Not everything owned by a married couple is necessarily divided during a Texas divorce. While Texas is a community property state, certain assets may qualify as separate property and remain with the spouse who owns them.
Understanding what qualifies as separate property—and being able to prove it—can be especially important when a divorce involves real estate, inheritances, investments, retirement accounts, businesses, or other significant assets.
Understand Separate Property in Texas
Texas law generally considers separate property to include property a spouse owned before marriage, property received during the marriage by gift or inheritance, and certain recoveries for personal injuries.
Community property, on the other hand, generally includes property acquired by either spouse during the marriage that does not qualify as separate property.
Determining which category an asset belongs to can significantly affect the outcome of property division during divorce.
Property Owned Before the Marriage
Property owned or claimed by one spouse before the marriage is generally considered that spouse’s separate property.
This may include a home, land, vehicle, investment account, retirement savings accumulated before marriage, or an ownership interest in a business.
However, simply stating that an asset existed before the marriage may not be enough. Documents showing when and how the property was acquired can become important when establishing its separate character.
For example, deeds, closing documents, account statements, purchase agreements, and business records may help demonstrate that an asset was acquired before the marriage.
Gifts and Inheritances May Be Separate Property
Property received by one spouse as a gift or inheritance during the marriage can also qualify as separate property under Texas law.
Examples may include money inherited from a parent, real estate passed down through an estate, or property given specifically to one spouse.
The source and intended recipient of the property can become important. Keeping documentation such as wills, probate records, gift letters, financial statements, and transfer records may help establish that the property belongs separately to one spouse.
Certain Personal Injury Recoveries Can Be Separate Property
Some compensation received for personal injuries during the marriage may also qualify as separate property.
Texas law generally treats recovery for personal injuries sustained by a spouse during the marriage as separate property, with an exception for amounts representing loss of earning capacity during the marriage.
Because a personal injury settlement may compensate someone for several different types of damages, determining which portions are separate or community property may require careful review of the settlement documents and circumstances surrounding the recovery.
Separate Property Must Be Proven
One of the most important issues involving separate property is documentation.
Texas law presumes that property possessed by either spouse during or at the dissolution of the marriage is community property. A spouse claiming that an asset is separate property generally must establish that claim by clear and convincing evidence.
This process is often referred to as tracing.
Bank statements, deeds, inheritance records, closing documents, investment statements, tax records, and other financial documents may help trace an asset back to its separate-property source.
Tracing can become more complicated when separate and community funds have been deposited into the same accounts, property has been sold and replaced with another asset, or financial records covering many years are missing.
Community Funds Can Complicate Separate Property Claims
An asset may remain separate property even when community funds are used in connection with it, but that does not mean the financial issues disappear.
For example, one spouse may have purchased a house before marriage, making the house separate property. If community funds are later used during the marriage to pay certain debts associated with that property or make qualifying improvements, reimbursement issues may need to be considered.
Similar questions can arise with businesses, investment accounts, and other assets that existed before marriage but changed substantially during the marriage.
For this reason, looking only at whose name appears on an account or title may not provide the complete picture.
Prepare to Protect Your Separate Property
If you believe you own separate property, begin gathering documentation as early as possible.
Locate deeds, bank statements, investment records, inheritance documents, wills, trust records, retirement statements, business documents, closing statements, and other records that establish when and how the property was acquired.
An experienced Texas divorce attorney can help evaluate whether property may be separate or community, identify potential tracing or reimbursement issues, and determine what documentation may be needed to protect your financial interests.
Jamie Jordan Law represents individuals and families throughout Fort Bend County and Brazoria County in divorce, property division, child custody, child support, and other Texas family law matters.
Contact Jamie Jordan Law to schedule a confidential consultation and discuss how separate property may be handled in your Texas divorce.