Community Property or Separate Property?

People going through a divorce often come in our office and say something along the lines of, “The house is mine and the truck is mine.  The car is hers and the jet skis are hers.  We bought the boat together, though.”  Even more frequently we hear, this is my retirement fund or that is his money because he earned it. All of that makes sense, right?  Not according to Texas marital property law.

In Texas Law , on divorce (or death), all property in a marriage is presumed to be community property regardless of the title on the property or the name on the account.  There is a high standard to prove something is separate property.

Part of the standard for separate property versus community property depends on whether the parties were married at the time it was acquired. Therefore, if the house was bought during the marriage, it is presumed by the court to be community property regardless of title.

Even if it was bought before marriage it is still presumed to be community, but the person claiming it can overcome this presumption by showing when or how it was acquired. For example, you might present a deed for the property showing that it was transferred before the marriage or that it was received as a gift or inheritance.  The same applies to vehicles and anything else that the couple owns.

People seem to get particularly upset that their retirement plans are also community property, at least the part that was earned during marriage. And, surprisingly, the person who did not earn the money or contribute to the retirement plan also believes it belongs to the other party.

The methods of calculating what portion or a retirement plan is community and what portion is separate are complicated and a bit inconsistent.  Unlike other property, the ability to claim that a retirement plan is community is very different upon the death of a spouse than on divorce because of a federal court opinion that I believe is extremely unfair to a spouse in Texas.

The division of retirement plans is extremely complex, you will see another blog from our firm later devoted entirely to this topic.  For now, if you are contemplating divorce, think of everything you have as belonging to both of you.  If you have something you acquired before you got married, inherited or received as an individual gift after you were married, just know that you will have to have good records to keep it off the table when it comes to dividing your property to settle your divorce.

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