Asset division in a Texas divorce is based on community property law. If you can understand the basics of community property law, then you are in a position to be able to figure out how your assets are likely to be divided in your own divorce case. Ultimately, I would like to spend today going through the basics of community property law so that you can apply what you have learned to whatever circumstances you and your family find yourselves in.
There are basically two parts to a divorce: child custody/conservatorship and property division. Each of these parts is important in its own right, but we are here today to discuss division of property. Community property is an equitable way to divide up your assets in a divorce. Texas counts itself among the thirteen states in the United States who adhere to community property principles. Spanish civil law influenced the community property principles that our state utilizes in divorce cases.
Where community property laws differ from common law principles of property division most significantly, in my opinion, is that community property laws allow for spouses to share equally and fully in marital property. It does not matter whose name appears on the title or purchase documents for property. All that matters is that the property was purchased during the course of your marriage (with some exceptions).
It doesn’t matter if you’ve never worked a day in your marriage outside of the home. Your husband could be a professional who earns hundreds of thousands of dollars per year. It doesn’t matter about either of those things. Both of you have an equal shot at keeping property that will be divided in your divorce. The trick of the whole thing is learning how to negotiate your way through community property issues.
Negotiation versus going to trial
The popular perception of divorce cases is that the vast majority of them end up being decided by a family court judge. We have all seen the movies and television shows where the bleached-blonde, young wife tries to take her older-than-dirt husband for all he’s worth by lying to the judge and using sex-appeal to her advantage. Therefore, you would be forgiven if you expected this to be the likely reality of your own divorce. Like many things that come out of Hollywood you can’t always believe what you see.
In Texas, the vast majority of divorce cases settle before they reach a trial. Therefore, you should become comfortable with the idea of working with your spouse in order to reach a resolution in your case. Even if you are not on the best of terms with him or her it is very likely that this will be the end of your case. Knowing that this is true you can better plan and prepare for how assets are likely to be divided. This starts with being willing to talk with and negotiate with your spouse- despite whatever problems you are experiencing.
The benefit to being able to negotiate with your spouse is that you are able to come up creative ways to divide your property. A judge is bound by the laws of community property (which we are about to get into, I promise). Therefore, he or she is likely to split things down the middle or at least in a fairly straightforward manner. As in, if you have $100,000 in total assets in your marital estate then you could expect a judge to divide those assets by awarding you $50,000 and your spouse $50,000. Not very creative, but absent unorthodox circumstances, this is how we could expect a judge to handle matters regarding asset division.
On the other hand, not only do you and your spouse not have to follow a judge’s example in splitting property right down the middle, but you don’t even necessarily have to follow the laws associated with community property. As in, you all can agree to divide property in whatever manner you choose no matter what the official laws state. As long as what you agree to is not unconscionable (against the norms of fairness) then a judge is very likely to approve whatever settlement terms you come up with in your Final Decree of Divorce. The key to this whole discussion is to understand the issues in front of you and trust your spouse in negotiations.
Community property in the context of asset division
Is all of the property in your life at the time of your divorce subject to division in the divorce? It is true that all property at the time of your divorce is presumed to be community property. However, that presumption can be overcome with evidence that property is part of either of your separate estates. Separate property is any property that was owned by either you or your spouse prior to the start of your marriage.
Much of the time you and your spouse will come to a mutual understanding on what is community property and what is separate property. Be prepared, however, to produce receipts, title documents, bank transaction forms, etc. in order to prove that something or another is part of your separate estate. This is just as much something to produce for your spouse in discovery or mediation as it is for admitting into evidence for a trial.
At the beginning of your divorce, your family law attorney will likely recommend that you create an inventory of the property owned between you and your spouse. Often times you can go from room to room in your home and take photographs to document property. Next, you should go through your investment accounts and bank accounts and learn what the current balance is in each account. Finally, it is recommended that you go through your credit report and attempt to distinguish between those debts which belong to you as separate debts and which are part of the community estate.
