One of the biggest questions that comes up in the divorce cases I work on concerns what belongs to whom. It’s an interesting but often misguided question, as it fails to acknowledge the difference between separate and community property. The simplest way to think of it is this: whatever stuff you accumulated during the marriage–regardless of who paid for it or who uses it–is considered to be community property.
Because Texas is a community property state, it doesn’t differentiate between what you do and what your spouse does during the marriage. You accumulate both assets and debts together during the marriage. If one spouse racks up more debt than the other during the marriage, regardless of whether one name or both names are on the account, the divorce decree needs to determine what happens to that debt. Similarly, if one spouse made a wise investment on his or her own during the marriage using money earned while in the marriage, the investment is an asset considered part of the marital estate.
This flies in the face of what people-especially people going through divorce and preparing for life on their own-think of as fair. They might say things like, “It’s my money,” or “I bought this with the money that came out of my paycheck,” but that’s not how it works in a community property state like Texas. The decisions that a couple makes with regards to money, whether in step with each other or dysfunctional and separate, result in a marital estate that has to be distributed either in court or through agreement by the couple.
There are some exceptions to the community property rule, though. Items purchased before marriage will be considered separate property, although if separate property funds becomes part of the community property-say, if used for a down payment on a house bought during the marriage-it can be hard to determine what funds should be considered separate vs. community property.
Inheritance is also considered separate property. However, even an inheritance received during the marriage can be complicated if the money is co-mingled with community property. It’s best, when it comes to inheritance, to keep the money separate and to keep exacting records of where the money goes.
While cars are usually considered community property, if each spouse pays for and maintains a car, and they drive their individual cars most of the time, it’s likely that the court will award them the cars separately. However, if one car is better suited to the parent who will have the children most of the time, the court could very well rule for that regardless of who drove what and paid for what.
It is also possible, if couples are in conflict about certain assets and can’t agree on how to divide them, the court could prescribe selling those assets and divvying up the profits-even if the parties would prefer those assets remain intact.
It can be a frustrating, angering, and disheartening process to deal with the financial aspects of a divorce. It’s best, of course, to try to come to a settlement through negotiation rather than through the courts. That allows for more creative and flexible solutions than the ones a judge would be likely to choose.
But the first steps, before you get into specific asset and debt divisions, is to determine what assets and liabilities you have as completely as possible and then determine with your family lawyer what’s most important to you. In some cases, you may be able to win everything you think you deserve, but in some cases, you may be risking losing what’s most important to you. When I consult with clients, I make sure they’re aware of what’s probable and what’s possible before we proceed.