Below are questions many people have about the division of marital property in Texas. If you have any additional questions or need more information, please call me today at 682-234-2006 or email me to schedule your free initial consultation.

What is community property?

Texas law defines community property as all of the property that either spouse acquires during the marriage, unless it is separate property.

Separate property is anything one spouse owned prior to marriage, property inherited by only one spouse, property received as a gift by only one spouse, property designated as such in a premarital/post-marital agreement, and recoveries for personal injuries sustained by only one spouse, except for the portion of the award intended to compensate for lost earnings during the marriage.

All property is presumed to be community property, until the party claiming that it is separate property proves it is separate property by a preponderance of the evidence.

How is community property divided at divorce?

When a couple divorces, Texas law requires that their property be divided in a manner that is “just and right.” This means that the division of property must be equitable under the circumstances. There are many circumstances that the court can consider in determining what is “equitable”, including fault in the breakup of the marriage, disparity of earning power between the spouses, each spouse’s health, which spouse has custody of the children, each spouse’s, and the future employability of the spouses.

What kind of agreements can we make in mediation about division of community property?

You and your spouse can decide for yourselves what is community and separate property, how much it is worth, who gets what or what part, and whether any debts or liens the property has (car loans, mortgage) will be paid by the one who gets it, by the other spouse, or by selling the property. Such an agreement allows you to avoid the high cost of litigation, make a “doable” plan, and eliminate the high probability you will not be happy with a judge’s decision.

How is community property divided at divorce if there is no agreement?

So long as your name is on the house mortgage, the car loan, the credit cards, or on any other debt, you are legally responsible to pay even if the judge orders the other spouse to pay all of it. It does not matter to a creditor that a judge gives the property and the debt to the other spouse in the divorce decree or that you made an agreement with your spouse that he or she would pay it. Debt is contractual. If your name is still on the contract for the loan and there is a default, the creditor is coming after you until the debt is paid off by selling the asset or the asset is refinanced into your spouse’s name. I can help you and your spouse find practical ways to address these problems if, for example, you cannot sell or refinance the house before the divorce is finalized.

Agreements about who owns property made before marriage (prenuptial agreements) or postnuptial agreements made afterwards (partition and exchange agreements), can legally change property that would normally have been community to separate property or vice-versa.

Can I get a portion of my spouse’s pension and employment benefits?

If a married person accumulates an interest in a pension, retirement, profit sharing, or other employee benefit plan during the marriage, it is community property and subject to division upon divorce. If a court awards a portion of one spouse’s retirement benefits to the other spouse, the attorneys will prepare a Qualified Domestic Relations Order (QDRO) to be sent to the employer, who will be ordered to distribute benefits to each spouse in accordance with the court’s order.

In the case of a cash account, such as a 401(k), the employer will usually disburse the funds in 30 to 90 days. In the case of benefits to be paid upon retirement, such as a pension plan, the employer will be given a calculation of a percentage to be applied when payments begin, and the employer will be ordered to send the appropriate amounts to the other spouse in accordance with the court’s order.

Like other community property assets, retirement and pension accounts do not have to be divided exactly equally between the spouses. If each spouse has a separate retirement account or pension for his or her own job, for example, the court might simply award each spouse his or her own account, particularly if the amounts in each are relatively similar or the award of other community property makes up the difference.

How do the courts divide a closely held business or professional practice?

Like any other asset, a business or professional practice must be considered in the valuation and division of community property. If a business or practice has been developed during the marriage, there is a community property interest in that business that must be dealt with in the divorce.

Certified public accountant and business appraisers are often hired to determine the value of a business or professional practice. The accountant or appraiser will review the books and records of the business or practice and prepare a written report.

The most difficult and time-consuming aspect of determining the value of a business or professional practice is in valuing “goodwill.” This is the intangible value that most businesses have based on their established name or reputation. Even a business or practice that could not be sold on the open market has a goodwill value, which must be ascertained when the couple divorces.