“Texas is one of nine states that is a community property jurisdiction. In general, this means that any property acquired by a couple during their marriage (with a few exceptions) is equally owned by both spouses. This can have a profound effect on the dissolution of property during divorce proceedings,” according to the Texas State Law Library. In this article, we discuss the basics of Texas’ community property laws and how marital property is divided in a Texas divorce.
In the United States, there are two methods of dividing marital property in a divorce proceeding: equitable distribution and community property. As a community property state, Texas spouses have equal rights to marital property. Meaning, they each have a 50 percent interest in their community property (marital property). As mentioned above, “community property” refers to all assets and income acquired during the course of a marriage, with some limited exceptions.
Community vs. Separate Property
While community property is subject to division in a divorce regardless of who earned the income or whose name is on the title, separate property is not divisible. What counts as separate property? Separate property includes:
- Assets acquired before the marriage
- Income earned before the marriage
- Gifts acquired during the marriage
- Inheritances received during the marriage
- Property bought with separate property during the marriage
Sometimes, separate property can be mixed with or “comingled” with community property. For example, a spouse may receive an inheritance and without thinking about it, he or she will deposit the funds into the couple’s joint bank account and the money is then used to pay household bills. As a result, the inheritance becomes “community property.”
Alternatively, a spouse may take separate property and use it to pay off marital debts. When spouses do this and they later divorce, it can complicate matters and ultimately, a judge could decide that since the separate property was commingled with community property, that it shall remain community property and will be subject to division.
If you’re engaged and you want to avoid having to split certain assets with your spouse in the event of a divorce, you can enter into a prenuptial agreement that states that the separate property brought into the marriage and your income earned during the marriage shall remain separate property. Additionally, divorcing couples do not have to adhere to a 50/50 split of their community assets. They can deviate from that formula so long as it’s fair and doesn’t leave one spouse penniless after the divorce.
To learn more about asset and debt division in a Texas divorce, contact the Law Firm of Johnson & Gaskill PLLC today.