Who gets what? Understanding Texas community property laws

We do things a little bit differently down here in Texas. Any native Texan or anyone that grew up in the state of Texas could tell you that. Folks who visit our state are quick to comment that Texans generally conduct themselves a little differently; you have a particular way of going about our business. While there is no direct connection between this tendency of Texans to act independently and our laws governing marital property, I think it’s interesting that we have relatively unique laws when it comes to this subject, as well.

A significant part of any divorce is determining how marital property is divided. Every state in the union has its own set of laws that govern this subject. If a court in that state has jurisdiction over your case, Then the laws of that state governing property division at the time of divorce will come into play. In Texas, that means you need to be aware of community property laws and their significance for you and your divorce. This does not mean that you have to be a scholar on the law, but it does mean that you have to have at least a general understanding of community property principles in what they can mean for your case.

Here is why that is so important. A divorce is not a legal matter that your attorney will handle. In divorce, a lawsuit is personal to you and your spouse and will be held by you and your spouse. Yes, the attorney is there to provide you with guidance and some perspective based on their years of experience. Hopefully, the attorney understands family law and will help you with the legal process; they will provide you with advice and counsel. However, do not make a mistake and think that this divorce case is your attorney’s case.

I like to use the analogy of a race car driver when I describe a person going through a divorce. You can put yourself in the position of the racecar driver, and the racecar is your divorce case. You are the one guiding the issue and making decisions on how to go about driving the vehicle. Your attorney will not get into the driver’s seat for you and make those decisions on your behalf. What an attorney should be doing is sitting in the back seat of the car and giving you advice on directions and perspectives on how to avoid potholes and other dangers.

If you are starting your divorce and hoping that the attorney will take the bull by the horns and make decisions for you, you are starting at a disadvantage. Keep in mind that although a diligent and professional person, your attorney will never know you and your family circumstances as well as you do. Therefore, your attorney can provide you with information and advice, but only you can tell how that advice will play out in your specific circumstances. What I mean by this is that you don’t want your attorney making decisions for you. You want to be the one to determine your fate in the fate of your family.

Additionally, your attorney is there as your representative and is duty-bound to give advice that will benefit you first and foremost. The attorney puts the interest of a client in front of themselves as a fiduciary. Whatever happens in your case impacts you and your family; it does not directly impact your attorney or family. Never lose sight of this. Your attorney will work with you, advise you, fight for you as an advocate. But at the end of the day, your attorney will go home to their own family, where they will deal with the needs and demands of their circumstances. Do not lose sight of the fact that your case belongs to you, and the impacts of your lawsuit will be felt by you and your family.

In other words, take ownership of your case and take ownership of your own life. Do not assume that your attorney knows everything that you do or that your attorney should be able to guess how a particular decision will impact your family. Suppose you take responsibility for the decisions made in your case and do what is necessary to learn about the process. In that case, you will be best served to be a knowledgeable and willing participant in your divorce.

With that said, let’s get into how community property law will impact and shape your divorce. As I mentioned at the outset of today’s blog post, the community property laws in Texas are somewhat unique. Therefore, you should be knowledgeable of them in how they may come to influence the outcome of your divorce. Before discussing anything in specifics, we should go over the basics of community property law and then talk about how you may want to approach these issues in your divorce.

Community property laws in Texas for divorcing spouses

At the time of your divorce, under Texas marital property law, it will be assumed that the community will own all property in existence between you and your spouse. This means that it will be presumed your family home, rental homes, other real estate, investment accounts, retirement accounts, personal properties, vehicles in any different sorts of property that you or your spouse may own will be community property. This is significant because community property is eligible to be divided and will be divided in your divorce.

Texas differs from most other states in the country because it doesn’t matter whose income was used to purchase the property or whose name appears on the title, receipt, or other ownership documents associated with the property. So long as community property income was used to purchase the property and it was done so during your marriage, that property will be found to be a community in nature. This can dramatically affect how property is divided relative to the role both you and your spouse played in your marriage.

If you are the spouse who went out into the world and earned a living for your family, this may surprise you. In most areas of our lives, if you are the person who goes out, makes an income, and purchases property with that income, that property would belong to you. After all, it wasn’t me who bought your car or your neighbor who bought your car. It was you who purchased the vehicle with the money you earned at your job. I think this is all a concept we can agree is pretty straightforward. However, in a Texas divorce, that vehicle is just as much your spouse as it is yours.

Texas treats all money earned during your marriage (to a certain extent) and all property purchased with that community income as part of your community estate. It doesn’t matter if your spouse never entered the workforce and never earned a dime during your marriage. The money you have in the bank, your investments for retirement in the personal property in your home are owned by you and your spouse as married people. That doesn’t mean the property is 50% yours and 50% your spouses. How did you own a complete share in any Community property such as it will be classified in your divorce?

If you are the spouse who stayed at home to raise the family and tend to the house, then this may be a surprise to you in a good way. I have talked to many spouses approaching a divorce who are worried about whether or not they will be able to survive after the divorce due to their having never earned an income. They assumed that all property and revenue generated during the marriage would go to their spouse, who worked and made a living. However, this is not how Texas views the marital property, and the outcome tends to be more equitable for the spouse who has not earned income outside of the house.

Other than community property, you are likely to find that both you and your spouse have a property that can be classified as separate property belonging to each of you individually. Typically, separate property is the property that both of you entered into the marriage with. Additionally, the property can be classified as being owned separately if you inherited it during your marriage or it was gifted only to you during the period of your wedding. Keep in mind that all property at the time eager to divorce is presumed to be a community in nature. Hence, if you want to argue that a particular piece of property is yours separately, you need to have evidence to substantiate that position.

What does this mean for you in your divorce case?

Now that we have gone through the basics of community property law four people divorcing in Texas, we can talk about what this will mean to you in your divorce. First of all, you will need to come up with a list of all the property you and your spouse owned. I understand that this may seem like a tedious chore, but it will benefit you greatly. After all, how can you possibly negotiate on a subject that you don’t have complete information on?

Start by inventorying each room in your home by taking photos and making lists. Next, you should get a good idea of what investments you and your spouse own if any, and do your best to collect financial documents so you know what each account is worth. You should run a credit check for yourself and see what deaths are in your name by the same token. Gets are just as much of the community estate as your property, and assets are in your debts will likely be divided in some form or fashion.

Once you have inventoried all your property and debts, you can begin to work with your attorney on dividing the property and debts into three columns: the community estate, your separate estate in the separatist state of your spouse. By organizing property and obligations in this fashion, you can prepare for mediation much better. The odds are that you and your spouse will be dividing up your property and debts in mediation rather than a family court judge. You should be prepared with multiple plans of attack as to how you could see property being divided.

Take your immediate years after the divorce into consideration when negotiating on the community estate. Do not be bashful when dealing with a disproportionate share of your community estate if you believe you will require financial assistance after the divorce. Do not or cannot negotiate for enough community property to sustain yourself while you attempt to enter the workforce and find employment. You may need to request post-divorce spousal support. Do not think that you will work something out with your spouse after the divorce if it does not get taken care of during your case. Be prepared to negotiate firmly and with reason so that your post-divorce years get off on the right foot.

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