Texas Property Division in Divorce: A Guide

Understanding Community Property vs. Separate Property in Texas Divorces

When couples divorce in Texas, the divorce court must divide their property equitably. While “equitable” doesn’t always mean equal, it aims for fundamental fairness. Here’s what you need to know about property division in Texas divorces.

Community Property in Texas

Texas is among nine states following community property laws. Here’s what that means:

• Property acquired during marriage is presumed to be community property
• Community property typically (but not always) faces an equal division in divorce
• A spouse claiming that property isn’t community must prove it
• Both spouses have equal ownership rights to community property
• Property that is not community is considered to be separate property

What Qualifies as Separate Property in Texas?

Separate property remains solely owned by one spouse after divorce. It is not subject to court division.  Property qualifies as separate when it is:

• Owned before marriage
• Inherited during marriage
• Received as a gift during marriage
• Personal injury compensation (except lost wages)
• Property bought with separate property funds
• Property exchanged for separate property

Complex Property Division Issues

Income vs. Appreciation

• As a rule, income from separate property becomes community property
• Rental income from separate property house is community property
• Business income from separate property business is community property
• However, value increase in separate property remains separate (see example, below)
• Example: Stock dividends are community, but stock value increases remain separate

Common Challenges

Some issues can arise when property is brought before the Court for division.  A few of these are found below:

• Mixed funding sources for property purchases (i.e. a combination of community and separate funds used to purchase property during the marriage)
• Commingled accounts which contain both types of property
• The burden of proving separate property claims over the presumption of community property
• Tracing of a spouse’s separate property through various transactions

Protecting Your Property Rights

Property division in Texas divorce cases can become inordinately complex, especially when the court is dealing with:

• Multiple real estate properties
• Business ownership fractional interests
• Retirement accounts
• Investment portfolios
• Inherited assets
• Mixed community/separate property
• A request for an un-equal division of community property due to various factors

For complex property division issues, consulting with an experienced Texas family law attorney is essential to protect your rights and interests during divorce proceedings.