Friday, July 29, 2011

Community vs. Separate Property

by Carrie E. Campbell, J.D.

Texas has the legacy and distinction of being a "community property" state. All property acquired or earned during the years of a marriage in Texas are presumed to be equally owned by both spouses. Only upon the ending of a marriage, either by death or divorce, is the property divided. The assumption is that a division of community property will be 50/50, although the court is charged with the duty of splitting the assets in a way that is "just and right, having due regard for the rights of each party and any children of the marriage." The application of this analysis can, but not often, result in something other than an equal split. For this reason, the outcome could differ depending on the judge assigned to the case. It should also be noted that any debts incurred during the course of a marriage are "community debts," and accordingly, the liabilities are shared/divided just as assets are.

"Separate property" refers to assets obtained before the marriage and/or assets acquired by gift or inheritance during a marriage IF those assets are kept separate from all community property and accounts. The means to prove the existence of separate property is frequently demonstrated by proving when title was acquired. The fact that only one name is on the title is not adequate. Furthermore, a claim can be made by a spouse for a reimbursement to the community accounts (before they are divided) for any expenses the community paid towards the mortgage, loan, maintenance, and/or improvements to separate property. For example, if a wife makes a down payment and buys a home one year before a twenty year marriage, and the mortgage during those 20 years is paid out of her wages (which are community property), then the wife is likely to be awarded the home as her separate property, but would owe the husband either cash or an offset against other properties to compensate him for ∏ of all the mortgage payments made during the marriage.

The calculations can quickly become very complicated when assets and debts are being divided, especially when the property and liabilities result during a long marriage. Add to the mathematics all the emotional intensity that accompanies the majority of deaths and divorces, and the need for objective assistance is obvious. The advice, guidance, and representation of an attorney is extremely important to protect your interests.

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