and reduce court time.
Divorce trial
If settlement negotiations fail, your divorce case proceeds to trial. During trial, the court makes the final decision on property division. The court will review the inventories, appraisals and evidence presented by both spouses to determine how to distribute the property and debts in your case.
How an attorney may help
An attorney can review the unique facts of your case to pinpoint what arguments you may make for a more favorable outcome and what evidence you might need to support your arguments. An attorney may also help you gather relevant evidence in your case and speak on your behalf when emotions regarding your divorce run high.
Sources:
FAMILY CODE CHAPTER 7. AWARD OF MARITAL PROPERTY (texas.gov)
FAMILY CODE CHAPTER 3. MARITAL PROPERTY RIGHTS AND LIABILITIES (texas.gov)
General Information – Community Property – Guides at Texas State Law Library
FAMILY CODE CHAPTER 3. MARITAL PROPERTY RIGHTS AND LIABILITIES (texas.gov)
FAMILY CODE CHAPTER 3. MARITAL PROPERTY RIGHTS AND LIABILITIES (texas.gov)
Horlock v. Horlock, 533 S.W.2d 52 (Tex. Civ. App. 1976) https://casetext.com/case/horlock-v-horlock
FAMILY CODE CHAPTER 7. AWARD OF MARITAL PROPERTY (texas.gov)
FAMILY CODE CHAPTER 7. AWARD OF MARITAL PROPERTY (texas.gov)
Rule 11 Agreement Regarding Initial Disclosures – Divorce with Children (traviscountytx.gov)
FAMILY CODE CHAPTER 7. AWARD OF MARITAL PROPERTY (texas.gov)
