In your Texas divorce, you and your divorcing spouse will need to divide your marital assets between you in a manner that is considered fair, given the circumstances. Those assets that either of you owned prior to your marriage and that you managed to keep separate throughout remain the separate property of the original owner, but – it’s not quite that simple.
The burden of proving that a separate property is separate lies with the spouse who claims it belongs to them alone, and there are several primary steps involved. The best tool at your disposal when it comes to protecting your financial rights in divorce is the skilled legal counsel of an experienced Round Rock property division lawyer.
Know the Law
In Texas, the assets that you, your spouse, and the two of you as a couple came to own while you were married are considered marital property, including:
All income earned by either of you
All real estate purchased during the marriage, including your marital home
All business ventures that were initiated during the marriage
These marital assets are offset by all debts acquired over the course of your marriage, and
the only exceptions to this rule include any gifts or inheritances that either of you received in your name alone, as well as the pain and suffering compensation from any personal injury settlements that either of you initiated during your marriage.
Texas courts presume that all assets that belong to married couples are marital, which means that the spouse who is claiming separate property must take the steps necessary to prove an asset’s separate nature. This can be a complicated process, but working closely with a formidable property division attorney can make a profound difference in the outcome.
Property Division
In a Texas divorce, all marital assets must be divided in what is called a just and right manner, which means fairly when you take factors like the following into account:
The length of your marriage
The amount of marital assets involved and the amount of separate property you each own
You and your spouse’s separate incomes
Your spouse’s earning power and yours
The contributions that you and your spouse made to the marriage, including in the form of homemaking and childcare
Any spending down, hiding, or dissipating of marital assets for the sole gain of either of you
Whether fault played a role in the breakdown of your union, which can potentially be relevant even in a no-fault divorce
The Commingling of Separate and Marital Assets
To claim separate property, you must prove its separate nature, but there are many circumstances that can wear away at the dividing line between separate and marital assets. Any commingling of the two, such as when one is used to help finance the other, can make distinguishing between them that much more challenging.
Further, when a separate asset increases in value while you’re married, that increase is generally considered marital property. Understanding how the State of Texas addresses property division in divorce lays the foundation for proving that specific assets belong to you alone.
Gather the Financial Documentation You Need
Gathering financial documentation is key to not only demonstrating the extent of your marital assets but also proving the separate nature of any assets that belong to you alone or that are both marital and separate. In order to rebut – or disprove – that an asset is community property, you’ll need clear and convincing evidence, which can come in a range of forms.
For Property Owned Prior to Marriage
If you owned property prior to your marriage, the title deed to that property is the surest means of proving that you took ownership before you were married. Such documentation generally serves as clear proof that an asset is separate.
For Inheritances Received during the Marriage
Documentation needed to prove that an inheritance is your separate property can include a last will and testament, a probate court order, or trust documents that outline the origin of the asset in question. If your inheritance was deposited directly into an account, you’ll likely need to produce transfer documents as well as account statements.
For Gifts Received during the Marriage
If – over the course of your marriage – you received a valuable gift or gifts in your name alone, a gift letter can back up your claim that the asset is your separate property. The gift letter should definitively state that you were the intended and sole recipient of the gift in question.
If the gift came with a note, card, or any other form of communication that addresses you as the recipient, it can help strengthen your claim.
For Personal Injury Compensation Received during the Marriage
Personal injury compensation generally breaks down into the following categories:
Compensation for property damage
Compensation for medical expenses
Compensation for lost income
Compensation for physical and emotional pain and suffering
Only the compensation you received for pain and suffering can be claimed as a separate asset, but identifying this portion of your overall settlement or court award may not be a straightforward process. Documentation, such as the court order or settlement agreement as well as detailed payment records can help establish the amount that belongs solely to you.
Trace Commingled Assets
A critical component of proving separate property is tracing commingled assets back to their primary parts. During a marriage, it’s not uncommon for assets to flow together and become commingled, which can make it especially difficult to sort separate assets from marital assets and can weaken your claim.
When the line between separate and community property is blurred in this way, tracing the roots of ownership is necessary, and this often requires forensic accounting. Reach out to a trusted Round Rock divorce attorney to ensure your property rights are protected and your case is handled with precision.
Your Separate Asset
Let’s consider a primary example. If you owned your home prior to marriage, and your spouse moved into it with you upon marriage, the house is your separate asset.
