Division of Property and Community Property

Q: How is property divided?

A: Texas is a community property state. This means that all property acquired and all income earned by either spouse during the marriage is considered to be jointly and equally owned by both spouses. This income includes capital gains earned during the marriage on any property owned by either spouse prior to the marriage, unless that property is specified as the spouse's "sole management property" at the outset of the marriage.

Likewise, all debts incurred by either party during the marriage are considered to be community debts. Each spouse is 50% liable for the total debts incurred during the marriage, regardless of who actually spent the money. Each spouse is solely liable for any debt they carried going into the marriage - but if that spouse's debt was paid off during the marriage with community funds, the other spouse is not entitled to an offset.

Q: So, does this mean that we add up all our assets, subtract all our debts, and split the remainder down the middle?

A: Yes, to put it simply. However, often it is not as simple as that. A simple 50/50 split would require a liquidation of all assets into cash. Usually, one or both spouses want to keep certain assets intact - personal property like furniture or jewelry. Usually the spouses will attempt to agree on the dollar value of such assets, and the spouse who keeps the asset will take a deduction from their share of the remaining community property. Often spouses can get mired down in a line-by-line division of personal property. Usually each spouse will keep their own automobile and assume responsibility for making payments against the note.

Q: What about my spouse's 401K?

A: Any contributions made to a 401K or other retirement savings plan or pension during the marriage are community property. Typically, a spouse might keep his 401K intact, and 1/2 of the value of the account will be given to the other spouse from the remaining community property funds. If insufficient community property funds exists to offset 1/2 of the value of the retirement account, the investment bank who manages the account can be informed that the other spouse is entitled to 1/2 of the distributions from the account which flow from community property contributions into the account. The documents submitted to the investment bank instructing them how to divide the account are referred to as a "Quadro". Drafting and submitting a quadro and having a bank split the disbursements from a retirement account is complicated, but certainly doable.

Q: What usually happens to the house? I would like to keep the house. How does that work?

A: If a couple purchased a house together during the marriage, each spouse owns 1/2of the equity in the house. Most often the house is sold during a divorce, the mortgage is paid off, and any profit from the sale is split between the two spouses. (If one spouse purchased the house prior to the marriage, the other spouse is entitled to an equity share proportionate to 1/2 of the amount by which the mortgage was paid down with community property assets during the marriage.)

If one spouse wishes to keep the house purchased during the marriage, the other spouse is entitled to take half of the value of the equity in the house from other community assets, such as cash in a savings account. Almost always the spouse who keeps the house will be required to refinance the house in a mortgage under that spouses name exclusively, to buy back the other spouses share of the house. If the spouse who wants to keep the house cannot qualify for a home loan on their own, or if insufficient community property funds exist to reimburse the other spouse for their half of the equity, than usually the house will be sold prior to the finality of the divorce.

Q: My spouse mentally and physically abused me, slept with my boss, and pawned my grandmother's wedding ring in Vegas. I don't think my spouse should be entitled to anything. Am I right?

A: If one spouse is established to be "at fault" in a Texas divorce, the court can order an uneven split of community property to compensate the injured spouse. Oftentimes the subject of discovery during the pendency of the divorce will be to uncover the misdeeds of the other spouse in order to negotiate an uneven split of community property.

Be aware, however: If one spouse finds out about the other spouse's misdeeds, the court will expect that spouse to seek an "at fault" divorce almost immediately.  If the wronged spouse reconciles and continues to live in a marriage with the wrongdoing spouse, the wronged spouse can be said to have acquiesced in the wrongdoing and waived any right to seek damages from the wrongdoing spouse in a later divorce proceeding. The divorce court expects the issues at final trial to be limited to matters of immediate concern, and expects the parties not to digress into a litany of all of the abuses each spouse suffered at the hands of the other during the entire marriage.

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To discuss your divorce in greater detail, please call one of our attorneys in Dallas at (214) 742-6400, or in Fort Worth at (817) 877-9944. We can walk you through the process and answer any questions you may have. It is our pleasure to serve our clients