As you consider divorce one of the questions you may have is what will happen to the property? In a perfect world, divorces would be amicable and property would be an equal division of the community property between the parties. However, that is not always the case. Texas is a community property state which is rooted in the inception of the state. This community property is established in the constitution; thus, changes would require a constitutional amendment. Community property is considered the property acquired during the marriage that is not considered separate property.
A spouse’s separate property consists of property acquired before marriage, any property gifted during the marriage, and the recovery of personal injuries that were sustained during the marriage, except medical and loss of earning capacity.
Qualifications to Definition of Separate Property
By a written and signed agreement between both spouses, they may divide any of their community property now or in the future.
As stated, gifts acquired during the marriage are considered separate party. Also, any income or property that may be derived from that gift.
Assets purchased with separate funds are separate property. (This is determined by tracing the money to the funds that purchased it.) This can be convoluted and depending on the findings of the tracing of money, a spouse may still have an interest in the property. For example, if the property was purchased prior to marriage, but community income was used to pay off the loan. The spouse who did not make the original purchase will have an interest in the property. Variables are as diverse as the people who we represent.
In Texas, any income that is derived from separate property belongs to the community. The only exception, as stated above, is a gifted property.
The property possessed by either spouse during the divorce is presumed to be community property. Any party claiming separate property will need to prove that it is a separate property with the establishment of clear and convincing evidence.
Employee Retirement Benefits
In the case where a retirement plan is started during the marriage, the entire plan benefit, valued at the time of divorce, is community property. This property is subject to “just and right” division.
When the participation of a retirement plan begins prior to marriage, the benefit is part separate and part community property.
If the divorce happens after retirement the formula to determine community share is found by dividing the number of years married and participating in the plan by the number of years employed while participating in the plan multiplied times the value at the time of divorce.
Spouse’s married 10 years to a service person has a community property right in military retirement benefits. There is an exception if the spouse signs there benefit rights away at the time of retirement. The exception is no community property right in disability retirement benefits.
There is a community property right in federal civil service retirement plans.
Social security benefits are not subject to division during a divorce because of federal preemption.
Disability benefits (non-military) are considered community property.
These are some property basics when it comes to the dissolution of marriage. This is not all-inclusive and not considered legal advice. Reading this does not establish the attorney-client relationship. Further questions can be directed to our office, 512-373-4200, where we are here to help.