Property & Debt Division
It is common for a divorcing couple to decide about dividing their property and debts themselves (with or without the help of a neutral third party like a mediator), rather than leaving it to the judge. However, if a couple cannot agree, they can submit their property dispute to the court, which will use state law rules to divide the property based upon the facts of the case and the equities.
In Texas, property and debts are divided based on the community property scheme. Under community property, all property of a married person is classified as either community property (owned equally by both spouses) or the separate property of one spouse. At divorce, community property is generally divided equally between the spouses, while each spouse keeps his or her separate property. Please note: It is illegal for either spouse to hide assets in order to shield them from property division.
Very generally, here are the rules for determining what is community property and what isn't:
- Community property includes all earnings and all assets acquired during the marriage except for separate property. Additionally, all debts incurred during marriage, unless the creditor was specifically looking to the separate property of one spouse for payment, are community property debts.
- Separate property of one spouse includes gifts and inheritances given just to that spouse, personal injury awards received by that spouse, and the proceeds of a pension that vested (that is, the pensioner became legally entitled to receive it) before marriage. Property purchased with the separate funds of a spouse remain that spouse's separate property. A business owned by one spouse before the marriage remains his or her separate property during the marriage, although a portion of it may be considered community property if the business increased in value during the marriage or both spouses worked at it. If separate property is commingled with community property during the marriage, it may become community property, either in part or entirely, depending on the circumstances.
- Property purchased with a combination of separate and community funds is part community and part separate property, so long as a spouse is able to show that some separate funds were used. Separate property mixed together with community property generally becomes community property, except where the separate funds can be properly traced.
The information presented here is a general guideline and should not be interpreted as a guarantee. Results may vary from case to case depending on the facts and circumstances of your case.