Asset Division

No matter what state you reside in, laws in place dictate the specifics of the division of marital assets upon divorce. In Texas, most property the couple acquires during their marriage, including their income, is considered “community property.” This property constitutes the assets that will be divided between a couple when they divorce. Much of this property gets split 50/50 under the terms of the divorce agreement. However, each spouse retains ownership of their separate property. For the law to consider property separate and therefore not subject to equal division between the couple, a spouse must show adequate proof that an asset is solely their own.

Property That Is Considered to Be Separate

Most couples wish to determine which of their assets remain fully their own when they get a divorce. The Texas Family Code defines such property as:

• Settlements were awarded to the individual for personal injuries incurred while married, excluding financial awards for loss of earnings while married.
• Property the spouse acquired by descent, devise, or gift during the marriage.
• Property the individual claimed or owned before they were married.

Some examples of these assets include:

• Personal injury awards. This example is not valid if the award was used to replace community money spent due to the injury for costs such as lost wages and medical bills.
• Birthday gifts.
• Family heirlooms.
• Inheritance assets, including those acquired during the marriage.
• Assets and property that the individual acquired before marriage.
• Property the spouse bought before the marriage.

The most efficient way for a couple to divide community assets when they divorce is to work out a mutual agreement of their own. This saves money and time but may still be subject to the approval of the court. Divorce cases require the judge to weigh all the facts in evidence to ensure a “just and right” division of the couple’s debts and assets. Although most couples can reach an equitable agreement on their own, there are circumstances in which the couple must rely on the judge to mediate their division of assets. In these situations, the courts consider certain factors when deciding the terms of the divorce. In Texas, the courts consider the following factors:

• Pre-marital or post-marital agreements that the couple may have in place
• Dissipation or fraud of community assets
• Tax consequences of the asset division
• The size of one or both spouses’ individual estates
• Community debt the couple incurred if the parties owe more than they own
• The economic circumstances of each individual
• The current and potential future earning power of each party
• Determination of spousal support
• Child custody provisions
• One party’s contribution to the training or education of the other
• Each individual’s contribution to the acquisition of property
• Each party’s health and age
• Length of the marriage

When a couple is going through a divorce, it is important to note that the division of assets applies to common-law marriages, as well as traditional marriages. Common-law marriage is recognized in Texas, and divorce is required to dissolve these marriages, just as it would be in the case of any other married couple.

An informal, or common-law, marriage is a legal marriage entered into without the formalities of traditional marriage. To be married under common law, the couple must meet specific legal requirements. Contrary to common belief, a common-law marriage is not dependent upon the length of time a couple has lived together or the fact that they have children together. Once a couple proves common-law marriage, it is just as valid, legally, as a formal marriage. The following criteria must be met for a couple to prove they are in a common-law marriage.

• The couple must not have been legally married, informally or formally, to another individual at the time their marriage began.
• Each party is required to have been at least 18 years of age at the start of the marriage.
• The couple must agree to be married and live in Texas together as a married couple.
• The couple must represent themselves as a married couple to others.

Having proof of a common-law marriage becomes an important factor, in legal terms, in a few circumstances. One such situation is entitlement to an inheritance if one of the spouses dies. If the individual died without a will, their spouse is entitled to inherit assets from them if they can prove that they were engaged in a common-law marriage.

The other circumstance, of course, is the dissolution of the common-law marriage by divorce. Under Texas law, the same conditions of equal division of community property apply to a common-law marriage as they apply to a traditional, formal marriage. If common-law marriage cannot be proven, then there are no community assets, legally, to divide. The division of communal debts is also subject to the same conditions.

If community property is lost due to one of the individual’s actions during the marriage’s breakdown or after it has broken down, it can be harmful to the innocent spouse, as there are fewer assets to be distributed upon divorce. The idea of dissipation of marital assets is intended to discourage intentional acts meant to hurt the innocent party.

A conveyance or expenditure is typically considered a dissipation when one spouse does so in anticipation of a divorce. There are remedies to assist the individual who is hurt by their spouse’s dissipation of marital assets, including:

• Classifying dissipated assets as marital property. This is figured into the distribution of assets, and if the amount exceeds the dissipating spouse’s portion of the estate, they are ordered to remit a cash payment.
• Unequal division of marital assets. A judge may divide community property in a way that benefits the innocent spouse, as opposed to 50/50 if the other party has dissipated marital assets.
• The courts may deem the dissipation spouse’s transfers to be fraudulent conveyances and have the assets returned to be divided appropriately.

When a couple divorces in the state of Texas, the division of debts is distributed in the same manner as assets, meaning that debts brought into the marriage by an individual still belong to that party, while debts the couple incurred during the marriage are typically distributed evenly.

When you are going through a divorce, you need legal counsel you can trust to oversee your case and ensure that you keep your assets separate. Call the professionals at The Law Office of William A. Walsh today at (682) 500-1077.