If you are getting a divorce, you should take a moment to understand how state law divides marital assets and debts since this will likely be one of the most time-consuming matters in this process. Texas is among the few community property states in the country and distributes marital property to both spouses as equally as possible. Continue reading to learn more.
Classifying Property in a Divorce
One of the most complex aspects of property division is the classification of property. Your spouse may think something is marital property, but you may think it is separate property and should not be subject to division.
What is Separate Property?
Separate property is the property that belongs solely to one spouse and is not subject to division in the event of a divorce. The key characteristic of separate property is that it is not earned or acquired during the marriage, and it has a clear origin that distinguishes it from marital property.
In Texas, separate property includes:
- Property that was owned by either spouse before they got married
- Property either spouse acquired during the marriage through inheritance or a gift from a third party
- Compensation from a personal injury claim
What is Marital Property?
Marital property, also known as community property in Texas, consists of assets and debts acquired by either spouse during the course of the marriage. Generally, the court considers any property earned or purchased after the marriage date to be marital property, regardless of who holds the title or the account in their name.
This includes, but is not limited to:
- Bank accounts
- Retirement assets
- Investments
- Valuables
- Cars
- Homes
The Process of Determining Property Status in Divorce
In the event of a divorce in Dallas, it is necessary to distinguish between marital property and separate property for the purposes of property division. The process can be complex, especially when determining whether certain property falls into the category of marital or separate property.
The first step in this process is identifying the property in question. The court will examine the assets and debts of the couple, including real estate, bank accounts, investments, and personal property, to determine whether they are separate or marital. If any property is unclear or there is a dispute about its classification, the parties may present evidence to support their position.
In cases involving business interests, the court may examine how much of the business was acquired during the marriage and whether one spouse’s contribution to the business increases the value of the property. It may also consider whether marital funds were used to support or grow the business during the marriage. This can be a difficult determination, as businesses are often a mix of both marital and separate property.
Additionally, the court may consider the efforts of each spouse in managing and maintaining the property during the marriage. For example, if one spouse made significant contributions to the management, upkeep, or value of a separate property asset, the court might consider awarding some portion of it to the other spouse, particularly if the other spouse contributed in ways that enhanced its value.
Commingling of Separate and Marital Property
That said, some complications may arise when marital and separate property mix together and commingle. This often happens with real estate, bank accounts, and investments. For example, if a spouse owns a home before marriage and then uses marital funds to make mortgage payments or significant improvements, the property may no longer be considered entirely separate.
Under these circumstances, forensic accountants and other financial experts may be necessary to trace where they became intertwined. An experienced divorce attorney will be able to help protect your interests and ensure property that should be considered separate does not land on the chopping block.
One way to avoid the commingling of property is by keeping thorough records. If a spouse can prove that an asset was purchased or acquired with funds that came solely from separate property, then the asset may remain separate property. However, if the asset was funded with a combination of both marital and separate property, the court will likely treat the asset as a mixed
The Impact of Debt in Divorce
In addition to dividing property, the court must also consider the division of debts. Just as marital property is typically divided between spouses, debts incurred during the marriage are also subject to division. This includes mortgages, credit card debt, and loans taken out during the marriage.
Similar to property, debts are presumed to be marital debts unless proven otherwise. For example, if one spouse incurred debt before the marriage, the court may classify that debt as separate debt. However, if the debt was incurred during the marriage, it is likely to be classified as marital debt and subject to division.
Discuss Your Divorce with an Experienced Family Law Attorney Today!
If you are ending your marriage, one of the most contentious issues you will encounter during this process involves asset and property division. To ensure you receive your fair share of marital assets, it is essential to hire an experienced attorney to handle your case.
At Garza Law Firm, LLLP, our family law team has the experience and insight necessary to help you smoothly navigate your case and overcome any obstacles that may arise. We understand how important these legal matters are, which is why we are committed to providing knowledgeable representation and guidance.
Reach out to our law firm today at (214) 225-4344 to set up a complimentary one-hour consultation with a member of our team to get started on your case.