Property Tracing

During a divorce, it’s important to protect your separate property interests. Texas applies a presumption that all property possessed by you and your spouse when your marriage is being dissolved is community property. This presumption can be rebutted by presenting evidence that the property in question is not community, but is your separate property. The spouse claiming property as separate has the burden to prove its separate nature. Otherwise, the property will be considered community and subject to a just and right division.

Under the Texas Family Code, property that is acquired before marriage or gifted, inherited, or awarded as recovery for personal injury during the marriage is separate property. Once the character of property has been determined as separate, it will retain that character even if it changes form, is sold or exchanged for other property. For example, assume you have $500.00 before you get married, and you use that $500.00 to purchase a phone the day after your wedding. The phone is considered your separate property. Because you purchased the phone with separate property funds, the phone is separate property as well. Thus, the property you receive from the exchange of your separate property is separate.

Tracing is the method used when your original separate property has changed form, mutated, been exchanged, or sold during your marriage, resulting in you owning different property at the time of divorce. The idea of tracing is fairly simple. You are merely connecting the dots, starting with your original separate property, then through each and every transaction, up until you acquired the property on hand at divorce. By connecting each dot (aka identifying each transaction), you can show that the property on hand was acquired by your original separate property.

For example, if you own a car during your divorce and you believe the car originally came from your separate property, you must trace the car through each and every transaction back to the original separate property. Although the idea is fairly simple, the tracing process can become very complex depending on a variety of factors such as the number of exchanges, type of exchanges, length of marriage, available documentary evidence, the mixing of separate and community property, the type of asset, etc. There are also different methods employed by practitioners used to trace assets. Depending on the property at stake, it can even be necessary to employ forensic investigators and other legal experts.

Property disputes are common in divorce. The family law attorneys at Orsinger, Nelson, Downing & Anderson are recognized for their ability to handle and manage the complexities of these disputes and guide you through the process. The firm is staffed with attorneys who primarily focus on the property aspects in a divorce and have expertise in characterizing, valuing, and tracing property. We also have the resources and experience of collaborating with forensic investigators and experts, along with trial skills in the event you and your spouse do not settle your case.

Relevant pages: