Property and Asset Division

Divorce: What is separate property and what is community property in Texas?

Under the Texas Family Code, a spouses separate property consists of 1) the property owned or claimed by the spouse before marriage; 2) the property acquired by the spouse during marriage by gift, devise, or descent, and 3) the recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage.

The terms “owned and claimed” as used in the Texas Family Code mean that where the right to the property accrued before marriage, the property would be separate.  Inception of title occurs when a party first has a right of claim to the property by virtue of which title is finally vested.  The existence or nonexistence of the marriage at the time of incipiency of the right of which title finally vests determines whether property is community or separate.  Inception of title occurs when a party first has a right of claim to the property.

Under Texas Constitution, Art. XVI, Section 15, separate property is defined as all property, both real and personal, of a spouse owned or claimed before marriage, and that acquired afterward by gift, devise or descent, shall be the separate property of that spouse; and laws shall be passed more clearly defining the rights of the spouses, in relation to separate  and community property; provided that persons about to marry and spouses, without the intention to defraud pre-existing creditors, may by written instrument from time to time partition between themselves all or part of their property, then existing or to be acquired, or exchange between themselves the community interest of one spouse or future spouse in any property for the community interest of the other spouse or future spouse in other community property then existing or to be acquired, whereupon the portion or interest set aside to each spouse shall be and constitute a part of the separate property and estate of such spouse or future spouse; spouses may also from time to time, by written instrument, agree between themselves that the income or property from all or part of the separate property then owned or which thereafter might be acquired by only one of them, shall be the separate property of that spouse; if one spouse makes a gift of property to the other that gift is presumed to include all income or property which might arise from that gift of property; and spouses may agree in writing that all or part of the separate property owned by either or both of them shall be the spouses’ community property.

In 1917 the Legislature defined and income from separate property to be the separate property of the owner spouse.  In Arnold v. Leonard, 114 Tex. 535,273 S.W. 799 (1925), the Supreme Court held that the Legislature did not have the constitutional authority to characterize the income from separate property as the owner’s separate property.  The court explained that the Legislature’s authority was limited to enacting laws regulating the management and liability of marital property, not its separate or community character.  This decision strengthened the constitutional principal that the Legislature may not define what is community and separate property in a manner inconsistent with Article 16, Section 15 of the Texas Constitution.

There are numerous means by which separate property may be acquired in defiance of Article 16, Section 15, a partial list includes mutations of separate property, increases in value of separate land and personality, recovery for personal injury not measured by loss of earning power, improvements of separate land with an unascertainable amount of community funds, and United States Securities purchased with community funds.

Although such property may undergo changes or mutations, as long as it is traced and properly identified it will remain separate property.

The Texas Family Code defines community property as follows:  “community property consists of the property, other than separate property, acquired by either spouse during marriage.”

Texas Family Code, Section 3.003 states that all property possessed by either spouse during or at the dissolution of the marriage is presumed to be community property and that the degree of proof necessary to establish that property is separate property, rather than community property, is clear and convincing evidence.  Clear and convincing evidence is defined as that measure or degree of proof that will produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established.  If property cannot be proved to be separate property, then it is deemed to be community property.

The Texas Family Code, Section 7.002, deals with quasi-community property and requires a court divide property wherever the property is situated, if 1) the property was acquired by either spouse while domiciled in another state and the property would have been community property if the spouse who acquired the property had been domiciled in Texas at the time of acquisition; or 2) property was acquired by either spouse in exchange for real or personal property and that property would have been community property if the spouse who acquired the property so exchanged had been domiciled in Texas at the time of the acquisition.

By Nacol Law Firm | Property and Asset Division
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My Divorce is Costing Me What? Why is This Divorce Costing So Much?

