The difference between separate property and community property, when it comes to divorce, is tremendous. Community property gets divided and separate property goes with the person who owns it. In Texas, everything is considered community property, subject to a just and right (or fair) division, unless one of the parties proves it to be separate. We call that characterization.
The standard for proving something to be separate property is clear and convincing evidence. It is not a preponderance of the evidence, where one side or the other merely needs to tip the scales of evidence ever-so-slightly in their direction. It is also not a proof beyond any reasonable doubt, like one might expect in a murder trial. It is, though, a heightened standard. It takes more than just the normal trials of proof.
For instance, assume there is a bank account with $75,000.00 in it, which the husband claims to be his separate property. If all he did was get on the witness stand and claim that to be his separate property, followed shortly by his soon-to-be ex-wife testifying that it was all community property, he would almost assuredly lose that issue. The money would be found to belong to the community.
If he presented a bank statement from the month before the marriage showing $75,000.00 in that bank account, he would almost assuredly lose that issue. The money could have been spent and replaced with community money.
If he presented bank statements starting the month before the wedding ceremony and continuing month to month up until the day of trial, and all of those statements showed no withdrawals from the original $75,000.00, he would have traced his separate money and would most likely have a winning position.
Rarely is it that easy. Bank accounts earn interest; and interest, like most other income during marriage, is community property. People deposit money into bank accounts during marriage. Sometimes they also withdraw money. If he started with $75,000.00, earned some interest, deposited some community money and withdrew some money (we don’t know whether the withdrawal would be community money or separate money without further tracing), then he has commingled his separate property funds with community property funds.
In an instance like that, the complexity of the brokerage account, the bank account, the real estate transactions, or just about anything else will drive the need for a skilled attorney. Without the guidance and management of that kind of an attorney, the separate property can be lost, in whole or in part, to the other spouse in the divorce.
The attorneys at Orsinger, Nelson Downing and Anderson have decades of experience tracing and properly characterizing funds in divorce cases. If you need to protect your separate property or prove community property to ensure it is divided fairly, contact us today.