Once you have inventoried all of your property it is time to assign the property (and debts) to a particular category: community property, your separate estate and the separate estate of your spouse. Remember that this is not a final draft. Your spouse may have a fairly similar list as you do but may have different items in different columns. You can also assign values to each piece of property or at least to the larger, more substantial pieces like your home. The overall value of your estates will impact what a judge would do in dividing up the community estate.
If your separate estate is substantially larger than your spouse’s separate estate, then that may impact what would happen in dividing up your community estate. The thought I have in this regard is that if you own a great deal of separate property while your spouse does not then a judge would have less of a reason to award you more than half of your community estate in an asset division. If you earn a higher than average income, then it is even more likely that this is the case.
Spousal support post-divorce versus a disproportionate share of your community estate
Imagine that you are going through a divorce as a soon to be single mother. You have been married for over twenty years and have spent all but two of those at home raising kids and tending to the home. This means that while you have an extremely rewarding home life, you are not exactly prepared to enter the workforce at the drop of a hat. You graduated from high school, have some junior college level coursework but no degree. Your work experience comprises of you being employed as a secretary for an attorney in the early 2000s.
Prior to working part time and having raised children you held a full-time job as a waitress while your husband attended law school. You paid the bills while he got an education. That education turned into a great career that helped your family achieve a great deal financially. A nice home, vehicles, money in the bank and investments for retirement. You contributed to the home life of your family and gave your husband the opportunity to gain an education.
Now you have come to find out that your husband is going to be filing for a divorce from you. This comes as a surprise. In a pandemic, with you not having worked at all for twenty years you are worried about your future. How will you find a place to live? What about getting health insurance? Are you going to be able to go back to work? These are relevant questions to ask yourself.
First, you and your family law attorney should ensure that you are paid temporary spousal support during the divorce. Since the marital estate will not be divided until the tail end of your divorce you are in need of some money in the short term to make sure that your bills can be paid and the mortgage is not something that cannot be paid, either. Basically, you need a short-term infusion of cash to ensure that you keep your head above water while you figure out your next step.
During final order mediations, you should come prepared to be aggressive when dividing up the community estate. Even if you and your spouse have similar amounts of separate property, you need a disproportionate split of the community estate in order to survive in your post-divorce years. If that disproportionate share of the community estate means taking the house (assuming the mortgage is paid off), then that should be your plan. If that means asking for a large chunk of your spouse’s retirement funds, then that should be your plan.
Finally, if you cannot negotiate for a disproportionate split of your community estate and do not want to push your case all the way to a trial then you should ask for post-divorce contractual alimony. Contractual alimony is an agreed to amount of spousal support paid to you by your spouse for a period of time after your divorce. If a judge were to order spousal maintenance in a trial, then you should expect it to last for approximately seven years if you were married to your spouse for roughly twenty years.
Final thoughts on dividing assets during a divorce
Dividing up community property assets during a divorce is as much of an art as it is a science. You need to know the laws associated with community property as well as what a judge is likely to say about your circumstances should your case be pushed into a trial. Otherwise, you should be flexible and creative with your spouse in dividing up your community estate to prepare yourself for your post-divorce life as a single adult.
The last thing I will say on this subject is that it may be wise for you to draft a prenuptial or marital property agreement before you and your spouse begin a divorce. The premarital or marital property agreement can allow you and your spouse to negotiate your way through the dividing up of the property in your marriage. Why not attempt to negotiate with your spouse when you are on good terms rather than when you are going through a difficult divorce. Some people are hesitant to negotiate a prenup because of the negative connotations associated with doing so. However, I think that for many people it is a reasonable path to take.
Questions regarding the information contained in today’s blog post? Contact the Law Office of Bryan Fagan
If you have any questions about the material contained 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. We take a great deal of pride in serving our community and look forward to the opportunity to discuss the services we off to you and your family.