How Does Money Get Divided in a Divorce in Texas

Nov 7, 2022 | Divorce | 0 comments

During a divorce, the division of money and other assets is often at the center. Texas is a community property state, meaning that all assets acquired during the marriage are presumed to be community property and therefore divided between spouses in a Texas divorce. These assets include income, savings, investments, houses, cars, and even pets and wine collections!


Despite those general rules, Texas law mandates that certain types of assets are not divided during a divorce. Understanding how the division of assets works during a Texas divorce case is critical to achieving a fair outcome. This is one of the most common topics our clients ask us about.


Division of Assets


In a Texas divorce case, all assets, including money, are divided according to the “community property” laws. The general rule of community property is that all assets acquired during the marriage are considered “community property” and must be divided equally between spouses. This property includes money in bank accounts, houses, cars, investments, retirement accounts, etc. 


Oftentimes, spouses have different ideas about what constitutes a “fair” division of assets. When a couple cannot agree upon how to divide all property, then the court will decide for them. In its decision, the court may consider factors such as each spouse’s earning capacity, need for support, and contribution to the marriage or fault for its breakup. The court will also consider prior agreements regarding property division between spouses, including prenuptial and postnuptial agreements. However, there are some exceptions to these general rules, which are explained below.


Division of Inheritance and Gifts


Inheritance and gifts received by one spouse are considered “separate property” and are not divided in a Texas divorce as a result. This is true whether the inheritance or gift is received before or during the marriage; the spouse who received the inheritance or gift keeps it after the divorce. Inheritance and gifts received by both spouses are considered community property, however, and they are divided between spouses.


The spouse claiming an asset as their separate property bears the burden of proving by “clear and convincing” evidence that the property in question was inherited or gifted or is traceable back to the inherited or gifted property. If a spouse fails to meet this heavy burden, then the property is considered to belong to the community estate and is divided between the spouses.


If the inheritance or gift is combined or commingled with other assets, such as being deposited into a joint bank account, it may also be considered community property subject to division.


Property Acquired Before Marriage


Another of the most common types of property that is not divided in a Texas divorce is property that one spouse brought with them into the marriage. Put differently, if one spouse owned a certain asset before marriage, then that asset will remain theirs after divorce. 


Similarly, property acquired during marriage with property owned before marriage is also a spouse’s separate property. One spouse may own a house before marriage, for example. If that house is sold during marriage and the sale proceeds are used to acquire a different house, then the newly-purchased property is also the spouse’s separate property. It is not divided in a Texas divorce.


As always, the spouse who claims that they owned property before marriage must prove it with “clear and convincing” evidence. In some cases, it is relatively straightforward to prove that an asset was owned before marriage.


For example, real property records maintained by the county can be obtained to prove that a house was owned by a spouse before the marriage. Retirement and other investment accounts can be far more complex to prove as separate property due to changes in holdings and increases in value over time, separate property assets generating community property income during the marriage (e.g., dividends), and commingling with other property and contributions made during the marriage. Extensive records and expert witness assistance, and testimony is frequently necessary.


Getting Started with Dividing Assets


The first step in dividing property in a Texas divorce is identifying all of the assets that exist. From there, each asset should be characterized as either community property, separate property, or mixed community and separate property. The next step is to value all of the assets. This can be accomplished by agreement of the parties, documents, and records or appraisal by a neutral third-party expert. Once all of the property is identified, characterized as community or separate, and valued, the spouses can begin negotiations to divide it between them. They may need to seek mediation or go through the divorce court system if they cannot agree on how to divide the property.


How Thompson Law Can Help


At Thompson Law, we understand that one of the most stressful aspects of going through a divorce can be dividing up your assets. Spouses often have strong feelings about certain assets, such as a house, pension, retirement account, pet, or even Texas Longhorns season tickets! Due to the complexity of this topic, it is important to have the right attorney on your team. Whether it is fighting in court to protect our client’s assets or negotiating on their behalf outside of the courtroom, Thompson Law is here to help.

Contact our team today if you have questions about filing for a divorce or how to divide your property between you and your spouse. Our experienced team will help you understand your rights and options under Texas law and assist you in obtaining a fair resolution inside or outside the courtroom. Call today to get started.

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Everyone’s situation is unique. Some people need a facilitator, some people need a negotiator, and some people need a tough trial lawyer to go to court. I let my clients know the different paths available to them based upon their situation, and work with them to design a unique strategy and tactics to meet their goals and objectives.

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