Separate property as an issue in a Texas divorce

Typically, when you see a blog post on the subject of property here on our website for the Law Office of Bryan Fagan, you will see a blog post that focuses almost entirely on Community property. The presumption in Texas is that at the time of your divorce, all property owned by you and your spouse is a community in nature. It is up to you and your spouse to be able to prove that certain pieces of property are either community-owned or separately owned. The burden of proof is on either of you to prove that a piece of property is separately owned by one of you rather than community owned by both of you.

Despite it not receiving as much attention here on our blog or elsewhere in the world of family law, separate property can and does play a major role in divorce cases. Although a family court judge cannot divide your separate property in any way, the separate property does play a role in your divorce as far as how the Community property is divided. Additionally, there is also the important matter of how Community property and separate property are defined within your case and what evidence you would need to show that a piece of property belongs in your separate estate or the separate estate of your spouse rather than in the community estate.

What impact does the amount of separate property you and your spouse own have on how community property is divided?

Ultimately, you and your spouse hold within your hands the power to divide up Community property and designate the separate property as such. A family court judge only becomes involved in a divorce case if and when you and your spouse cannot settle certain issues. Otherwise, you all are free to designate property in whichever way you choose for your divorce. So long as the way you do so is not unconscionable, you all can take matters into your own hands you think are best based on your family and your specific circumstances.

Wait a minute, you may be saying. If you and your spouse are free to choose how to divide up your property in the divorce, then why do Community property laws matter at all? Theoretically, couldn’t you go by your own rules and make something up on the fly? Who’s to say what will be right and wrong if you all do not have to explicitly apply the rules of Community property to your settlement negotiations?

Here is why the rules of Community property division matter even when it comes to negotiations between you and your spouse. The simple truth is that, in the backdrop of all your negotiations, both sides are aware of the reality that if your settlement negotiations break down and you are not able to settle your case in your case will certainly go before a family court judge. Therefore, even though settlement negotiations may not be explicitly based on the exact rules of Community property following them to AT, there is a level of knowledge that your case can and will go before a family court judge if necessary pending settlement negotiations.

As a result, it doesn’t make much sense to offer off-the-wall theories or rationales as to why they held certain positions when dividing up the community estate. If you are more or less trying to follow the rules of Community property when it comes to negotiating this subject with your spouse, but they are making off the wall demands and making things up as they go, then that is to both of your detriments because a trial will be more likely as a result. However, it will be even more to your spouse’s detriment given that they will be unprepared 2 present a case to the judge given their reluctance to embrace Community property norms when negotiating with you.

Once you all have agreed upon which pieces of property belong in both of your separate states, then the next question will be how that determination impacts your case. How Community property is divided, I think it is important to designate separate property early in the case so that you all will be able to determine better how Community property will be divided. A good rule of thumb is that a family court judge, all things being equal, will award a spouse more Community property based on the lesser degree of separate property that they own. Here is how that could play out in a case like yours.

A hypothetical example of how separate property designations impact Community property division

let’s suppose that you and your husband are getting a divorce. You all have been married for nearly 20 years and are now closing in on the end of your marriage. While you were able to settle many issues in your divorce, there are still some outstanding matters related to your community, a state, and its division that need to be tackled by a judge. When we consider all the factors of your case, there are no-fault grounds for divorce, no children to support, and no bad behavior during the trial that might influence how a judge ultimately divides up your community is stated. For the most part, it has been a pretty uneventful divorce. That’s a good thing if you are curious.

So when your case makes it to a trial, what will a judge look to when determining how to divide up your Community property? The Community property you own is pretty standard for families in our area: you own a house with a mortgage, a few investments here and there, your spouse has a 401K through his employer, and you have money in a checking and savings account. These will be the elements that would be divided in your divorce case.

So, what are the factors related to separate property that a family court judge would look to when deciding how to divide up the community estate? Since we have already established that there are no behavioral, fault ground, or other issues to tackle, I believe a family court judge would look primarily to each of your statuses as far as employment, health, and job history are concerned as well as separate property to make this decision.

For instance, if your spouse entered into the marriage with a significant amount of separate property whereas you did not, then it will be more likely that a family court judge would award you a disproportionate share of your community estate. A disproportionate share means that greater than 50% are the community’s Estates value will be awarded to you. This reflects the reality that your community estate may be shared with your spouse equally, but your separate states are far from equal when it comes to property. To prevent you from getting the short end of the stick in this bargain, a family court judge may award you more Community property to make up for this disparity in separate property.

