Texas Family Law
Property Division in Texas
Dividing a Texas marital estate is two jobs in sequence: decide what is in the estate, then decide who gets it. Most of the money is won or lost in the first one.
Characterization comes before division
A Texas court divides community property. It has no authority to divest a spouse of separate property. So the threshold question on every asset is what it is — community (Tex. Fam. Code § 3.002) or separate (Tex. Fam. Code § 3.001).
The presumption favors community, and it is rebuttable only by clear and convincing evidence. That standard is why characterization is a documents case. The house you bought before the marriage is separate; the community's payments against its mortgage during the marriage may create a reimbursement claim. The brokerage account you brought in is separate until deposits and withdrawals mix it so thoroughly that tracing fails, at which point the whole account is treated as community.
Just and right is not equal
The court divides the community estate in the manner it deems just and right, with due regard for the rights of each party and any children of the marriage (Tex. Fam. Code § 7.001). Texas judges consider disparity in earning capacity and education, fault in the breakup, who has primary care of the children, health, age, the size of each spouse's separate estate, tax consequences, and wasting of community assets.
The practical consequence is that a spouse with a much lower earning capacity and primary custody may receive well over half, and a spouse who spent community money on an affair may receive well under it.
Retirement, equity compensation and the parts people forget
Retirement accounts earned during the marriage are community property even though only one name is on them. Dividing a qualified plan takes a separate order — a qualified domestic relations order — entered alongside the decree, and a decree that awards a share without the QDRO to implement it produces a problem years later when the plan administrator declines to pay.
Equity compensation is harder still. Restricted stock and options that were granted during the marriage but vest after it are commonly part community and part separate, apportioned by when the work that earned them was performed. Deferred compensation, unexercised options, stock in a closely held company and the goodwill of a professional practice all require valuation before they can be divided, and valuation is expert work.
When one spouse controls the information
In a lot of marriages one spouse handles the finances. When that marriage ends, the other spouse starts the case without knowing what exists. The tools for that are formal: sworn inventories and appraisements, requests for production, subpoenas to banks and employers, and depositions.
Where community assets have been given away, hidden or spent outside the marriage, Texas recognizes claims for fraud on the community. A court that finds it can reconstitute the estate and award a disproportionate share to compensate the wronged spouse.
Common Questions About Property Division
Is Texas a 50/50 state?
No. Texas is a community property state, which is not the same thing as an equal-division state. Texas Family Code § 7.001 directs the court to divide the community estate in a manner that is just and right, having due regard for the rights of each party and any children. Disproportionate divisions are common and legal.
What is separate property in Texas?
Under Texas Family Code § 3.001, separate property is property owned or claimed by a spouse before marriage, property acquired during marriage by gift, devise or descent, and recovery for personal injuries sustained during marriage except for lost earning capacity. A court cannot divest a spouse of separate property in a divorce.
How do I prove an asset is my separate property?
By tracing it back to its separate source with documentary evidence, to a clear and convincing standard. Texas Family Code § 3.003 presumes property possessed by either spouse during or on dissolution of marriage is community property. An asset kept in its own account is straightforward to trace; one commingled with community funds over years may not be traceable at all, in which case it is treated as community.
Is my spouse's retirement account part of the divorce?
The portion earned during the marriage is community property even if only one spouse's name is on the account. Dividing a qualified retirement plan generally requires a qualified domestic relations order entered along with the decree. Without that separate order, the plan administrator will not pay a share to the other spouse.
What happens to the house?
It depends on how the house is characterized and on what else is in the estate. Common outcomes are sale with the proceeds divided, one spouse buying out the other's interest, or one spouse keeping it. Where separate-property funds paid for a community home or community funds paid down a separate-property mortgage, a reimbursement claim may be owed between the estates.
What if my spouse is hiding assets?
Formal discovery is the answer — sworn inventories and appraisements, requests for production, subpoenas directly to banks and employers, and depositions under oath. Where community property has been concealed, given away or wasted, Texas recognizes a claim for fraud on the community, and a court may reconstitute the estate and award a disproportionate share to the wronged spouse.
Lisa G. Garza has practiced Texas family law for more than 30 years and is board certified in the field. If your situation needs an answer rather than an article, the firm offers consultations.