Dividing community property and debt, grounds for divorce, and residency requirements in Texas have all been hashed over thus far in our discussion on getting a divorce in the Lone Star State. Today we will keep the theme of community property by discussing some specific instances where the distinction between community and separate property comes into play.
When the need arises to reimburse the community estate
If we were to jump in a small plan and fly above your divorce, we would see that there are three different property distinctions in play:
- your separate estate
- your spouse's independent estate and
- the community estate.
Depending on how you and your spouse spent income and resources during your marriage, each of those estates may have a valid claim for reimbursement against the others.
A pretty straightforward example that I can provide to you is to consider that sweet little car sitting in your driveway as you read this. Now, that vehicle may have been purchased a couple of years before you became married, which means that it will be considered part of your separate estate.
However, the money you used to pay that vehicle off would have likely come from the community estate. Technically, the community estate (by way of your spouse and their attorney) can assert that the money used to pay off that vehicle needs to be paid back to them.
Will this type of nitty-gritty negotiation occur in your divorce? I would have to say that it is unlikely- although depending upon the nature of the divorce and the level of the property involved, it certainly is possible. What's more, since this reimbursement concept is not something that comes from the statutory law but is more or less a fair decision for a judge to make, there is no guarantee that a court would even listen to your spouse if they were to present this argument.
On top of that- it will likely cost whichever spouse intends to make a reimbursement argument time and money to do so. You will have to go back and track every dollar you attempt to prove needs to be reimbursed. Depending on the source of the funds, an accountant may need to be hired to review complicated financial paperwork to do this difficult work for you.
Tracing as a means to help a reimbursement argument
The concept of tracing hugs the idea of reimbursement pretty tightly. You or your spouse would use tracing to look for the source of income used to pay a debt, pay towards a piece of property, or do anything else in your marriage.
In general, tracing determines if the property in question is either part of the community estate or part of either spouse's separate estates. Your bank account may have money representing both the community estate and one of your other estates. What can do you do in this situation?
If you are a super-organized, type-A person, those traits may help you out. You and your attorney or an expert witness hired by your attorney would need to review financial records as well as bank statements to determine where the source of the funds in your account came from. If it's impossible to decide on and a judge cannot do so either, it will be presumed that all funds in the report are community property.
Dividing up your community estate
Whether it is by judicial decision or settlement between yourself and your spouse, your property and debts will be divided due to your divorce. If you and your spouse settle your divorce case, a division of these entities can be highly creative and can take on many different forms.
On the other hand, if you and your spouse cannot agree on how to divide up your debts and property, the judge will step in and decide for you. From my experience, the decision will likely leave you and your spouse somewhat unhappy in that the judge is ill-equipped to understand the minute details of your case as well as you and your spouse.
A division by a judge most likely would result in each of you keeping your separate property (whatever that is) and then determining what is a fair (just and right) division of your community estate looks like. If you were to ask me what that looks like, I would likely tell you that a division would be pretty straight down the middle absent any extreme circumstances like abuse in the marriage or infidelity.
Debts may weigh heavily on the judge, so if considerable debts populate your community estate, then do not expect to walk out of your divorce with assets that are worth a significant amount of money.
If your house has a mortgage on it, your vehicles have liens, and there is not much money in the bank, then the judge will have to decide how to divide that between you and your spouse in an equitable manner. If you are primarily responsible for young children, it could be that the judge will not place a heavy financial burden on you moving forward though we cannot be sure of that.
The ever-popular topics of spousal support and children will be the subject of tomorrow's blog post.
If you have children and expect to receive or pay spousal support, then tomorrow's blog post will be an interesting one for you to read. In the meantime, if you have questions about anything you've read today, please do not hesitate to contact the Law Office of Bryan Fagan, PLLC. One of our licensed family law attorneys is available six days a week to meet with you to answer questions and discuss the services our office can provide you with as a client.
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Other Articles you may be interested in:
- What Every Entrepreneur Needs to Know About Community Property Division
- What is community property in Texas?
- Community property issues in Texas divorces: Wasting of assets by spouses
- 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
- Family Law Cases in Texas: Marital Property and the community presumption
- Community Property in Texas: What you need to know before you get divorced
- 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?