| TEXAS
MARITAL PROPERTY ISSUES
HOW PROPERTY IS CHARACTERIZED AND DIVIDED
There are two major categories of property in the
State of Texas:community property and separate property.
A. Separate property is:
- property owned prior to marriage
- property acquired
at any time by gift or inheritance;
- recoveries for
personal injuries sustained by a spouse during marriage
(except for loss of earnings); and
- property exchanged
for above items 1 - 3.
- Community property consists
of the property, other than separate property, acquired
by either spouse during marriage.
This is true even if only one spouse has possession
of the property. Just because one spouse is named on
the title, deed, or account; one person receives the
asset as payment for personal services (ie: salary);
or the asset will not be paid until a future date (ie:
retirement) do not make it separate property. There
is a presumption that all property possessed by either
spouse is community property. Separate property ownership
must be proven by clear and convincing evidence. The
most common way of proof is by tracing the asset from
the date of acquisition to present date. If the asset
is money, and has been deposited into a joint account,
or into an account with monies which would be considered
community property (ie: salary) has been deposited,
the separate property may become commingled to the
point that it is not possible or cost-effective to
prove its continued existence.
In Texas, the appreciation or increase in value of
separate property is generally considered separate
property. However, reimbursement may be due to one
spouse or the community for contributions made during
the marriage to enhance the value of one spouse's separate
estate. However, income or interest earned on separate
property is community property. It is necessary to
advise the court if you own separate property or if
you believe you have a claim for reimbursement. Be
sure to talk to your attorney about these issues early
in your case.
The reimbursement area has been greatly expanded by
the concept of Economic Contribution. Essentially where
pre-2001 law gave all the appreciation in a estate's
property to that estate, the concept of economic contribution
allows the sharing of the increase in value attributable
to the other estate's contribution to the property.
It's a refined specie of reimbursement, but also shares
in the appreciation of the property.
Ownership of one spouse's separate property cannot
be awarded to the other spouse.
Community property is divided in
a just and right manner. This does not necessarily
mean equally. However, an equal division is a good
rule of thumb. The value of all the property is to
be determined as near as possible to the date your
divorce. "Value" usually
means the price at which the item could be sold currently
on the open market. Insurance appraisals are at replacement
value, which is usually higher. It is also necessary
to determine current debts. Your lawyer may provide
you with forms to assist you in providing this information.
In most cases, your attorney will need to transcribe
this information onto a formal Inventory and Appraisement
which will be filed with the Court and exchanged with
your spouse's attorney. It may be necessary to hire
appraisers to value your home, business, or retirement
plan.
You may also own property in a type of joint tenancy,
which may or may not involve the right of survivorship.
Be sure to tell your attorney if you believe you may
own a bank account or other property as a joint tenant
so that steps can be taken to revoke the survivorship
provisions if possible.
MARITAL PROPERTY LIABILITIES
If you have liability to a creditor, that liability
will continue until the obligation is paid regardless
of the terms of your divorce decree. Not all debts
incurred during marriage are the responsibility of
both spouses, but this is a highly technical and confusing
area of the law. The decree may order your spouse to
assume full responsibility for payment of certain debts.
However, the decree is not binding against the creditor.
They can sue you if your spouse does not pay. If you
are found liable, your remedy is to sue your former
spouse for failing to comply with the decree and obtain
a money judgment against your former spouse.
Since a great deal of property is exempt
from execution under state law, and cannot be taken
to satisfy the payment of a debt, you may not be able
to actually collect the money judgment for many years,
and will have to renew it every 10 years to keep it
valid. Additionally, your former spouse may file for
bankruptcy and attempt to extinguish the judgment.
If there are funds available for payment of debts,
you should consider utilizing these funds instead of
continuing to be liable. If your spouse is going to
keep the family home, you should encourage and cooperate
with attempts to refinance so that you can be taken
off the mortgage. This may not be applicable or practical
in many cases, but you need to be aware that you remain
liable to the mortgage lender in the event of default
even if your spouse is assigned total responsibility.
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