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Texas Property Division FAQs

Q: How Will the Property Be Divided in a Texas Divorce?

In the event the parties do not reach an agreement regarding the division of their marital estate, the judge is obligated to weigh all the facts and devise a “just and right” division of the assets and debts. Just and right can mean an equal division of the community property or it could mean an unequal division of property depending on the circumstances. There are a number of factors the judge may consider in dividing community property disproportionately, including fault in the breakup of the marriage, the health of the spouses, and the earning capacity.

Q: What is the Difference Between Community Property and Separate Property in Texas?

Community property is defined as property acquired by either spouse during the marriage that is not the separate property of one of the parties.

Separate property is defined in Texas as:

  1. Property owned by a spouse before marriage;
  2. Property acquired by a spouse during the marriage as a gift or inheritance;
  3. Recovery for personal injuries sustained by a spouse during marriage, except for any recovery for loss of earning capacity during marriage;
  4. Property that can be traced to a separate property asset;
  5. Personal Injury Recoveries; and
  6. Partitioned property – Premarital or Post Marital Agreements.

A court can only divide community property and there is a presumption that all property that either spouse possesses at the time of divorce is community property unless proven otherwise.

Q: Are Partnerships Separate or Community Property?

Partnership property is neither separate nor community property. A partner’s interest in the partnership (right to receive a share of partnership profits)  may be separate or community property.

Under the inception of title rule, if an interest in a partnership is acquired before marriage or by gift/inheritance, that interest is separate property. Distributions of profits and income during marriage are community property.

Q: How Are Separate and Community Property Determined in Corporations?

Below are four areas of assessment for separate and community property.

  • Inception of Title — Stock in a corporation incorporated during marriage is community property; stock acquired before marriage, or during marriage by gift/inheritance, is separate property.
  • Increase in Value — Increase in value of separate property corporate stock that is due to natural growth or market fluctuations remains separate property.
  • Reimbursement — If the increase in value is due to the time, toil and talent of a spouse, the stock remains separate property, but the community estate may have a right to reimbursement.
  • Capitalization With Separate Property — If a spouse shows that a corporation in which they hold shares was capitalized solely with separate property, the shares will be separate property.

 Q: How is Separate and Community Property Determined with Stocks?

  • Cash Dividends – Dividends paid in cash on either separate property or community property stock during the marriage are community property.
  • Stock Dividends – Dividends paid in shares of stock on separate property are separate property.
  • Stock Splits – Stock splits on separate property stock are separate property. 

Q: How Is My Retirement Divided in a Divorce? Is My Retirement Separate or Community Property?

Generally, retirement benefits earned during an employee’s marriage are community property. The character of Defined Benefit Plans are determined by principles and formulas in case law. Defined Contribution Plans can use tracing or subtraction methods to determine separate interests.

Q: How Do I Protect My Separate Property in Divorce?

Your rights regarding your separate property are important, and in Texas, the state constitution even protects your separate property rights. A probate court cannot undo the decisions you make before you die regarding your separate property. A divorce court cannot take away your separate property if your marriage ends in divorce. However, you can do things, where you inadvertently lose all your separate property protections and rights.

If you want to know more about how to protect your separate property in divorce, please watch the videos below.

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