Across the country, people who go through a divorce find themselves having a property that they own divided in some form or fashion. The primary question that you need to ask yourself, whether you are divorcing in Texas or Tennessee, is how to divide the property. While each state has its particular laws on this subject, generally speaking, all 50 states follow two ways of dividing property: equitable distribution or Community property.
Community property is how Texas courts and the Texas family code determine that property should be divided in divorces here. Community property laws can trace their roots back to Spanish civil law and matrimonial law in Mexico. It should come as no surprise that many of the states that utilize Community property to divide marital property in divorce are both in the southwest and western part of the United States. Having a connection to Mexico explains a great deal of how the law in Texas streets marital property.
Of the 50 states in our country, only about 13 utilized Community property to divide the marital property into divorces. The rest of the states in our country use principles of equitable distribution when it comes to dividing property. We will spend the vast majority of today’s blog post discussing equitable distribution and how elements of fair distribution can be employed in a Texas divorce. However, what I would like to do first is to go over the basics of Community property so that you can be exposed to what it means to get divorced in Texas and how the divorce laws in our state function on a fundamental level.
An overview of community property law
Before I begin with this basic overview of Community property law in Texas, I have to tell you that this subject is pretty complex. We do not have the space to go over every aspect of Community property in a relatively short area as we have here in this blog post. However, we can cover the basic concepts and principles of Community property law so that you can have a feel for what you will likely be exposed to in your divorce case. Course, as with anything in life, there are exceptions to every rule, and there is no way for me to be able to guess exactly what you will see occur in your divorce. With that said, let’s talk about Community property law in Texas.
Generally speaking, Community property principles treat any property or income acquired during your marriage as marital property. This means that the Community property as classified at that time either divorce is subject to being divided in your case. On the other hand, any property you or your spouse owned before or acquired during your marriage as a gift, through inheritance, or as a personal injury settlement is classified as belonging to either of your separate estates. If you think of it in this way, there are three columns on a sheet of paper when it comes to property for you and your spouse: your separate property, their separate property, and Community property.
On a basic level, this is how property in your divorce will be classified. At the beginning of your divorce, the court will ask you to turn in an inventory and appraisement. The checklist asks you to inventory all property you and your spouse own right now, tell the court what state the property belongs in, and finally disclose What you believe the property to be worth. This exercise is crucial to giving the court an idea of the value and amount of property you and your spouse owned.
How a Community property state differs vastly from how an inequitable distribution state divides property is pretty stark. A Community property state does not draw any distinction between who’s income was utilized to purchase property during your marriage. Imagine it as a big pot of money in the middle of your living room that all of your earnings and all of your spouse’s earnings are thrown into once you exchange your vows. It doesn’t matter if you are a stay-at-home mother and your husband is a successful doctor. As long as the income was earned during your marriage, those dollars are worth as much to you as they are to him.
By extension, this means all the property purchased with your joint income, likely your home, and any investment savings made during your marriage are all considered to be Community property. This could come as quite a shock to many people if you were unaware of how Community property worked in this state. It reflects the idea that when two people become married, they truly do become one person. There is no distinction made between his and her income or property once married.
This can be quite a relief if you are a spouse hesitant to get divorced for financial reasons. If you have been relying upon your spouse for income and survival, you may have hesitated or stalled on getting a divorce because you were outright concerned with what your life would look like after a divorce. Would you be able to return to the job force after being out of it for many years? Do you need to go back to school to complete your education? These are all relevant considerations for you to ask yourself but should not outright impact and delay you’re getting a divorce. Hopefully, this development makes you more confident in your ability to survive after a divorce.
On the other hand, you may be looking at this reality of Community property law in Texas and can’t believe your ears or eyes. You may have thought that you would end up with most of the property because you did most of the earning in the marital relationship. On some level, this makes a great deal of sense. As we have already covered, many states would agree that this is the most reasonable and equitable way to conceive of marital property and division in a divorce. However, it just so happens that you reside in a state that does not adhere to these principles. That’s not to say that equitable distribution principles cannot be and will not be utilized in your particular divorce. However, if left to a judge, Community property law will prevail.
So, what you need to be asking yourself is what does this mean for you and your divorce? What can you do to prepare for your divorce and understand how Community property and equitable distribution may interact within the confines of your case? What are the main differences between the two types of marital property law, and how can you best prepare for any range of eventualities in your case?
To answer those questions, I would like to discuss equitable distribution and how these principles, while not the law in Texas, can be utilized in your divorce.
An overview of equitable distribution principles as applied in states other than Texas
Texas is not a state that applies equitable distribution principles as a matter of law. That’s not to say that all Community property law is opposed to two fair distribution principles. Still, at the same time, states’ utilization of Community property law does not directly correspond to equitable distribution. Assets accumulated during your marriage will likely not be divided up similarly regardless of income. The property would likely be divided according to whose income was utilized to purchase or acquire the property in an equitable distribution situation.