Next, the family court judge could look to your specific circumstances regarding employment and inability to provide for yourself after the divorce when making decisions on dividing up your community estate. Your age, educational background, employment history, and health level would be all factors in these decisions. Let’s talk a little bit about each of these factors and how they will be a part of a judge’s decision when dividing up your community estate.

A judge has to consider how many more years you have income earning potential before it gets close to retirement age for you when it comes to age. If you are much younger than your spouse, this may be seen as a positive factor from a judge when deciding your potential to build an income. By the same token, if you are younger, it is conceivably true that you could also pursue education more readily than an older person who would allow you to better support yourself after the divorce.

Educational background plays a big role in this decision, as well. If your spouse is much more educated than you, this is typically looked at as a positive when entering the workforce. There is some degree of correlation between income and education, at least to a certain extent. Therefore, your spouse, who is a medical doctor, versus you, who was a stay-at-home mother, tells the story of a great disparity in education and possibly in income earning potential.

Likewise, if you have been a stay-at-home parent for the majority of your marriage while your spouse has been the one to go out into the workforce and earn a living, this may allow you to retain more of your community estate compared to your spouse. This is especially true if you were a stay at home parent and part-time worker to help your spouse fund their education period; for example, you may be in line to retain more of your community estate than your spouse, especially if you work part-time to help your spouse be able to attend school to increase their income earning potential.

Finally, health is a major consideration for determining how to divide Community property in a bench trial. After the year that we’ve had, it goes without saying that health is critically important to our success as individuals and as a society. The better your health is, generally speaking, the less of a factor it becomes when dividing up Community property. It is when you have a significant health problem that may impede your ability to provide for yourself financially after the divorce that a family court judge may begin to consider awarding a disproportionate share of your Community property to you rather than to your spouse.

More on separate property

As you can see, it would be a misnomer to believe that all Community property has to be divided up in an equal fashion in your divorce. We can see that your circumstances, personal attributes, education and income earning potential, health, and role in the divorce all play a part in determining how Community property will be divided. On top of that, Community property can be classified as a strict community in nature and quasi-community or of a mixed character. When the property was acquired and how it was acquired would play into this determination. Simply depositing community income into a bank account with your name only does not make the income your separate property.

The big thing for you to keep in mind is that all property owned by you and your spouse at the time of your divorce is presumed to be Community property. If it comes down to it, a Texas judge will look to when the title to the property was acquired and would make a decision on community versus separate property based on that factor. So long as the title was acquired during your marriage, it is likely that that particular piece of property would be classified as being community-owned rather than separate.

The burden of proof to show that a piece of property or asset belongs to you rather than the community a state places the burden on your shoulders to present evidence. You would need to show that the source of the money used to pay for the property came from separate property.

For example, if you utilized money from an inheritance, a gift specifically to you, or income you had before your marriage to purchase a home, then that home may be properly classified as being separate property. The legal standard by which you must produce evidence to show this would be clear and convincing. Clearing convincing means that the evidence must be more than merely more reasonable than not but is not as strict as beyond a reasonable doubt as you would see in a criminal trial.

Using the above example of the home purchase with separate property funds, you would need to show further that no community income was invested into the home for it to be free and clear as a part of your separate estate. For example, if your spouse can show that community income was utilized to purchase improvements for the home or make renovations, then it is very likely that the house will be classified ask a Community property at least in part.

By the same token, if you can show that you purchased a home before your marriage, it will be classified as separate property. However, that does not mean that your spouse will not be able to make arguments regarding reimbursement claims when it comes to any Community property funds that were utilized to pay down the mortgage or make improvements on the home. Also, if you refinance the mortgage during your marriage and your spouse’s name appears on the loan, then your spouse may have acquired a 50% interest in that home as a result.

It can be a significant challenge to prove a separate property owner of an asset during a divorce. So much of this process relies on good record keeping and documentation that most of us out there do not maintain the sort of files that we need to make this process as easy as it might be in other circumstances. It is unlikely that you made decisions and kept track of things with the intent to get a divorce. As such, you and your attorney may need to do some work on preparing your case and researching the documentation you need to prove the separate property nature of an asset or piece of property.

Finally, you need to be aware that depositing community income into a bank account that had previously been the home of your separate property is known as Co-mingling. Doing so can jeopardize your ability to assert a separate property nature of much of that account and, at the very least, will take some effort to distinguish between separate property and Community property. Again, you may have performed this kind of action without considering what it could mean if you and your spouse were to get a divorce. It is unlikely that you made decisions like this while fully cognizant of their implications for a future divorce.

Questions about the material presented in today’s blog post? Contact the Law Office of Bryan Fagan

If you have any questions about the material presented in today’s blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free of charge consultation six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas family law and how your family circumstances may be impacted by the filing of a divorce or child custody case.

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