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If you’ve researched divorce in Texas, you’ve likely encountered the fact that Texas is a community property state. But what does this mean, and how does it impact your case? In today’s blog post, the Law Office of Bryan Fagan, PLLC, will dive into the details of marital property and explain how Texas’s community property laws affect your divorce and your future. Understanding these concepts is crucial as you navigate the division of assets and move forward with your life.
Presuming Property to Be Community-Owned During a Marriage
You and your spouse jointly own all property at the time of divorce. The same rule applies to debts that either of you incurred during your marriage. In your divorce, the court will divide both your property and your obligations before finalizing your case.
To prove to a court that a particular piece of property is not community property but separate property owned by either you or your spouse individually, you or your spouse will need to present clear and convincing evidence to the judge.
When a piece of property was first acquired by either you or your spouse, you would need to show that at that moment in time, the property was, in fact, the separate property of one of you. Typically, you accomplish this with title documents, receipts, or other documentary proof of the transaction that brought the property into your marriage. Testimony from a witness alone about why the property is separate and not the community will not suffice in most cases.
Defining Separate Property
Now that we’ve begun to discuss what separate property is, we need to define the term to know precisely what we’re talking about. In Texas, separate property includes property acquired before marriage or property developed during marriage through gift or inheritance.
Many Texas spouses sign premarital agreements that categorize specific property as either separate or community property. This enables you and your spouse to transform property that is usually considered community property into individual property.
Asserting a Reimbursement Claim Against Your Spouse
During your marriage, you and your spouse may have contributed community income to pay a debt on either of your separate property. That same community income could have been used to improve a piece of your particular property.
For instance, say you owned a home before your marriage, and that home needed a new roof. You could have used your income to put a new roof on the house. Because that income is community property, your spouse, upon divorce, would potentially be able to assert a reimbursement claim against you for utilizing community funds to improve a separate property asset that you own.
Premarital and Marital Property Agreements
We had briefly discussed premarital agreements earlier in this blog post, and now we will open up a more wide-ranging overview of these documents. You and your spouse, either before your marriage or during your wedding, can enter into a signed, written agreement regarding how you and they will classify certain pieces of property.
To avoid leaving decisions in the hands of either spouse or a judge in the future in case of a divorce, couples often take specific actions.
Many spouses sign premarital agreements to keep certain properties owned before the marriage separate or to ensure certain debts remain apart from the community estate.
During the marriage, spouses often sign marital property agreements. These agreements typically aim to separate certain community property between the spouses. In the event of a divorce, the court attaches the married or premarital agreement as an exhibit to the Final Decree of Divorce or incorporates it into the Decree by quoting the specific language used in the contract.
Dividing up Community Property in a Divorce
If you had not read anything about divorce in Texas before going through this blog post, you might believe that it is a foregone conclusion that a judge will decide your divorce case in a courtroom. This is not the case, however.
Typically, parties decide divorce themselves through formalized settlement processes like mediation or informal discussions between spouses and their attorneys. However, if you and your spouse cannot agree on divorce terms, a court will intervene.
In your divorce, a court will divide community property justly and properly. The court will evaluate the circumstances of your case, both spouses’ rights, and any relevant events concerning your children (if any) to determine what is fair and right.
Contrary to the popular belief that debts and property in community property will split evenly between spouses, this often does not happen. The court will consider your separate estates and any fault that either of you had in causing the divorce. This consideration often results in a “disproportionate” share of the community estate going to one spouse.
Moreover, evenly dividing community property like King Solomon is not always feasible. For example, if you and your spouse own a home and one of you files for divorce, the typical (and easiest) court action is to order the house’s sale, with the proceeds divided between both of you. This solution might seem straightforward, but it is not always the case.
Dividing the Marital Home Into a Divorce
What if you have three school-aged children and live in a home together? This situation does not easily allow for the sale of the house. Your children, already dealing with the upheaval of your divorce, would find their lives further disrupted by a forced move. In such a scenario, what happens?
The spouse who gains the right to determine the children’s primary residence will likely also have the right to stay in the home after the divorce.
The spouse who does not gain this right will probably receive other assets to compensate for their loss of share in the community property value of the house. Alternatively, the divorce could involve dividing whatever equity exists in the home, with the other spouse receiving their portion.
If you do not get the right to stay in the home post-divorce, the money for these assets often comes from refinancing the mortgage solely in your spouse’s name.
If you and your spouse can agree on settlement terms, you have the opportunity to be highly creative. It requires an agreement that both of you consider appropriate and fair. Often, a judge, not fully aware of what is best for your family, will try their best to decide if you cannot reach an agreement before trial.
In conclusion, understanding marital property and how it is divided in a Texas divorce is crucial for ensuring a fair outcome. As a community property state, Texas requires an equal distribution of assets acquired during the marriage, which can significantly impact the financial aspects of your divorce. By familiarizing yourself with these laws and seeking expert legal guidance, you can better navigate the complexities of property division and make informed decisions that will shape your future post-divorce.
The Law Office of Bryan Fagan, PLLC
Please join us again tomorrow as we discuss the popular topic of spousal maintenance and begin to get into issues that relate to your kids in a divorce.
In the meantime, please get in touch with the Law Office of Bryan Fagan, PLLC, with questions you may have on this or any subject in the field of family law. We offer free-of-charge consultations and are available six days a week to meet with you.
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Other Articles you may be interested in:
- When debts become marital property
- An overview of how to divide marital property in a Texas divorce
- How is marital property defined?
- How does a judge divide up community property in a Texas divorce?
- What happens if you and your spouse mix community and separate property?
- Characterizing your assets as community or separate property through tracing
- Community Property Essentials for Texas Divorces
- Community Property and Credit in Texas Divorces
- Community Property Law in Texas
- Community Property in Texas: What you need to know before you get divorced
- Reimbursement of the Community Estate: Continuing the Discussion on Divorce
- Texas Divorce Overview: Dividing Community Property and Debts
- Dividing community property in mediation: What can be done to settle your divorce in Texas
- The community estate in a Texas Divorce: Where is all of our stuff going?