Utilizing equitable distribution principles means that when you file for divorce in a state that is not a Community property state, you would ask for a divorce based upon fair distribution principles. Simply put, this means that you are asking the court to divide your marital property equitably. In this way, the court would divide debts and property based on whose income was utilized to acquire the property and who took out the debt and utilized the deficit for the most part.
One way that Community property States and equitable distribution states are similar is that a court in either state would ask spouses like yourself to determine the marital property and marital debts. From this standpoint, the court would be able to decide how to divide the property up. Connected to this type of analysis is a decision of what date the court should utilize to determine the value of the marital property. Some cases used the value of the property on the day the divorce petition was filed. Other courts will use The date of final mediation or any different date for that matter.
We also saw how Texas would ask you to assess and appraise your property to determine its approximate value. The same is done in equitable distribution states. An aggregate amount of the property owned needs to be selected for the court to be equitably distributed between you and your spouse. For example, if all the marital property divided up equals $1,000,000, a court can begin to divide the property according to the amount of income contributed throughout your marriage. If you contributed 90% of the income throughout your wedding, you would likely receive 90% of the marital property when divided.
What are relevant factors that a court in an equitable distribution state would utilize to divide marital property?
As with anything else, each state utilizes specific factors that others may not. I want to provide you with a basic overview of relevant factors in many equitable distribution circumstances. You can begin to think about how these factors either favor or disfavor you and your spouse in your divorce. From there, you can further figure out whether or not Community property principles prefer you or whether or not equitable distribution factors would be more in line with your role in the marriage.
The most likely to be used factor in determining how to divide property in an equitable distribution method is the length of your marriage. The longer your marriage has lasted, the more likely a court would divide property more evenly between you and your spouse. Whereas, shorter marriage would likely find that the court plays pretty tight with the rules on assigning property to each of you based on your contributions in terms of income.
A series of factors that are also used in Community property states like Texas are your spouse and your ages, health situations, educational levels, skills in the workplace, and work history. These factors are all relevant because your past performance at work will likely determine your future ability to earn an income. From here, in a Community property state like Texas, likely, the spouse in your marriage who is at a disadvantage in these factors would likely receive more property rather than less. The same is expected to be true in an equitable distribution scenario.
Likewise, if you or your spouse contributed a great deal to others’ ability to obtain an education, then that is going to be noteworthy. For instance, if you stayed home to take care of the kids, worked multiple jobs, or performed any other duty to allow you have been to get that medical degree that we were referencing earlier, then that is undoubtedly going to be a factor when it comes to determining how to divide the marital property in a Community property state.
Next, the future opportunities of both you and your spouse to earn an income and acquire property will be assessed. For instance, in an equitable distribution scenario, even if you contributed most of the income earned during your marriage, that is not necessarily a dead giveaway in terms of being assessed more property. This is because if your spouse cannot mean a position with your future economic outlook looks excellent, you may wind up in a situation where the property is divided more along the lines of a Community property state.
The bottom line is that these are factors relevant to inequitable distribution in States and the Community property state like Texas. Community property laws allow Texas family court judges to assign weight to each element as they see fit. Therefore, it is tough to say how a particular judge will view your specific circumstances. Since every case is different, there could be a wide range of outcomes from a judge’s standpoint.
What if you want to use equitable distribution principles in your Texas divorce?
All of this leads us to a discussion of how equitable distribution principles can be utilized in your divorce. While a family court judge would utilize Community property principles when dividing marital property in a Texas divorce trial, the fact is that you and your spouse can use Community property, equitable distribution, or any other method you see fit to divide your property in mediation or informal settlement agreements.
The key to this discussion is that this needs to take place before going to a trial. If you wait until you get to a problem, you rely on the judge to make final decisions in your case. However, you and your spouse will have plenty of opportunities to utilize whatever principles you see fit to divide up property. The only thing that matters is that the property is divided up fairly and is not obscenely in favor of one spouse or the other. That is what a family court judge will be looking to when reviewing your final decree of divorce.
In closing, the main ingredient to this discussion has an attorney who knows how the experience and money get you to the point where a division based on either of these theories is possible. Again, what the Texas family code says in what you and your spouse want to do does not have to be the same thing, period. Instead, with your attorney there to guide you, you can utilize the principles that you think are most equitable and most appropriate for your family in your specific circumstances.
Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan
if you have any questions about the material contained in today’s blog post; please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free of charge consultation six days a week in person, over the phone, and via video. These consultations are an excellent way for you to learn more about the world of Texas family law and how your family circumstances may be impacted by the filing of a divorce or child custody case.