Community and Separate Property Gray Areas in Texas Divorces

Image of House“Who gets what?” is an important question that parties frequently ask in a divorce case. As a community property state, Texas divides all property related to a divorce nto two categories: community property and separate property. Community property is property acquired by either spouse during the course of the marriage. Separate property is of three types: (1) property owned by a spouse before the marriage, (2) property that someone gifts or gives in a will to a spouse during the marriage, or (3) property obtained with separate funds clearly belonging to only one spouse.

The community/separate property distinction seems easy enough, but parties often contest this determination during a divorce case. There are gray areas where spouses cannot determine how to divide the property. It is important to discuss your divorce case with Houston divorce attorney who can help you determine what property the court will divide and what property will remain yours.

Community and Separate Property Gray Areas

A Houston property division lawyer can discuss with you the areas of property division that parties frequently contest. The following are several of these gray areas of community and separate property division:

When one spouse owns a business. Determining the value of the business can be problematic. If the business’s value grew substantially during the marriage, how can we measure that? Is that increase community or separate property? Additional problem areas include whether both spouses ever ran the business jointly, what should happen after the divorce, and what to do about income generated from one spouse’s separate property.
House ownership. Determining whether a house is community or separate property depends on how the parties paid for the house and where the money came from.
Complex investments. For example, if one spouse has valuable stock options, it is often extremely difficult to value what those options are worth; this is particularly true when the stock option pertains to a new company whose potential is untapped.
Retirement accounts. Most retirement assets are community property, and, as such, the court will divide them. A spouse may have earned some assets like a pension, for instance, before and during a marriage, so it may be difficult to determine which assets are community property and which are separate.
Purchasing new property with prior separate property proceeds. If a spouse sells property that he or she had before the marriage and then purchases something new, that new purchase is generally still considered separate property. The spouse must usually use a forensic accountant and trace the path of the separate property for the court.

What is at stake in community/separate property division is important – for property that is determined to be community property, the court will divide it. Property that is determined to be separate property will be yours to keep, undivided. Contact a Houston community property attorney at John K. Grubb & Associates, PC for important information relating to the division of property in your divorce case.

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