Texas is a community property state. All property owned by spouses at the time of divorce is presumed to be community. However, there is some property that can be shown to be separate property.
Separate property is not subject to division by the Court in divorce. Some examples of separate property include property that is owned prior to marriage, received as a gift, or received by inheritance.
Who Has the Burden of Proof?
The spouse claiming separate property must demonstrate the property is not community. The spouse must also demonstrate the value of the property. This is not as simple as it sounds. To demonstrate that property is separate and to confirm its value, an exercise known as “tracing” has to be performed.
Tracing Property Ownership
Tracing is performed by an accountant or other expert familiar with the legal standards and burdens that must be met in making a separate property claim. Prenuptial agreements and postnuptial agreements can also specifically address whether property is separate or community.
Let’s take a look at an example. When you got married you had a bank account with $100,000 in it. You made occasional deposits into that account while married, but never spent any of the money. Is this account separate property? Some of the money may be separate property, and some may be community property.
The $100,000 initial balance may be separate property. The interest the account earned during the marriage is community property. The deposits made into the account may also be community property if the deposits were made with community funds (such as income from work). And, if enough community funds were commingled with the separate funds, then the whole account may become community property.
Separate property questions are complex. Make sure you discuss any separate property issues with your attorney when discussing divorce and property division.