When you’re thinking about getting a divorce, property can become a major issue, especially if you’re trying to determine community property vs. sole property in Texas. Whether it’s a business, money, or other assets, it’s important to know what’s considered community property and what sole property is under Texas law. This will help you understand your rights better and protect what is yours during the divorce process.
Everything you need to know about Texas Community and Separate Property
Understanding what is yours, your partner’s, and yours collectively will help clear any grey areas when it comes to your assets, home, real estate, and money. This will help when it comes to property division when getting divorced and hopefully, everyone will get what’s rightfully theirs.
What’s mine, his, and ours?
When it comes to marriage, there two types of property: “Mine” and “Ours.” In Texas “what’s mine” is defined as:
- Property acquired by a spouse during marriage either by a gift, devise, or inheritance
- Property owned by one spouse before marriage
- Recovery for personal injuries a spouse sustains during the marriage (does not include recovery for loss of earning capacity during marriage)
The distinction to determining what’s “mine” is when someone obtained the property. If it was before marriage it is owned by one spouse, also known as spouse owned. But, if it was during the marriage, it will be considered community property.
Something can become “his” or “hers” when it gets mingled together with another spouse. Adding a spouse’s name to the title of an asset after you’re married makes it community property. The same goes for items you bring into the marriage and use interchangeably without distinguishing ownership. They can easily become community property.
Property that is considered “ours” is something that either spouse acquired or earned during the marriage. It doesn’t have to be used by both spouses to be considered community property.
What Is Community Property?
Texas is one of nine community property states in the country. Under Texas law, all earnings and property married couples acquire during the marriage are considered community property. It doesn’t matter who paid for it or whose name is on the title. If it was purchased during the marriage, it is community property.
Examples of community property include:
- Vehicles, houses, or other real estate purchased during the marriage
- Employment income including wages, salaries, tips, and overtime
- Unemployment compensation and payment for lost wages
- Checking and savings account balances regardless of whether the account is single or joint
What is Separate Property?
Separate property is property owned prior to marriage or acquired during marriage as a gift or through inheritance or something that was part of a personal injury settlement.
- A car given to a husband or wife by his parents
- A house purchased before marriage
- Retirement contributions made before the marriage
- A married persons inheritance
If you have any of these things, they belong to you as personal property and are not considered marital property.
How Is Community Property Divided at Divorce?
While some people may assume that marital property needs to be divided equally, that is not the case. The court is only required to make a “just and right” division while considering the needs of the children, earning capacity of the spouses, age and health of the spouses, and education level of the spouses.
If both spouses can agree to divide property and debt, the court will usually agree and approve the agreement. The spouse who is awarded property is typically responsible for any debt that goes along with it.
Dividing property during the divorce process can get messy especially when high-net-worth assets or unique property are involved. This is why you’ll want to have an attorney who is extremely knowledgeable in divorce law and can help you get the settlement that is right for you.
How Do the Courts Divide a Closely Held Business or Professional Practice?
If one spouse develops a business or professional practice during the marriage, there is a community property interest that the court must look at during the divorce process.
The value of the business must be determined. This can be difficult because “goodwill” must be looked at. This is the intangible value that most businesses have based on their reputation or name. When couples divorce, they often hire appraisers or certified public accountants to determine the value of their business or professional practice. This person will review the books and business records to make their determination.
How will the court divide our debts?
Marital debt or community debt is debt that was created or incurred during the marriage. This can include a mortgage, car note, loans, medical bills, or credit cards. Both spouses are responsible for any community debt and liabilities of the marriage regardless of who created them.
If a car is purchased during the marriage, a court can award the car and the balance owed to one spouse but cannot take the other spouse’s name off the contract that started the debt. This means the creditor can still look to the other spouse if payments are late or missing. The same is true for any other contracts or debts. If your spouse opened your account using your information without your knowledge or consent, it may be considered fraud or identity theft.
Can I Get a Portion of My Spouse’s Pension and Employment Benefits?
Any pension, retirement money, profit sharing, or other benefits that are accumulating during the marriage is considered community property and will be divided by the court. If a portion of one spouse’s retirement benefits is awarded to the other spouse, the divorce attorney will prepare a Qualified Domestic Relations Order that will be sent to the employer. The employer will be ordered to distribute the benefits to each spouse following the court’s order.
As with other community property assets, retirement and pension accounts don’t have to be equally divided. If each spouse has their own retirement account, the court may award each spouse their own account and not split each one.
Talk to an Attorney
At The Jimenez Law Firm, we know that it can be confusing to determine the difference between sole and separate property and community property. That’s why we’re here to help. If you are thinking about getting divorced and have questions regarding community property vs. sole property, call us at 432-335-9000 to get the answers you need. We can help you through divorce mediation and divorce litigation. We can also assist with a prenuptial agreement, domestic partnership, and more.