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What Is Considered Community Property in a Divorce?

Feb 16, 2022 | Property Division

Filing for divorce is hard enough without trying to figure out how to divide property between spouses. Fortunately, Texas divorce laws and regulations can clarify some of the gray areas your shared assets and property may have on paper. For community property divorce in Sugar Land, TX and Houston, TX, it is helpful to have the guidance of an experienced divorce lawyer so you can keep all the property that belongs to you and other shared assets.

What Is Considered Community Property in a Divorce?

Texas is a community property state, meaning that some property gained during a marriage will belong to both spouses. During a divorce, all community property must be divided between each spouse so that each spouse gets to keep property and assets when the marriage ends. However, assets each spouse had entering the marriage will be kept when the marriage is over, as these assets do not typically count toward community property.

Does That Mean All Assets Are Split 50/50?

No. Even though all assets and property acquired throughout a marriage are considered community property, this does not mean that these assets will be evenly split between both spouses. In Texas, the way community property is split during a divorce is determined by the specific circumstances of the spouses, how and when the asset was acquired, and how much each spouse contributed to the property, among other factors.

The court will typically look at the length of the marriage, the health and education of each spouse, and the separate assets each spouse has to determine the division of community property. The court may also consider the custody of any children, the business or earning potential of each spouse, contributions to the home and marriage by each spouse, and the type of assets being divided when community property is split during a divorce. Being at fault for the divorce may also affect property division.

What If the Property or Asset Doesn’t Belong to Both Spouses?

During community property divorce decisions, the general assumption is that all assets and property belong to both spouses. However, there may be specific circumstances where one spouse can prove that property is separate, even if the property or asset was acquired during the divorce. If this is true for some of your assets, then you will need to discuss the issue with your legal representative to prove the asset should be considered “separate” rather than “community”.

In this circumstance, you and your lawyer will have the burden of proof, which means you must prove with evidence that the property belongs solely to you. Evidence may include deeds to property, names on bank accounts, including authorized signers, and other documentation that will establish the ownership and operation of an asset was done by only one spouse for as long as the asset has existed.

What Counts as Property in Sugar Land, TX and Houston, TX?

So, what qualifies as property? Both separate property and community property are defined as assets that are owned by either spouse. This can include physical properties such as homes, businesses, and vehicles, as well as financial property in the form of bank accounts, retirement accounts, stocks, and other holdings. Unless proven otherwise, all properties gained during a marriage by either spouse will be considered community.

Separate property, on the other hand, can refer to a few different types of assets. For example, separate property may be any assets you entered the marriage with, such as being the sole owner of a business. Separate property acquired during a marriage may also refer to gifts given to one spouse, inheritance, or other monetary rewards given to a single spouse. These assets must be properly documented to qualify as separate property.

Dividing Property and Assets in Community Property Divorce

Because assets will not be divided by a 50/50 split during a Texas divorce, it may take some time for the court to determine the cut each spouse should have for certain community property. The division of land ownership and business assets can be especially tricky, but there are certain factors a judge will consider.

For example, if the asset is a business, then the judge will consider how involved each spouse was in developing the business, including the initial funding for the business and the daily management of the business or holdings. It’s common for a judge to award the majority of an asset to the business owner rather than the spouse, particularly if other qualifications are met.

Premarital Agreement

It can be much easier to divide property and assets when there is an existing premarital agreement that will determine the ownership of businesses, property, and other assets before marriage. With a premarital agreement, there is already legal documentation that states what property or assets will be considered separate in the event of a divorce.

For instance, some premarital agreements will declare that a business is owned only by the spouse, or that the ex-spouse will only be entitled to certain assets if the marriage ends. Ultimately, this can simplify the process the court must take during divorce proceedings. Many lawyers will recommend business owners or spouses with significant assets, such as an inheritance, file a premarital agreement to simplify the division of community property in the future.

Marital Assets as Business Capital

On the other hand, it may be more difficult to determine business property division if there has been any comingling of marital funds for business purposes during the marriage. If marital assets (shared finances, or funds from the separate assets of one spouse) were ever used to fund a business, start a business, or support a failing business, then the business assets may not belong solely to one spouse. In this case, the court will need to look at certain factors, including reimbursement claims, to determine the split of the business assets, if any.

How a Lawyer Can Help You With Your Texas Divorce

A divorce lawyer in Houston, TX and Sugar Land, TX will have the expertise and knowledge to help your community property divorce reach a reasonable resolution. Ideally, a lawyer will help you and your ex-spouse settle outside of court where the division of assets is beneficial for each spouse. However, if there is any contention in the division of assets, your lawyer will represent you in court and help you gather evidence to prove that certain property should be considered separate.

Exploring Options

Your lawyer will prioritize your preferences during property and asset division. Some options you may have for dividing the value of community assets can include liquidating assets, “buying” shares of a community property business, or selling your portion of shared assets. Your legal team can also help negotiate so you can keep certain community property in addition to any separate property you may have brought into the marriage.

Texas is a community property state, which can be beneficial for some spouses during divorce since this means that lower-earning spouses may have the right to larger divisions of assets and property. However, community property doesn’t necessarily mean Texas divorce laws support the 50/50 split of all assets. You may need the assistance of a lawyer to support your claims of separate property and assets. For more information about the division of property and assets during a divorce, contact Skillern Law Firm in Houston, TX and Sugar Land, TX today.