How Are Marital Assets and Debts Divided in a Texas Divorce?
When your marriage has ended in divorce, one of the biggest challenges involves the division of marital debts and assets. Texas is one of a minority of states that take the community property approach when determining the allocation of marital property.
What Is Community Property?
According to Texas law, all assets and debts acquired by the parties during the course of the marriage are considered to be jointly owned by the spouses, regardless of how they were paid for or whose name is on the title or account. Specific examples of community property include:
- Any money in financial accounts, provided it was deposited after the date of the marriage and before the date of the divorce
- All income earned by the parties during the marriage
- Motor vehicles purchased during the marriage, irrespective of how they are titled
- Real property purchased during the course of the marriage
- Contributions to qualified retirement plans, including IRAs, 401ks and deferred compensation plans, regardless of who made the contributions
As a general rule, when allocating debts and assets during a divorce in Texas, the court will first look at all property and obligations and categorize them either as community property/debt or separate property/debt. Assets and liabilities may be deemed separate property if:
- It was owned by one of the spouses before the marriage ceremony
- The property was acquired by one spouse as either a gift or an inheritance
- The property was acquired by one spouse as part of a personal injury verdict or settlement
- The parties agree that the asset/debt is separate
Examples of separate property include:
- Residential property owned by one spouse before the marriage
- Personal property, such as a car, jewelry or stereo equipment, owned by one spouse before the marriage
- Any amounts in a qualified retirement plan before the wedding
- Gifts of any kind to one spouse from a friend, family member or other person
- Damages for pain and suffering awarded by a jury to one spouse or as part of the settlement of a personal injury lawsuit
What Happens to Property Paid for Before and During the Marriage?
It’s common for one party to bring a house into the marriage, even though the mortgage on that house has not been fully paid. If one of the parties to a Texas divorce brought partially paid property into a marriage, the other spouse may seek reimbursement for any payments made on that property during the marriage.
Must All Community Property Be Divided Equally in Texas?
The Texas community property laws operate as a guideline for the courts. The actual language of the law in Texas requires that the court make a “just and right” division of debts and assets. The court may consider a wide range of factors when determining whether a property settlement is “just and right,” including:
- Any wrongful conduct of either party that contributed to the divorce
- The education and earning abilities of both parties
- The needs of any minor children at the time of the divorce
- Any other factor the court considers relevant
Contact the Proven Family Law Attorneys at Bailey & Galyen
At the law office of Bailey & Galyen, we offer a free initial consultation to every client. To speak with a results-oriented lawyer about your divorce or family law concerns, contact us by e-mail or 844-402-2992 call our offices at one of the convenient locations listed below. We will take your call 24 hours a day, seven days a week.
