Questions about property division are some of the most common that we receive here at the Law Office of Bryan Fagan. Did you know that we offer free-of-charge consultations six days a week in person, over the phone, and via video? This is true. We seek to ensure that potential clients receive the most amount of attention possible in these consultations. Whether you are going through a divorce, child custody, or other type of family law case, we want you to know that you have an ally in the Law Office of Bryan Fagan. Our attorneys are here for you to talk to you at no charge at your convenience about whatever matters are most impacting your life right now.
When it comes to property division in a divorce there are many elements to consider. Property division represents one of the two major areas of divorce cases. The other is child custody and conservatorship. If you are going through a divorce case and have minor children, it is especially important to pay attention to matters involving your finances. The reason that we believe this is that so much attention in divorces involving minor children understandably centers around the children themselves. While this is completely understandable and necessary it is also important to not lose sight of the importance of issues related to your finances.
This is one of the reasons why we wanted to write this blog post today. Understanding issues related to property in Texas divorces means not only gaining an insight into those areas but also developing goals and a game plan for achieving those goals. We can tell you from experience that having a main goal of simply getting through the divorce as quickly as possible is not a great position to be in. Rather, you should strive to be educated on the law as well as how your circumstances will interact with the Texas family code. If you can get to that point, then you will be in a great position to be able to have a productive divorce that puts you and your family in the best position possible in the months and years after the case is over.
In today’s blog post from the Law Office of Bryan Fagan, we are going to delve into a critical topic regarding property division in Texas divorces. Specifically, we are going to talk more about what is separate property in a Texas divorce. We know from helping thousands of Texans achieve their divorce goals, that this can be a topic that at first glance appears to be simple. However, there are almost always circumstances and situations that you may find yourself in which can complicate the case and require you to be nimble with presenting arguments and understanding the law.
For that reason, we highly recommend that you seek out a free-of-charge consultation with one of the attorneys from the Law Office of Bryan Fagan if you have any questions about what you are about to read. We always do our best to make sure that these blog posts are as relatable as possible in terms of presenting information that is relevant to you, our reader. However, we also understand that you have specific circumstances which we may not be able to explore in detail in a blog post. Therefore, we invite you to reach out to our attorneys to schedule a free-of-charge consultation to discuss those matters in a comfortable and relaxed environment.
What is separate property?
To answer the question, of what is separate property, we need to 1st determine what community property is. Stick with us as we establish these parameters of our discussion and I think we will have a very worthwhile blog post to share with you. Texas is known as a community property state when it comes to divorces. This means that the state of Texas adheres to principles related to community property when it comes to dividing assets and debt in a divorce. Most states in our country are known as common law states and adhere to different principles in a divorce and property division setting. Therefore, if you were married in another state but have lived in Texas for most of your marriage then this blog post can be especially important for you.
To begin with, community property law in Texas presumes that all property owned by you and your spouse at the time of your divorce is community-owned. Why is this important? This is important because a Texas family court judge has the legal authority to divide Community property in a divorce. In theory, this means that all the property that you own can be divided in your divorce if it is determined to be Community property. However, you can rebut this presumption with appropriate evidence.
Early speaking, Community property is any property acquired or purchased during your marriage. This includes income. From our experience serving our community, the attorneys at the Law Office of Bryan Fagan can tell you that the most surprising reaction we receive when talking about Community property is that the income that you earn from your work is community-owned. There is no distinction drawn between “his” and “her” income, for instance. When you go to work you can think about your income being able to go into a big pot in the middle of the table for you and your spouse to share.
Why does this matter? It matters a great deal because no matter if you are the spouse who earns $30,000 per year or $300,000 per year, so long as that income was earned during the marriage it is almost certainly going to be divisible in your divorce. This means that money in the bank or property purchased with community income will be divisible in the divorce. For many people, this is a major surprise and can be a frustrating part of going through a divorce in Texas depending upon the role that you have played in your marriage. Particularly for the higher income earner, this can be a frustrating situation when you are going through a divorce.
What is separate property compared to community property?
Now that we have gone through and established the basics of what Community property is we can better discuss what separate property is separate property is any property that is not part of the community estate. When we talk about separate property, we are usually discussing property that you owned before your marriage. If you owned a vehicle, personal property, real estate, or anything else for that matter before your marriage then that property is likely to be considered separate property.
This is important because separate property cannot be divided in a divorce by a family court judge. Much of the separate property that you own will be easy enough to assert that it is yours separately and not part of the community estate. However, there are also circumstances where you may find yourself in a position where you are struggling to prove that a particular type of property is separately owned rather than Owned by the community. This can happen especially with different financial accounts and investments that you may have made around the time of your Marriage. In these types of circumstances Having the documentation necessary to prove the separate property nature of a particular asset that you own is incredibly important.