Financial costs of divorce may often be significant. Divorce lawyers, like any other professionals, are paid according to their skill, training and experience. In Texas, one can expect to pay an advance deposit from $2,500 to $25,000 depending on the complexity of the legal issues involved, as well as the quality and expertise of counsel selected. In addition to the legal fees, some cases require “expert testimony” regarding the value of certain significant assets, i.e. business interests, the marital residence, rental properties, art work and more.

One reason most experienced divorce lawyers want a substantial retainer is that once an attorney files an appearance, they are charged with duties in their role as an officer of the court. Under law and court procedure an attorney must make appearances and file specific legal documents with little or no discretion depending on the opponent’s conduct. Initial filings and other documents may appear deceptively simple, but can challenge even the most patient person. The devil truly is in the details, especially where haggling parties look for disagreement. Even minor issues can blow up, and evolve into unnecessary expense.

Divorces involve complicated issues and many times it is necessary to have a temporary hearing sooner rather than later to sort out legal and monetary issues for the pendency of the divorce proceeding.  Who will continue living in the home?  Who will make mortgage payments?  Who will make payments on automobiles?   Who will pay certain credit cards?  Who will pay utilities?  Who will maintain the property?  Who will be responsible for the debts?  All questions must be carefully considered and weighed out.

In divorces with child related issues there are more complicated factors to be considered.  Who will receive primary custody of the children? Where will the children live and how often?  What school will the children attend?  How will their education be paid?  How much child support will be paid? What visitation schedule will work for the parents and the children?  How, when and where will the child exchange take place?  Which parent will maintain health insurance?  Will the child’s residence be restricted to a particular geographical area? 

In all cases, marital assets must be divided; and even if there are few marital assets and only marital debt, there remains much to fight about, or resolve.

The state of Texas makes it unethical for lawyers to take a divorce action on a “contingency fee” basis. That leaves only two ways for a divorce lawyer to be paid: by the hour, which is the most common; or on a flat fee basis. Hourly fees in the Dallas/Ft. Worth metroplex area for a divorce lawyer range anywhere from $250 per hour to $550 per hour and up, depending on your choice.

In the cases where one party has a distinct financial advantage, the economically disadvantaged party can apply for temporary attorney fees and costs to be paid immediately by the party in control of the resources provided a fund is available for such use. In a proper case, such temporary motions often are granted by the trial court in order to level the playing field.

After every hearing, whether it concerns child related issues, marital assets, debts of the parties, or property owned by the parties, an order must be drawn by counsel based on either the court’s decision or the agreement of the parties.  Many times these orders involve the drafting of further legal documents such as Deeds of Trust, Deeds of Trust to Secure Assumption; Special Warranty Deeds, and Real Estate Lien Notes relating to the parties home; Powers of Attorney to transfer title of automobiles; Wage Withholding Orders for the withholding of child support; and Austin forms (required by the Bureau of Vital Statistics in every divorce action).  Often a Qualified Domestic Relations Order (QDRO) is necessary to divide retirement plans, accounts, pensions and the like.  These are just a few of the necessary documents required in some divorce actions.

Bottom line is: the less the parties fight the less they will pay. Lingering animosities do not expedite resolution. Courts do not want to hear “he said/she said.” Whether that is right or wrong is for a social commentary, not a legal guide. That is why there are ‘irretrievable breakdown’ divorces.

Other factors that affect the cost of divorce are: whether the divorce is adversarial; how much you pay hourly for your legal counsel; if you and your spouse are battling over child custody issues involving children; the number of marital assets and debts you have to deal with; and whether your spouse’s attorney is unnecessarily aggressive and adversarial, without purpose.

When selecting a divorce lawyer know what you are looking for.  Your counsel should be a person in whom you can put your total trust — after all your emotional health, the emotional health of your child(ren) and potentially the emotional health of your grandchildren could be at issue. The way to keep divorce costs under control is to select the right lawyer and to force your intellect to overrule your emotions when making decisions.

