- within Family and Matrimonial topic(s)
During a divorce, a court has authority to divide community property, but may not divide separate property. When it comes to separate property, the only authority a court has in a divorce is to confirm it. Thus, it is important for an individual going through divorce to generally understand what constitutes community versus separate property and what is required to prove what is asserted as separate property.
How Spouses Prove What Is Theirs
Community Property
The presumption in a divorce is that all marital property acquired by spouses during the marriage is community, which includes any assets and liabilities.1In fact, Section 3.002 of the Texas Family Code succinctly defines community property as "the property, other than separate property, acquired by either spouse during the marriage." Even if the spouses kept their assets and liabilities acquired during the marriage separate, such as maintaining individual financial accounts and credit cards, the presumption remains that it all qualifies as community property, until proven otherwise. Additionally, income earned during a marriage is community and thus, anything that that income is used to purchase, like a second home or a boat, is also community and thus divisible upon divorce.
Separate Property
So, what constitutes separate property? Section 3.001 of the Texas Family Code generally defines separate property using three categories: (1) property owned or claimed prior to marriage; (2) property acquired during the marriage by gift, devise, or descent; and (3) any recovery for personal injuries sustained by a spouse during the marriage, notwithstanding loss of earning capacity during the marriage. Other separate property caveats exist in regard to certain employee benefits (Tex. Fam. Code § 3.007) and insurance proceeds (Tex. Fam. Code § 3.008), but the general question of when the interest was acquired remains consistent: if before marriage, it is separate and if after marriage, it is community.
Proof of Ownership and Marital Property
In order to prove a spouse's asserted separate property, evidence must sufficiently establish by a clear and convincing burden that the asserted property is separate, as defined above. Sometimes, prior to marriage, spouses execute valid, enforceable premarital agreements or, after marriage, execute partition and exchange agreements that specify each spouse's separate property. These agreements are generally sufficient evidence to prove a spouse's separate property upon divorce. A spouse may also prove asserted separate property through authenticated and credible documentation evidencing ownership prior to marriage or by inheritance or gift. Often, particularly in complex marital estates, a forensic financial expert will trace ownership of property, through abundant documentation, to establish characterization of the property as separate, and will then testify as an expert who may opine on the property issue in court under Texas Rules of Evidence 702.
This overview only provides the basics of the characterization of marital property as community or separate. However, that characterization can become complex, quite quickly, and thus requires the guidance of legal counsel who are knowledgeable and experienced in the topic, and who will recognize when additional experts (e.g., an appraiser or forensic professional) may be required. Otherwise, a person may risk losing significant assets or being strapped with significant liabilities upon divorce.
Nonetheless, a basic understanding of what generally constitutes community and separate property allows a person to prepare for divorce by attempting
- to identify the proper characterization of the marital estate's assets and liabilities,
- to determine necessary, recommended documentation in preparation for divorce, and
- to have a general idea of how a court may likely divide property upon the divorce.
Footnote
1. Section 3.003 of the Texas Family Code states that the property possessed by either spouse during or on dissolution of the marriage is presumed to be community property.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
