Texas is a community property state where all property held by each spouse when they divorce may be divided by a judge. A judge cannot divide property if a spouse can prove that the property is separate, or their divorcing spouse agrees that it is separate.
Community property typically includes real estate like a house or land, a business, vehicles, money, retirement accounts, furniture, and other items that either spouse purchased during marriage. Property may be community property if a spouse’s earnings purchased the property, or it is titled under their name.
Community debt is any debt acquired by either spouse during marriage. The divorce decree, however, does not affect the creditor’s right to collect debt from a spouse.
Community property and debt must be divided in a just and right manner. This does not necessarily mean an equal split.
Separate property and debt are not divided. Separate property includes property owned or claimed by one spouse before their marriage, a gift or inheritance to one spouse during marriage, money received by one spouse for personal injury occurring marriage except for lost wages and medical costs, and stock dividends and capital gains on one spouse’s separate property investments.
Separate debt is acquired by one spouse before marriage. Separate property and debt may not be divided.
A spouse must prove that an item is separate property by clear and convincing evidence unless both spouses agree that it is separate. If there is insufficient proof and no agreement, the item is considered community property.
House or land purchased during marriage is community property regardless of which spouse is named on the deed. It may be separate property if it was purchased with the separate funds of one spouse.
Mortgage companies are not bound by divorce decrees. If you and your spouse are on the mortgage but your decree gives the house to your former spouse, the mortgage company may seek payment from you if your spouse does not keep up with payments.
A lien on the property should secure an order for one spouse to pay their other spouse’s part of the equity in the home. If you are keeping the property, a special warranty deed should be signed by your spouse and filed with the property records office.
A spouse’s retirement benefits earned during marriage are typically classified as community property that a court may divide, even if a spouse is not retired.
Retirement benefits are among the most valuable assets for spouses. These include pensions, military retirement, 401(k) and 403(b) accounts, stock and profit-sharing ownership plans, Keoghs, stock options, IRAs, annuities, and variable annuity life insurance.
To divide these benefits, the divorce decree must contain specific information about the retirement benefits. The judge should also sign a qualified domestic relations order for benefits except an IRA. The retirement plan administrator will not divide benefits unless a certified executed QDRO is submitted.
When the divorce case ends, a judge must execute a final decree of divorce which governs the division of property. The decree will contain a list of community property that each spouse will keep and, in some cases, order the sale of certain property and the division of the proceeds.
The decree will also contain a list of separate property of each spouse. The payment of debt will be allocated.
Community property retirement benefits are typically covered. These may be awarded entirely to the spouse who earned the benefits or divided between the spouses.
The decree does not fully resolve all property issues. Spouses may have to take additional steps after divorce such as transferring vehicle titles or real estate deeds.
Attorneys may help address other important legal issues that arise during property division. Their representation can help assure that your rights are protected.