When spouses divorcein Texas the laws regarding community property come into effect. For the most part the laws are easy to follow despite what friends and family members who have gone through a divorce may have told you.
The key to understanding them, however, is being taught about the ins and the outs of the laws so that when you are asked in your divorce to negotiate over a specific item that you will have the information necessary to do so.
A key to understanding the laws of community property in Texas is to know that if you and your spouse are able to negotiate and settle the issues of your case prior to a trial then the law has nothing to say about what you decide to do. Your agreements with your spouse can be much more flexible than what our state laws on this subject can provide for you and your family.
An example to begin today’s blog post
Imagine that there exists a hypothetical entity that is known as the “community” that owns your and your spouse’s assets. Both you and your spouse have a one half interest in the community. Additionally.
Texas law has it that any property that is not considered to be community property either belongs to the separate estates of you and your spouse. When dividing up property upon your divorce it is important to know what a court will likely consider any given piece of property to be- community or separate property.
Defining Separate and Community Property
Any property that you owned prior to your marriage or property that you acquired during the course of your marriage by gift or inheritance is considered to be separate property. If you have any income that can be determined to be separate property and that income purchased property during the marriage that property as well is considered to be separate property.
Community property is every other form of property. This is literally the definition. All property that is not separate property is considered to be community property under the laws of Texas. When we think of community property things like salary, wages, commissions, and income that is generated off the community and separate property are all considered to be community property.
The Community Property Presumption
The aforementioned law that all property that is not separate property is considered to be community property makes sense in the context of the community property presumption.
Before analyzing anything, the presumption in Texas is that all property owned by you and your spouse is community property. This means that any property that you and your spouse came into the marriage with individually, as well as all property that you acquire during your marriage, is assumed to be community property. Thus, in order to prove that any property is either the separate property or you or your spouse you will need to rebut and overcome this presumption with clear and convincing evidence.
A premarital agreement is a document that many spouses with a substantial amount of separate property that they are entering into the marriage with may want to consider negotiating with their spouse-to-be. By negotiating with and agreeing with your fiancé what will be considered to be separate property you can avoid heated exchanges on this subject should you and your spouse decide to get a divorce.
At the same time, a premarital agreement can actually save the spouse with less property, potentially. If you are entering into the marriage with a substantial amount of debt that could potentially be argued to be community debt you can partition off this debt as your separate debt before the subject would even arise in your divorce.
The inception of Title as a means of classifying property
In your divorce, you will be required to determine whether a piece of property is either community or separate property. This is true even if your case never makes it to trial and you and your spouse are able to negotiate upon a settlement beforehand. The inception of title rule is how Texas law determines whether a piece of property belongs in either the community estate or the separate estates of you or your spouse.
At the time the asset is acquired, a determination will be made as to whether or not the property is either separate or community property. Any events that take place after the title comes into being will not affect how the property is designated.
As an example, let’s assume that you acquired a home with the obligation of paying a mortgage on that home. You were a single person when you purchased the home with the mortgage but decided a few years later you decided to get married.
The mortgage payments you made on that home would come then from community income as all income earned during the course of your marriage (from either your or your spouse’s employer) is considered to be community property.
Despite the source of the funds used to pay the mortgage the home itself is still considered to be your separate property under the laws of Texas.
If you and your wife ultimately decide to get a divorce then your wife may end up having a reimbursement claim against your separate estate since community funds were used to pay the mortgage. This will have no effect on your ability to assert and prove that the home itself is your separate property.
What happens if you moved to Texas from a non-community property State?
Most states in the United States are not community property states. If you have moved to Texas from one of the states that do not have community property laws on the books then you will have to learn what, if any, property that used to be part of one estate now perhaps belongs in another estate.
I have another example to run by you that will hopefully illustrate this point for you a little better. Consider that you and your wife had lived the beginning years of your married life in Alabama. You and your wife owned mutual fund investments that were titled in your name only. Prior to your move to Texas, you and your wife sold your shares in the mutual funds for $50,000.
You and your spouse then used that $50,000 as a down payment on a home in the Houston area. The remaining portion of the sales price ($200,000) on the home was put on a mortgage.
The key here to understand as far as our overall discussion is that because the mutual funds were your separate property before selling them and using the profit for another purpose, the profit itself is still considered to be your separate property once you moved to Texas. Based on the above hypothetical, the house would then be 20% of your separate property and 80% part of the community estate of you and your wife.
Speaking of homes, it does not matter whose name appears on the title as far as ownership is concerned in your divorce.
The inception of title rule looks at the time and circumstances of acquisition of whatever property is in question to determine whether the asset belongs in the community or separate estates of you or your spouse.
That means the new house you purchased during your marriage need not have your spouse’s name on it to be considered community property. It can be titled just to you but your spouse’s rights in the property are the same as if her name appeared on the title along with yours.
More on community property in tomorrow’s blog post
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Other Articles you may be interested in:
- Family Law Cases in Texas: Marital Property and the community presumption
- Issues in Community Property Law in Texas
- Reimbursement of the Community Estate: Continuing the Discussion on Divorce
- Texas Divorce Overview: Dividing Community Property and Debts
- Dividing community property in mediation: What can be done to settle your divorce in Texas
- Individual Retirement Accounts (IRAs) and your Divorce: Taxes and General Information
- Social Security division in a Divorce
- Will Social Security Benefits play a substantial role in my Texas Divorce?
- Is Social Security Considered Separate Property in a Texas Divorce
- Key Elements of a Divorce for persons over the age of 50
- 7 Tips for Divorcing After Age 50 in Texas
- Divorcing After Age 50 in Texas: What it Can Mean for You and Your Spouse
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