Texas Community Property
Texas is a community property state. As a result, all property on hand at the time of the divorce is “presumed” to be owned by the community. Community property is best defined as everything that is not the separate property of the spouses.
Separate property is usually property that can be proved (or can be traced) to be property that is: (a) owned prior to marriage, (b) was acquired by gift, or (c) was acquired by inheritance. Additionally, if there was an agreement between the spouses that no community property was to be created, the Court may also decline to find that there is a community estate.
The Court cannot divide property that is separate property, but it does have the jurisdiction to determine whether the property is separate property in the first instance, and then “confirm” that it is, in fact, separate property.
Reimbursement and Economic Contribution
There are basically three “estates” that exist by virtue of a Texas marriage: (1) the community estate, (2) the husband’s separate property estate, and (3) the wife’s separate property estate. When one of the estates expend money (and potentially when they expend “toil, time and effort”) on behalf of another estate, then it is said that the estate expending the money or efforts should be reimbursed for the efforts to enhance the other estate. This is a claim for equitable reimbursement.
Moreover, if one of the estates has expended funds or assets to make capital improvements on property the title to which is held by another estate, then that estate may have a claim against it for economic contribution. This scenario also applies if one of the estates pays on a mortgage or other indebtedness that is secured by a lien on property that is owned by another estate.
Just and Right Division
Texas Courts will divide the community property in a manner that the Court (or jury) deems “just and right” taking into consideration the circumstances of the parties. Obviously, what constitutes “just and right” is a matter of interpretation and will vary from Court to Court and Jury to Jury. As a result, a straight 50 / 50 division is not, necessarily, what the Court will do.
In deciding whether to award a disproportionate share of the community property to one party or the other, the Courts can consider such matters as: (a) fault in the breakup of the marriage, (b) fraud (actual and/or constructive) fraud committed by a spouse, including fraud on the community, (c) benefits that an innocent spouse may have derived from the continuation of the marriage, (d) disparity of earning power (and ability to support themselves); (e) health of the spouses, (f) the spouse to who primary conservatorship is awarded, (g) the needs of the children, (h) the education and future employability of the spouses; (i) community indebtedness and liabilities; (j) tax consequences of the division of property, (k) the ages of the spouses; (l) the earning power, business opportunities, capacities, and abilities of the spouses, (m) any need for future support of the spouses, (n) the nature of the property involved in the division, (o) the wasting of community assets by the spouses, (p) any applicable credits for temporary support paid by a spouse, (q) community funds used to purchase out-of-state property, (r) gifts to or by a spouse during the marriage, (s) the increase in value of separate property through community efforts of time, talent, labor, and effort, (t) excessive community-property gifts to the parties’ children; (u) reimbursement, (v) expected inheritance of a spouse, (w) attorney’s fees to be paid, (x) the creation of community property through the use of a spouse’s separate estate, (y) the size and nature of the separate estates of the spouses; (z) creation of community property by the efforts or lack thereof of the spouses.
The Court can also take into consideration such issues as adultery, mental cruelty, and/or misconduct by one of the spouses. However, unless the conduct has an economic impact on the other spouse, such as actual or constructive fraud on the other spouse, or when sums of money are going to another person with whom the spouse is in a dating relationship, the willingness of Courts to do so in recent years has diminished.
If any of these issues apply in your situation, you will want to consult with an experienced attorney about the nature and amount of the property division in your case.
If you have a legal issue related to Property Division in a Family Law context, please contact Cindy Veidt for an appointment to discuss.