Generally, income earned and property/debt acquired during your marriage is considered community property for Texas residents. Property and income are presumed to be community property in our state. You or your spouse must present evidence to rebut that presumption for it to be considered either of your separate property.
For example, showing that the property was a gift intended solely for your use rather than your spouse is a way to prove that property is a part of your separate estate. Likewise, if you inherited a sum of money from a relative, then this sum is a part of your respective estate as well. Otherwise, all property and debt fall into the broad category of community property.
Mediating on community property and what can be done to avoid a trial
Mediation is one of the tools that effective and successful family law attorneys will utilize to help ensure positive outcomes for their clients going through a divorce. Rather than roll the proverbial dice and take a chance on what a judge has to say about who gets what, mediation allows both you and your spouse to collaborate and negotiate on whatever encompasses your community estate.
The result is typically a much more flexible and sensible division than what a judge would decide. However, it's not that the judge is incompetent or doesn't care. It's just that they will have little time or opportunity to learn all the nuances of your case in time to make as good a decision as you and your spouse would be able to.
When you and your spouse attend mediation, both of you and your attorneys will likely have come up with proposals on all of the property that encompasses your marriage. A common way to break down the property is to create columns of community property/separate property/valuation of that property. If a piece of property is real estate with a lien on it, then the lienholder and the amount of the lien will need to be included for a thorough analysis.
Your proposals will most likely include your positions on how the property should be qualified (community or separate property) as well as which party should end up with the property when the Divorce has concluded. These sorts of proposals are good starting points for each side to learn of the other's thought processes and attempt to meet in the middle to avoid forcing a judge to make these sorts of difficult decisions for you both.
Preparing for mediation when community property is at issue
When so much is at stake, working closely with your attorney in the weeks and days leading up to your mediation makes sense. Our office staff and your attorney will work with you to complete worksheets (often an Inventory and Appraisement) that details each piece of property in your marriage, how you believe it should be characterized, and what your asset the value of the property to be.
Debts are not as much fun to discuss, but they are just as relevant and will need to be addressed as well.
I will ask you to present any information you have possessed as far as valuing the property. If you have various retirement accounts, stock holdings, or mutual funds that you contribute to, I'll ask you to research what the fund or stock was worth at the time of your marriage to your spouse and what it is worth now.
Should it become necessary to divide that account in mediation, we will have all the information required to make a proper and sensible decision based on the most recent valuations.
Preparing for mediation when community property is at issue
Unfortunately, not all mediations lead to a settled case. That's not to say that a settlement isn't possible after the fact, but it becomes more likely that your case will head to a contested trial in front of a judge. As we alluded to earlier in this blog post, the judge will be the final arbiter of your Divorce and make decisions regarding any outstanding issues in your case.
This includes characterizing any property in dispute and dividing any property that is a part of the community estate.
Your judge will have the difficult task of not only deciding as to what is part of the community estate and what belongs to either you or your spouse's separate estates, but who gets what and how much each piece of property is worth. The judge will need to make decisions on these subjects after a trial that can last a few hours or just a few days.
Either way, there is not much time for your lawyer and your spouse's lawyer to present a case and lay out evidence that the judge can consider.
It would make sense, and I encourage all clients I work with to attempt to settle your case in mediation. You do not have to walk out of mediation believing that you have the upper hand for it to be a success from your perspective. Most mediations end with both sides conceding some things and gaining some things.
That's how negotiations work- if both you and your spouse walk away feeling like it could have gone a little better in a particular area, then you probably came to a relatively equitable and fair settlement. While your case may prove to be an exception to the rule, it is generally better to settle in mediation rather than risk the ruling of a judge.
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Other Articles you may be interested in:
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- 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
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- Family Law Cases in Texas: Marital Property and the community presumption
- Reimbursement of the Community Estate: Continuing the Discussion on Divorce
- Texas Divorce Overview: Dividing Community Property and Debts
- Community Property in Texas: What you need to know before you get divorced
- The community estate in a Texas Divorce: Where is all of our stuff going?