Texas divorce potentially combines three lawsuits into one: (1) dissolution of the marriage; (2) division of property; and, (3) the suit affecting the parent/child relationship. Whether or not children are involved in the marriage, property must be divided based on a just and right division with due regard for both spouses and any children of the marriage. Notice that “just and right” does not necessarily equate to a 50/50 split of community assets and liabilities, which is quite a shock to most of my clients. While 50/50 may be a starting point, the court does not have to order an equal split. This is because family courts are both courts of law and equity, meaning that their guidepost for property division is based on just and right equitable property division.
There are multiple, fact-specific issues impacting the division of community property if the spouses are unable to reach a settlement without a trial. If the parties do not make an informal settlement agreement or come to agreement at mediation, then the court determines how property is divided. The factors the court may rely upon include:
- Fault in the break-up of the marriage
- Benefits the innocent spouse would receive if s/he were to remain married (if fault based)
- Education level of each spouse
- Earning potential of each spouse
- Current income from each spouse’s employment
- Length of the marriage, the health of each spouse
- If one spouse has a need for future support due to disability
- Nature of the property to divide
- Tax consequences to each spouse
- Attorney’s fees
- Personal finances of each spouse
- Who has custody of the children (if applicable)
- Whether there was wasting, liquidating, or improper transferring of community assets by one spouse
- Whether one spouse committed fraud against the community estate, and,
- Amount of each spouse’s separate property estate.
It is important to keep in mind that judges differ in their experience and personal views on all of those factors, and that is why it’s important for your attorney to know the judge (e.g., know how s/he tends to rule on certain things). Also be aware that no single factor(s) is/are the “jackpot” button for a one-sided split. For example, it’s highly unlikely that the community estate would be divided 90/10 or 80/20.
Another surprise to clients is that Texas law presumes that all property is community in nature. When I explain this concept to clients, they usually respond: “That’s the money I made!” or something similar. However, the community property presumption is rebuttable by a standard of proof known as clear and convincing evidence. This standard is higher than the preponderance of the evidence (>50%), but lesser than the criminal standard of beyond a reasonable doubt. Making a case for separate property may be as simple as showing that title to property incepted prior to the marriage, but often rebutting the community property presumption requires tracing, which is performed by attorneys working with accountants. It is also document intensive in terms of property records and financial records. Most banks do not keep records beyond the previous ten years, so it’s important to keep excellent personal records. Tracing can be burdensome and expensive, but depending on the value of the alleged separate property, it may well be worth the time, effort and expense.
Community property is defined in both the Texas Constitution and in the Texas Family Code. For more information on the character of property, stay tuned to blog posts and consult with a Houston family lawyer.