(Video) How to Protect Your Separate Property in Divorce: Part II
In Part I, GoransonBain Ausley partner Clint Westoff discussed how you lose your separate property in Texas when you engage in transactions, such as creating a company using your separate property and accidentally make it all community property. The most common ways people lose their separate property is by not keeping track of it. If you can’t prove something as your separate property, then you aren’t going to have judicial protection for your separate property. In that case, it will be treated as community property even if everybody knows it’s separate property. Here in Part II, Clint shares what you need to know when keeping track of your community property.
Clint: This is part two of a multi-part series regarding protecting your separate property. In part one, we discussed losing your separate property when you engage in transactions, such as creating a company using your separate property and accidentally make it all community property. In part one, I mentioned that the most common way people lose their separate property is not keeping track of it. And that is what we’re going to cover today. If you need a refresher, part one discusses what is separate property. If you can’t prove something as your separate property, then you aren’t going to have judicial protection for your separate property. In that case, it will be treated as community property even if everybody knows it’s separate property. Your burden to prove something is your separate property is clear and convincing evidence that is one of three standards of proof that are used in the judicial system. The most common burden of proof is preponderance of the evidence. If you think of a scale a preponderance is if you tip the scale ever so slightly to your side, then you win. Another burden of proof is beyond a reasonable doubt. That is the burden of proof required before we put people in jail. You don’t have to prove something as your separate property beyond a reasonable doubt. But the closer you can get to that standard, the better. The standard of proof for proving something as your separate property is clear and convincing evidence, which is somewhere between preponderance and beyond a reasonable doubt. Legally, that’s described as the measure or degree of proof that will produce in the mind of the Trier of fact, a firm belief or conviction as to the truth of the allegations sought to be established. That probably doesn’t provide a lot of guidance for most people, and isn’t very helpful in day to day life. So here’s some guidance. First, keep all of your separate property records. For example, if you have an investment account before marriage, and you were married in 1990, in going through a divorce and 2021, it is best to have every single account statement. If you have all of the account statements except for some reason you’re missing 2009 then there is a very real chance the entire account will be treated as community property. Keep in mind that financial institutions generally keep records at most for seven years. Another thing you can do is keep your separate property and community property separate dividends and interest generated by separate property or community property. If you use the dividends from your separate property stock to buy more stock, the new stock is community. If you keep it all in one account, it makes proving something as your separate property much harder. Because it’s all mixed together. What you can do is sweep your dividends and interest out of your separate property account into another account every single month. Another tip is to keep your records clear. Don’t title an account jointly if you tend to everything in it to be separate. Don’t deed real estate to your spouse if you’re if it’s your separate property. Sometimes when refinancing secured debt on real estate, when you’re at a closing, you’re handed a stack of documents, and there’s a deed to both you and your spouse and the stack. Even if you were told it’s just standard. Don’t change the title unless that is what you are really intending to do. Finally, document things as you go over the course of your marriage have open and healthy conversations with your spouse about your entire financial situation, including what is your separate property and what is community property. Those are just some very basic tips about what you can do to keep track of your separate property. where most people fail is that they just simply don’t keep the paper or electronic records, especially over a long marriage and so their separate property is simply lost because they can’t meet their burden of proof to have clear and convincing evidence. In addition to keeping good and complete records, keeping your separate property segregated not commingled and keeping title to your separate property and just your name. As mentioned in part one, you can get a marital property agreement to put in writing exactly what you and your spouse expect to be separate property and what you expect to be community property. also talked to a family law lawyer, you can always consult with one of the Family Law Lawyers at GoransonBain Ausley and we are here to help!
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