The Basics of Property Separation during a Divorce
Updated: Jan 20
There is often concern about how marital property will be divided in a divorce case. By understanding Texas’s views on marital property, it is possible to simplify the divorce and come to an agreement on how property will be divided. This can also help relieve the stress and anxiety that comes with not knowing what to expect during a divorce. This article will give you an overview of Texas' property laws and prepare you to understand how divorce proceedings affect marital property.
Property Characterization during the Divorce Process
Texas uses the community property model to divide property in divorce proceedings. All marital assets acquired during a marriage are considered equal and must be divided equally between the spouses after the divorce. It doesn't matter if the property was held only in one spouse's name, as it is assumed to be part of community property.
The following are included in community property:
all income earned during the marriage
financial accounts, retirement benefits
contributions to retirement accounts
long-term investments and other assets
marital debts that were incurred during marriage are treated as community debts and treated as community property as well.
Assets that are separate property are the only exception to the community property law.
Separate property refers to property owned by one spouse before the marriage or acquired by one spouse during the marriage by inheritance, gift, personal injury settlement, or other means (except for any recovery due to loss of earning capacity). Separate property is not included in the community properties. Any asset that can be proven to be separate by clear and convincing evidence is considered separate property and will not be subject to property division in a divorce.
Before declaring an asset as separate property in the final decree, you must include a request to confirm that your separate property is being confirmed in your divorce proceedings pleadings.
The merging of property:
Although community property can be divided fairly and legally during a divorce, separate property is solely the property of the spouse who acquired it. It is not subject to property division during a divorce. However, there are instances where the community and separate property can be entwined in such a way that makes it difficult to determine their opposite nature; this is called "commingling". For example, it can be impossible to analyze the history of an asset when determining which parts of it are community property and which sections are separate property. In this case, the community property presumption will dominate and allow for property division.
Conversion of Property:
According to Texas property law, the spouse's separate property can be made into community property by marrying. This will allow for fair and equitable division of the property. To convert the property, both spouses must sign an agreement which identifies the property and states that it is to be converted to the spouse's common property. This agreement will be used to prove that the spouse's separate property was converted into community property. It would be difficult to prove the conversion of separate property to community property without an agreement or any other pre- or post-marital document. Therefore, it is not simply enough to prove that the property has been converted to community property by simply transferring the separate property of one spouse to the name of the other spouse or both spouses jointly, as in the case with a car title and real property deed.
Texas Property Matters Divorce Laws
Suppose one marital estate (the separate estate of one spouse) contributes or pays for an asset belonging to another marital estate. In that case, the paying estate can seek reimbursement for those amounts. The following example will help to illustrate the concept.
Before marriage, the wife owned a house. After getting married, the husband moves into the wife's home and makes it their marital residence. They have a joint bank account, which they use to pay their mortgage. Over time, the spouses also build and renovate additions to the house. The Wife transfers the title of the home to the husband. However, they don't make any formal agreements about the property. Then the Husband files for divorce after many years. What should the husband do with the house? How can they handle the money spent on the mortgage and other improvements over the years?
The Wife owns the house, but all amounts paid for the mortgage and the additional renovations are community property now. The community estate paid for the wife's separate assets. The wife's separate estate could reimburse the community estate for the entire amount paid to the house, namely the mortgage and the improvements. If the receipts and other evidence prove that the payments were made, the wife's separate property will now reimburse the community estate for any funds it paid. The reimbursement is then distributed to the community estate, which is subject to fair and equitable division.
Although this is a simple example, it illustrates how reimbursement works in a Texas divorce. A reimbursement claim must be made in your pleadings to be granted a divorce. It is best to consult an attorney to ensure this process is done correctly.
Fraud in the Community:
Texas law states that if one spouse transfers or spends community property on another without the consent or knowledge of the other spouse, it is called "fraud on a community". To prove fraud, either the spouse must prove "actual fraud" (or "constructive fraud”) to file a claim for fraudulent conduct in a divorce.
The court must be shown that the spouse was involved in the transfer of community property with the intent of dishonesty or deception. It is the (accusing) spouse who must prove that the opposing spouse (accused) acted dishonestly or with an intent to deceive.
“Constructive fraud” is more complex and requires that the spouse accused show they have breached their fiduciary obligation to the spouse accusing. Fiduciary duty refers to a legal obligation that someone acts in another person's best interests. In the case of divorce, this would be the spouse. When constructive fraud occurs, the burden of proof shifts from the accusing spouse to the offending spouse. They must prove that the transfer of property or funds was fair and justifiable.
How is the community estate divided if the spouse accused of fraud committed it on the community? The Texas Family Code provides clear guidance on the remedies available to the spouse accused of fraud. These options include reconstituting an estate to allow the spouse to receive a fair and equitable property.
Here's how the Family Code deems fraud against the community to be dealt with, The Judge may:
Calculate the community estate's value as a result of the fraud and the amount of the reconstituted property, or
Divide the value of the reconstituted property between the parties in the manner that the court considers fair and just.
The court can grant any legal or equitable relief required to make a just division of the reconstituted property.
The spouse who has been wronged should be awarded a proportion of the community estate that remains after any constructive or actual fraud;
Awarding a money judgment to the wrong spouse against the spouse who has committed actual or constructive fraud in the community;
Awarding the spouse who has been wronged BOTH a money judgment and a proportionate share of the community property.
The Judge can also consider fraud committed by one spouse in the community in determining spousal maintenance.
Finalizing the Division
Community Property Law and Dividing Property:
The court will order the division of the parties' estates under a no-fault divorce decree. This is because the court considers it "just and right”. This means that the Judge must distribute the community estate fairly and equally. However, any property owned by the owner will remain with them and not be subject to any property division.
There is an exception to the "just & right" division of community estate if fault grounds are established in a divorce case or fraud on the community. These two factors allow the court to award a disproportionate portion of the community property to the spouse who has wronged the other.
Here are some examples of fault grounds:
A conviction for a Felony and imprisonment for at most one year
Abandonment: Intending to abandon and who remained absent for at least one calendar year
Living apart for at least three years
Confinement in a Mental Hospital
These are the remedies for fraud in the community. In these cases, the court can award a disproportionate portion of the community to the spouse who is wronged. Although the court is unlikely to give a spouse a disproportionate amount of the community estate, the circumstances of each case may make it possible.
The final decree should specify when and how property should be divided. The divorce decree usually includes a deadline, such as within 30 days of the date that the Judge signs it. This stipulates that all property must be handed over to the spouse to whom it was given. Suppose there is no agreement between the parties regarding a plan for each party to receive the property they have been awarded. In that case, the Judge may request a more specific manner to complete the division of community property.
Texas divorce laws regarding property are based on many of the same rules for common-law marriages.
An experienced attorney will help you transfer title and ownership documents for any motor vehicle and real property. Additional documents may be required to file with the relevant government offices to make the transfers official if necessary.
Kamal Law Firm, PLLC, can assist you with managing marital property and the division of community property. If you want to keep as much as your assets and possessions after you file for divorce as possible, then Mrs. Farah Kamal, an experienced attorney, can ensure that your personal property is protected and help you negotiate an equitable division of community property.