One of the biggest concerns couples encounter when going through a divorce is how their property and debts will be divided. If you are divorcing in Texas, it’s important to understand community property laws and how they may affect what happens to your assets and liabilities during the process.
At Melone Hatley, P.C., our experienced Fort Worth family law attorneys are here to guide you through Texas’s complex community property laws. If you have questions about how your property will be classified and divided during your divorce, we are ready to help you understand your rights and advocate for your best interests.
Is Texas a Community Property State?
Texas is one of only a few states in the United States that follow community property laws.
Under Texas law, any property and debt acquired by either spouse during the marriage is considered community property. This means it belongs equally to both spouses, regardless of whose name is on the title, who purchased the asset, incurred the debt, or earned the money. This differs from states that recognize equitable distribution rules, where property is divided based on what the court considers fair, considering many different factors.
Under Texas law, when a couple divorces, the court must divide community property in a way that is “just and right.” While this often results in an even division of assets and debts, it’s not always the case. Courts can adjust the division based on the case’s specific facts if fairness requires it.
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What is Considered Community Property in Texas?
Community property typically involves all the assets and debts spouses acquire during their marriage. This will include:
- Income from employment earned by either spouse during the marriage
- Any real estate purchased during the marriage
- Vehicles, furniture, and personal items purchased during the marriage
- Bank accounts, stocks, and investment accounts funded during the marriage
- Businesses founded or grown during the marriage
- Debts such as mortgage, credit cards, student loans, and car loans incurred while married
Even if only one spouse worked outside the home, Texas law treats the efforts of both spouses as contributing to the accumulation of community property. This means that one spouse can’t simply claim they own an asset because they earned the money to acquire it. If it was acquired during the marriage, it is generally considered community property subject to division in a divorce.
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What is Separate Property?
Separate property, or property owned solely by one spouse, is not subject to division during a divorce.
Separate property generally includes:
- Property owned before the marriage by either spouse
- Gifts received by one spouse individually, including gifts from the other spouse
- An inheritance left to one spouse, whether before or during the marriage
- Personal injury awards or settlements
If separate property is not carefully maintained as such, it can become mixed, or “commingled” with community property, making it more difficult to prove and protect during a divorce. For example, if one spouse inherited money that is deposited into a joint bank account and used for shared expenses, it may lose its separate character unless it can be carefully traced.
In Texas, it is important to be mindful that there is a strong legal presumption that all property owned by either spouse at the time of the divorce is community property. If a spouse claims separate ownership, they bear the burden of proving it with clear and convincing evidence.
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Can Spouses Agree to Their Own Property Division?
Spouses can agree to divide their property however they see fit during a divorce, as long as both parties voluntarily consent, and the agreement is fair.
Instead of relying on the court to divide assets and debts under the standard community property rules, spouses can create a property settlement agreement that allows them to decide who will keep specific assets, how debts will be paid, and how their retirement accounts, real estate and personal belongings will be handled.
Once signed and approved by the court, the agreement becomes legally binding and part of the final divorce decree. Courts generally honor these agreements unless they are grossly unfair or the result of fraud, duress, or coercion. Negotiating a property settlement agreement gives spouses more control over the outcome while also saving time and the added legal expenses of court intervention.
Couples can also protect their property rights before or during the marriage by entering into
- A prenuptial agreement made before the marriage that outlines what will be considered separate property and how property will be divided in the event of a divorce
- A postnuptial agreement made during the marriage that can accomplish the same goals
- A Partition and Exchange Agreement made during the marriage to reclassify community property as separate property or vice versa
These tools allow couples to define and clarify their own property rules, which the court must respect during a divorce unless the agreement is found to be unconscionable. Even without formal agreements, spouses who can work cooperatively during a divorce can often craft more creative settlements that better fit their unique situation, avoiding the risk of leaving these decisions up to a judge.
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How Does the Court Decide What is “Just and Right” When Making Property Division Decisions?
When spouses can’t agree on how to divide property and debts, the court will need to step in and divide community property in a way that it considers “just and right.” Texas courts can divide property unequally when a truly equal division would be unfair.
When doing this, the court may consider many factors, including
- Each spouse’s earning potential and current income
- The size and nature of each spouse’s separate property
- Who will have primary custody of the children and the associated financial responsibilities
- Fault in the breakup of the marriage, such as infidelity, cruelty, or abandonment
- The health, age, and financial condition of each spouse
- Any wasting, hiding, or fraudulent transfer of marital property by one spouse
- Future financial needs or obligations of each spouse
This unequal division can involve awarding more assets to one spouse or ordering a spouse to pay a disproportionate share of the debt based on fairness. In complex cases involving businesses, investments, or large estates, professional appraisers or forensic accountants may be brought in to help the court understand the true value of the property being considered.
Contact Our Experienced Fort Worth Family Law Attorneys
If you are going through a divorce in Texas, understanding its community property laws and how courts divide assets and debts can play a crucial role in safeguarding your financial future. Every case is unique, and having skilled legal guidance can help ensure your property division is fair and your rights are protected.
At Melone Hatley, P.C., our experienced Fort Worth family law attorneys have extensive experience in handling all aspects of property division under Texas community property laws. Whether you are negotiating a property settlement agreement or preparing for litigation, we are committed to protecting your rights and securing the best possible outcome. Contact us online or call (817) 736 – 0277 to schedule a free consultation with one of our Client Services Coordinator.
Schedule a call with one of our client services coordinators today.