Texas law prefers community property over separate property. That means without clear evidence that shows an asset is the separate property of a spouse, it will be considered the community property of the marriage and divided in a just and right (a fair) manner. If, on the other hand, the separate property nature of an asset can be proven, it doesn’t get divided. It simply remains that spouse’s separate property and that person retains ownership of it after the divorce.
What Assets Are Separate?
Put simply, if you owned something before you got married, it’s your separate property. Saying something is your separate property isn’t enough. The character of that asset must be proven by clear and convincing evidence, which is a heightened standard. It’s more than just a preponderance of the evidence, but somewhat less than beyond any shadow of a doubt. Satisfying that burden of proof will often depend on the type of asset and the documents available.
For instance, if a wife owned 100 shares of IBM stock before she married, at a value of $100.00 per share, and still owns that same stock at the time of the divorce, at a value of $125.00 per share, it will be her separate property upon divorce. She’ll have to show that the stock has not changed to some other, untraceable asset by brokerage statements or maybe even the original stock certificates. The fact that the stock went up in value will not make a difference. If, during the marriage, she sold that stock for $125.00 per share and bought Microsoft stock with the proceeds, then the Microsoft stock will still be her separate property, so long as she can show that the money that came from the sale of IBM went to purchase Microsoft. If the exchange was done through a brokerage account, the tracing of the money from IBM to Microsoft will be easier.
However, if it’s an active account, the passage of time and the activity in the account from the moment IBM was sold to the time Microsoft was purchased could make that tracing more difficult. Money which came from separate property and is held in an account during the marriage will continue to be separate property, but if that money is commingled with community property money, then the landscape begins to get more difficult to navigate. There are many principles by which that commingled money may be untangled, though it takes an expert in that area to do it.
The important thing to remember is that assets owned prior to marriage are separate property, the separate property nature of the assets may be lost by the actions or inactions of the owner, and sorting out the ultimate character of those assets should be done by someone with experience and training. Your separate property is yours, but it could be lost if left in the hands of someone who does not know how to handle the issue. Contact Orsinger, Nelson, Downing & Anderson today to schedule a consultation with our legal team. Our attorneys have decades of experience handling divorces where property is divided.