By Nacol Law Firm | Property and Asset Division
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Cohabitation and Domestic Partnership Agreements

Premarital and post-marital agreements in Texas have a complex history immersed in the community property presumption, the sate constitution, statutes and case law.  Originally, such agreements were found to be unenforceable.  But with amendments to the Texas Constitution, evolving statutes, recent case law, and improved draftsmanship, such agreements are now enforceable under contract law.

For some couples living together is a precursor to marriage; for others, there is no intent to ever marry, or the law prohibits the marriage, as in Texas with same sex marriages.  The simple fact is, domestic partnership agreements involve a wide variety of circumstances, which may or may not involve the gay or lesbian couple. 

Many couples choose to live together so they do not lose certain benefits under current rules of social security, military and insurance disability programs, or to stop those benefits from being taken away from their children.  In other cases, couples who are divorced, and who may have children, may want to protect certain assets.  In situations such as trust funds or inherited funds, beneficiaries simply do not want to place family money at risk.  Other couples choose to shelter their own resources from the real or perceived obligations of their partner.   

The marital agreement is considered to be a contract under Texas law. The premarital agreement must be in writing and signed by both parties.  No actual consideration is required; however, to conform with contractual law, it may be wise to provide benefits for the non-monied party to avoid a later finding of unconscionability, particularly if the financial condition of the non-monied party under the agreement will be poor. 

Matters that may be dealt with in a premarital agreement include, but are not limited to, the following:

  1. the right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property;
  2. the rights and obligations of each of the parties in any of the property of either or both of them whenever or wherever acquired or located;
  3. the disposition of property on separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event;
  4. the modification or elimination of spousal support;
  5. the making of a will, trust, or other arrangement to carry out the provisions of the agreement;
  6. the ownership rights in and disposition of the death benefit from a life insurance policy;
  7. the choice of law governing the construction of the agreement; and
  8. any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.

Child support may not be adversely affected by a premarital agreement.  Therefore, provisions providing for the elimination of child support upon separation or divorce are unenforceable.  However, provisions for private education, college expenses, and choice of residence may be included, but may still be reviewed by a court to determine if they are in keeping with public policy.

In post-marital agreements, it has been noted that a fiduciary duty exists that is not present in pre-marital agreements between spouses or prospective spouses.  Case law states that a confidential relationship between husband and wife imposes the same duties of good faith and fair dealing on spouses as required of partners and other fiduciaries.  However, adverse parties who have retained independent counsel may not owe fiduciary duties to one another.  Texas Legislature enacted Section 4.105 with the understanding that married spouses owing fiduciary duties to one another would negotiate and execute post-marital agreements.  Not withstanding these duties, the legislature manifested the strong policy preference that voluntarily made post-marital agreements are enforceable.

Cohabitation, domestic partnership, premarital and post-marital agreements may be as creative as a party determines necessary.  However, care must be given to see that such agreements protect the party, keep with public policy, and adhere to current Texas family law and applicable contractual law.

By Nacol Law Firm | Property and Asset Division
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Please contact father’s rights Dallas Attorney Mark Nacol, or father’s rights Dallas Attorney Julian Nacol with the Nacol Law Firm P.C., for legal insight to your rights as a father. Both attorney Mark Nacol, and attorney Julian Nacol , provide counsel in the area of family law including divorce, father’s rights, interstate jurisdiction, child support, child custody, visitation, paternity, parent alienation, modifications, property division, asset division and more. Attorney Mark A. Nacol is board certified in Civil Trial Law by the Texas Board of Legal Specialization. Our attorneys at The Nacol Law Firm P.C. serve clients throughout Texas, including Collin, Dallas, Denton, Ellis, Grayson, Kaufman, Rockwall and Tarrant counties and the communities of Addison, Allen, Arlington, Carrollton, Dallas, Fort Worth, Frisco, Garland, Grapevine, Highland Park, McKinney, Mesquite, Plano, Prosper, Richardson, Rowlett and University Park, Murphy,Wylie, Lewisville, Flower Mound, Irving, along with surrounding DFW areas.

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