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Division of Community Property in Texas

When a court tries a divorce case concerning property, the court will try to categorize property either as separate property or community property.

A spouse's separate property consists of:

  • The property owned or claimed by the spouse before marriage;
  • The property acquired by the spouse during marriage, by gift, devise, or descent, and,
  • The recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during the marriage.

The significance of separate property is that a court cannot divest a spouse of their separate property. Therefore, once a court determines that a particular piece of property is separate property, then it must set that property aside to the separate property owner. The burden is upon a spouse to prove that property is his or her separate property by clear and convincing evidence.

Community property consists of all property, other than separate property acquired by either spouse during marriage. Property possessed by either spouse during the dissolution of the marriage is presumed to be community property, unless the spouse can prove that it is their separate property by clear and convincing evidence. Community property consists of almost anything of value, such as real property, personal property, stocks, bonds, savings accounts, automobiles, retirement benefits, 401(k) accounts, IRA accounts, stock options, copyright royalties, patents, income, rental income, life insurance and virtually anything else of value.

Once the court determines that property is community property, then the court must divide the property. In dividing community property, the court is obligated to order a division of the estate of the parties in a manner the court deems "just and right", having due regard for the rights of each party and any children of the marriage. In dividing the community estate of the parties, the court typically takes into account one or more of the following factors:

  • Fault in the breakup of the marriage
  • Health of the parties
  • Education of the parties
  • The present earnings of the parties
  • The earning capacity of the parties in the future
  • The party raising the minor children of the marriage
  • The specific nature of the property
  • Any separate property that a spouse may have
  • Any inheritance that a spouse is likely to receive
  • Tax issues in connection with property
  • Any fraud that one spouse has committed against the community or the other spouse
  • The debts of the parties

As a practical matter, if the court has two people before it, with the same educational background, earning the same income, and having the same opportunities in the future, and no children, the court will divide the estate of the parties 50/50. As more facts favor one individual, then the court has a tendency to award that individual a greater percentage of the community property. For example, if the wife is clearly at fault in causing the marriage to break up, is young, and in good health, is earning substantial income, has an MBA, and expects to inherit a lot of money from her family, and the husband has only a high school diploma, suffers from deteriorating help, has a low paying job, and is taking care of the parties three children, then the husband could expect to receive a substantially greater portion of the community property than the wife. Property awards up to 90%, in very unusual circumstances, have been upheld by the appellate courts in Texas.

Many clients want to approach a divorce settlement insisting that they get 60%, 70%, or 75% of the community property; because they believe that the other party was at fault in the breakup of the marriage. Such an approach can make it very difficult to settle a case without trial. Usually the other spouse does not believe that he or she was at fault in the breakup of the marriage, or even if they were, they believe they were justified in engaging in the conduct because of the complaining parties approach to the marriage. Also, the courts frequently do not place the same degree of emphasis upon one particular issue as the clients frequently do. For example, while one party may clearly be at fault in the breakup of the marriage, the court will be weighing that issue against the issues of present earning ability, future earning ability, educational background of the parties, etc. Also, the courts frequently have a different perception of the value of the community estate, and that can substantially effect the court's division of property. For example, if the party who claims that the other one is at fault, believes that the equity in the house is worth $30,000.00, and is demanding 70% division from the court (or $21,000.00), the court may very well find that the equity in the house is only $10,000.00, and award the party not at fault only 60% of that equity ($6,000.00).

Of course, the vast majority of cases do not go to trial. While evaluating any settlement, the parties should take into account all of the factors that the court is going to take into account, when settling a case, there are other factors that have a significant bearing on the settlement. For example, if one party particularly wants the house, they should probably be willing to accept a lower percentage of the community estate in a settlement in order to make certain they get the house. There is absolutely no guarantee that the court will award a person the house. The court may very well decide that it would be better to sell the house, or award the house to the other spouse.

Since a judge can take into account so many different factors in dividing the community estate of the parties, the court has great discretion in how it divides the estate of the parties. Very rarely will the appellate courts reverse a trial judge on the basis that the trial judge was guilty of "abusive discretion". Knowing that there is very little possibility that a party can appeal a trial court's division of the estate of the parties, is another factor that has to be taken into account in making a decision on whether to settle the case or not.

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Before the divorce is final, the court may issue temporary orders to deal with immediate problems, such as conservatorship, possession, child support, and spousal support/alimony. Temporary orders can say who will live in the home, who will be able to write checks on the bank accounts, and who will have control of the children up until the divorce is final and permanent orders are put in place. In most cases, depending on the court, the spouses will be ordered to mediation prior to any hearing on temporary orders. Mandatory mediation helps lessen the case load at the court and helps the parties resolve issues without a court ruling.
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