Commingling and overcoming the community property presumption
as we have already discussed, the presumption in Texas is that all property at the time of your divorce is community-owned. Therefore, any property that you would like to argue is separate property may involve a situation where you need to present evidence to a court as to the type of property it is. This is not to say that in every circumstance where you try to present property as separately owned, you will be facing an uphill battle. However, you should be prepared in a divorce setting to be able to present effective arguments as to why a particular type of property should be a part of your separate estate versus your spouse. By the same token, if you believe a type of property to be part of your community estate rather than your spouse’s separate estate you also need to be prepared to present these types of arguments.
One of the toughest situations that you can find yourself in when it comes to arguing that property is part of your separate estate rather than part of the community estate is regarding commingled funds in a bank account. This is not an overly complex subject, but I do think it is one where we are best served by going through the subject matter with an example to better illustrate our points.
Let’s take a situation where you inherited $10,000 from a relative who recently passed away. We should point out that a major exception to the community property presumption rule is that property acquired during your marriage by gift or inheritance is considered to be the separate property of the recipient. This is well defined in Texas family law and it’s not something that you would necessarily have to push hard to prove in a courtroom setting. However, we know that the circumstances of your case can present unique factual situations that we may need to work through as an attorney dash client team.
One of the common issues that can come up when it comes to separately held property is that of commingling in a community property bank account. You and your spouse had been married for a handful of years when you inherited this money. Thinking nothing of it, you deposited that $10,000 from your relative into a jointly held and considered to be a community property bank account. This is the account where you and your spouse deposit your paychecks and other money that you come into because of living your daily lives. For the record, it would not matter if you and your spouse had separate bank accounts in which you held your money. The income in both accounts would still be community property.
Thinking nothing of it you deposited your $10,000 inheritance into your bank account with your spouse. You went on to spend money out of that account as normal not thinking about the implications of doing so in a divorce context. However, the two of you unfortunately find yourselves in a position where you are now going through divorce proceedings. One of the issues in your divorce is what property you own should be considered community property versus which assets should be a part of your separate estates. You meet with a family law attorney from the Law Office of Bryan Fagan about representing you in the divorce. Of course, you mentioned the $10,000 received from a relative and how you believe this to be separate property based on having read a blog post from our office.
At least in your mind, this is an open-and-shut situation. Inheritances are separate property, right? Not so fast. By depositing that separate property into a jointly held bank account with community property funds you have done what is known as commingling. Commingling is adding separate property or community property together to the point where it is very difficult to tell how much of the property is separate property and how much is community property. This can make for a difficult circumstance when you are presented with proving how much, if any, of that bank account is your separate property.
The process of trying to figure out how much of an asset is separate property and how much is community property is known as tracing. Tracing requires you to be very diligent and focused on record keeping and the maintenance of evidence associated with the property that you own. Diligent record keeping and keeping track of deposits and withdrawals from an account like this will be of the utmost importance. You may have done a good enough job in your record keeping that a situation like this can be solved simply by looking up bank records and different account summaries from your bank or credit union.
On the other hand, you may also be facing a situation where the circumstances are more complex. In that type of scenario, you may need to hire someone like a forensic accountant who can go back and look through different financial documents to help you determine the community property versus the separate property nature of a particular asset. In any event, this can be a complex situation that you find yourself in. Depending upon the size of your estate and the assets that you own, a $10,000 inheritance may represent a substantial part of your financial situation.
Let’s not forget about debt
this is to say nothing about how the debt in your marriage must also be divided. Just as we have seen how property must be classified as either community or separate in a divorce, we can also see that debt must be treated in the same way. The debts that you have will need to be accounted for in your divorce. In concluding today’s blog post we can talk about the largest debt that will probably be part of your community estate. Namely, your home mortgage. If you purchased a home with your spouse during your marriage, then that mortgage is likely to bear both your name and your spouse’s. Therefore, it is critically important that you be able to handle how’s that community debt.
Due to the size of the debt, the type of asset it is as well as the emotional ramifications of dividing a house in a divorce this is a complex subject that will require a great deal of thought on your part as well as that of your spouse. Working with experienced family law attorneys, such as those with the Law Office of Bryan Fagan can be incredibly beneficial given that you may find yourself in a position where your head tells you one thing, but your heart tells you another.
Factors like being able to afford a mortgage on only your income, the needs of your children, your goals after the divorce, and a range of other topics should all play a part in determining the direction you move as far as deciding whether to remain in a home. If one of you decides to keep the house then there is a situation that will arise where you all need to determine the best way to manage this circumstance when it comes to dividing the debt, paying out equity, and shielding the other spouse from liability if the mortgage is not able to be paid in the future.
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 consultations 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 as well as about how your family’s circumstances may be impacted by the filing of a divorce or child custody case.