How assets are categorized and divided in a divorce.
Texas is a community property state, which means that most property acquired during marriage belongs to both spouses and must be divided in a divorce. In order to understand how assets might be divided in any particular divorce, it is important to know which assets are categorized under the law as separate property and which assets are categorized as community property.
Once you are married, the assets which you and your spouse accumulate during your marriage are considered to be community assets or community property. These assets belong to the community estate or the estate that you own as a married couple. In a divorce, these assets are subject to a just and right division. Typically this means the assets are split 50/50; however, certain factors can be taken into consideration where the assets would not be split 50/50 and still be considered a “just and right division.” Such factors can be fault (the reason behind the divorce), disparity in income, relative financial conditions of each spouse, etc.
Texas has a presumption of community property, meaning that all property is going to be presumed to be community property unless you can prove otherwise. There are assets that are not part of the marital community estate and are instead categorized as separate property. These assets are not subject to a just and right division in a divorce except under very specific circumstances. Then, what is separate property?
In order for an asset to be considered separate property, it should fit into one of the following categories: (1) property owned or claimed by the spouse before marriage; (2) property acquired by the spouse during marriage by gift, devise, or descent; and (3) the recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage. Generally speaking if an asset does not fall into one of these categories it is considered community property and subject to the divorce.
It was mentioned above that separate property is not subject to division except under specific circumstances. The most common circumstance is when there is commingling of funds or a community contribution claim.
If you put community property assets and separate property assets into the same account, there will be a point where you (more importantly, the court) cannot tell which of those assets were from your separate property and which were from the community property. All of those assets are considered “commingled.” At this point, accountants and financial experts may be used (if possible) to try to separate the assets. However, if it is not possible, then the separate property assets may be subject to division.
As for the contribution claim, if you have been using community property assets (Ex: income earned during your marriage) towards improvement of separate property assets, the community estate (or marital estate) may have a “contribution claim” against those separate property assets. In other words, since community funds were used to benefit your separate property, those funds are owed back to the community in a divorce.
As you can see, how assets are divided and categorized in a divorce can become quite complex. Here we have just provided a brief and general outline of the some of the basics of property division. For more information about the specifics of your particular case we recommend consulting with an attorney licensed in your jurisdiction.