In Texas, we look at property as either community property or separate property. In a divorce, community property is divided in a fair and reasonable manner (not necessarily 50%) and separate property isn’t divided. It’s considered the separate property of one or the other spouse and doesn’t get divided.
What property is not included as community property in Texas?
- Property owned prior to marriage
- Property acquired by the spouse during the marriage by gift, including a gift from the other spouse
- Property acquired as a result of inheritance
- Certain parts of a recovery for personal injuries sustained by the spouse during the marriage (for instance, pain and suffering)
A personal injury recovery for loss of earning capacity during the marriage is still generally going to be considered a community asset and, therefore, subject to an equitable division upon divorce. Proving separate property during a divorce is complicated; we strongly recommend that you retain legal counsel from an attorney experienced with dividing assets and property.
The act of determining which property is community or separate is known as “characterizing assets,” i.e, characterizing property as either separate or community. The method by which property is characterized can be complex, but the first rule to understand is called “inception of title.” That means, whatever character the property had (separate or community) at the time it was acquired will remain unless something else happens to affect its character. The date of inception of title is the date the spouse first acquired a right to claim an ownership interest in the property in question. Because separate property can be acquired prior to or during marriage, the date of inception of title to separate property can be prior to or during the marriage.
But, notice that the inception of title doctrine applies not only to the acquisition of the property, but also the right to claim ownership in the property. A common example is a home. Most people buy their homes with some money down and a mortgage for the rest. If one spouse bought his or her home the day before the wedding and put very little down, that home will remain his or her separate property. It will not matter if the property is later refinanced – that is only the payment of debt and not the character of the house. There might be a claim by the other spouse that community money went into the separate property house, giving rise to reimbursement, but that will not change the character of the home. It will always be separate property until it is re-deeded into someone else’s name.
The law favors community property. That means the burden of proving that something is separate property is on the person making that assertion. These are important and often very complex issues. Your attorney should be experienced and capable of tracing and proving that your separate property assets are indeed yours. Call Orsinger, Nelson, Downing & Anderson today to speak with an experienced property division attorney who knows how to prove separate property from community property.