When a marriage ends in divorce, there are difficult decisions to navigate, including how to divide your property and assets. Texas is a community property state, which means all property acquired during the marriage belong to both spouses and is subject to division. In contrast, each spouse can keep his/her separate property, or property acquired before the marriage.
What Are the Differences Between Community Property and Separate Property?
To understand how you and your spouse’s property will be divided during a divorce, you first need to understand the differences between community property and separate property. Texas law defines community property as all property either spouse acquired during their marriage – not including separate property.
Community property might include but is not limited to:
- Real estate
- Retirement accounts
- Savings accounts
- Vacation house
- Other items earned or purchased by either spouse during the marriage (art, furniture, boats, etc.)
It does not matter which spouse’s income was used to purchase this property and/or assets if the couple was married at the time.
Additionally, community debt, or debt you and your spouse collected during the marriage, is also subject to division between both parties. Texas law states that community property and debt should be divided in a manner that is just and right. As there are exceptions to these rules, it is advisable to consult with an experienced lawyer before you divorce.
Separate property may include but is not limited to the following:
- Inherited property (while married)
- Property received as a gift by one spouse
- Recoveries for personal injuries sustained by one spouse
Texas law presumes that all property is community property unless proven otherwise.
How Is Community Property Divided During a Divorce?
Texas courts divide community property in a way that is just and fair, which does not always equate to a 50/50 split. There are various factors the court can consider when dividing community property including but not limited to the following:
- Misconduct or fault in the dissolution of the marriage
- Each spouse’s health
- Disparity of earning power between the couple
- Each spouse’s education and income
- Which spouse has custody of the child(ren)
Are Employment Benefits Subject to Division?
If you obtained a pension, retirement account, or other employee benefits during your marriage, these benefits are considered community property and subject to division. When the court awards a portion of one spouse’s retirement benefits to the other, an attorney will prepare a Qualified Domestic Relations Order (QDRO) to send to his/her employer.
Like other community property assets, the court does not necessarily divide retirement and pension accounts equally between both spouses. It is up to the court’s discretion to determine what is appropriate and fair.
How Do the Courts Divide a Business in a Divorce?
A judge must also consider a business or professional practice when determining how to divide community property if the owner of the business developed this company during the marriage. This can prove complex as it is hard to determine the value of a business. You may need to hire a business appraiser, financial advisor, and/or accountant to figure out your business’s value.