If, however, marital funds were used to pay the mortgage while you were married, the asset is now commingled, and in order to prove what remains your separate property, you’ll need to disentangle what is separate from what is marital, and that comes down to tracing.
Means of Tracing
In order to trace the origins of a commingled asset, you’ll need to trace the path your separate property followed through a range of transactions to its current status. While the process is complex, it can play a critical role in your ability to prove that specific assets are rightfully yours.
The Inflow and Outflow of Income
To begin, you’ll need to document inflow and outflow, which refers to money that comes in and that goes out, respectively. Establishing the inflow and outcome of income in relation to a specific asset requires documentation like receipts and bank statements, which help draw a line from the property that began as yours alone to its current commingled state.
For example, if you owned a piece of real estate prior to marriage, it qualified as a separate asset when you married. If you kept the property separate during your marriage and then proceeded to sell it, the money generated also qualifies as a separate asset.
As such, anything you purchased with those funds would also be separate – but identifying the inflow and outflow of income is key to proving the purchased asset’s separate nature.
Tracing Schedules
When a tracing schedule is created, it details how funds flow in relation to specific assets. This means that each transaction relative to a commingled asset is outlined to illustrate the separate property’s evolution to its current status. This helps set the stage for proving what part of an asset is separate and what part is marital.
Tracing Reports
The tracing report represents a formal analysis of the forensic accounting conducted on the asset in question. This expert opinion regarding an asset’s makeup can have a powerful impact on the court’s decision about your asset’s characterization.
The more complex your assets are, the more likely you are to need a forensic CPA on your side, and your resourceful property division attorney will help ensure that you have the right one for you on your team.
Present the Court with Clear and Convincing Evidence
If you and your spouse aren’t in agreement on the matter of what belongs to you alone, you’ll need to provide the court with clear and convincing evidence of each asset’s separate nature. Clear and convincing in this context means a significant amount of proof that leaves the court – or your spouse if you settle out of court – with little doubt regarding the validity of your claim.
Your Burden of Proof
Again, the court starts with the presumption that all assets are marital, which means that it is up to you to prove otherwise. Doing so comes down to demonstrating that one of the following applies to the asset in question:
That you owned it before you were married
That – while you received it during your marriage – it was a gift or inheritance that came to you alone
That it represents the pain and suffering portion of a personal injury claim initiated during your marriage
Supporting Testimony and Other Evidence
Providing the court with clear and convincing testimony can require your personal testimony, the expert testimony of a forensic accountant, and carefully compiled supporting documentation. While informative testimony helps lay the groundwork for claiming separate property, it’s not likely to make your case without actual evidence in the form of financial documentation.
FAQ
The answers to the questions about separate property that a focused property division lawyers field most often can help you with your own.
How can I protect my separate assets?
The best way to protect your separate assets is by having a practiced property division attorney in your corner from the start. They will help to ensure that you have all the evidentiary documentation you need, that any commingled assets are carefully traced, and that you present a cohesive claim that is difficult to refute.
If I owned the property prior to marriage, isn’t it automatically separate?
While an asset that you owned prior to marriage can be identified as a separate asset, you’ll need to prove this characterization. Texas courts presume that all the property involved in a divorce is marital property, and if either spouse claims otherwise, the burden of proof falls to them.
Any commingling of assets, which refers to not keeping a separate property strictly separate during your marriage, can make proving a property’s separate nature that much more difficult. Having a savvy property division lawyer backing you up from the outset can make a serious difference in your ability to prove that a separate asset belongs to you alone.
Can separate property have a marital component?
Yes, if marital funds are used to maintain or further develop a separate asset, there is commingling involved, and the marital estate has a stake in the property. Additionally, if the asset increases in value throughout the marriage, that increased amount is typically treated as marital.
The bottom line is that the issue of separate assets is complicated, and it’s always in your best interest to have the trusted legal guidance of a property division attorney on your side.
An Experienced Round Rock Property Division Attorney Can Help
Brett Pritchard at The Law Office of Brett H. Pritchard – proudly serving Round Rock, Texas, for more than two decades – is an accomplished property division lawyer who is well versed in the legal intricacies of complex property division and is well prepared to employ the full force of his imposing experience in pursuit of a settlement or court award that honors your ownership rights.
Learn more about what we can do to help you by contacting or calling us at 254-781-4222 and scheduling a free consultation today.