Division of property

Family Law

Everything you own is presumed community until you prove otherwise.

Texas starts from a presumption that all property either spouse holds at divorce is community property. Overcoming it requires clear and convincing evidence that an asset was owned before the marriage, or received during it by gift or inheritance — and that it has stayed identifiable. That is a documentary exercise, not a matter of what everyone remembers agreeing.

Where separate property gets lost

• An inheritance deposited into a joint account and spent alongside marital income.
• A house owned before the marriage, refinanced during it, with community funds paying the mortgage — creating reimbursement claims that have to be quantified.
• A business started before the marriage whose growth during it was produced by a spouse's work.
• Retirement accounts that existed at the wedding and continued to receive contributions.

Each of those is traceable with statements and, where the trail is long, with a forensic accountant. Each is also lost by default if nobody does the work.

Assets that need specialist handling

• Retirement and pensions. Dividing a 401(k) or pension generally requires a qualified domestic relations order drafted and entered correctly; a decree alone does not move the money.
• Closely held businesses. Valuation, the characterisation of growth, and whether the business can realistically be split or must be bought out.
• Real property. Refinancing, owelty liens and who is left on a mortgage after the deed changes hands.
• Debt. A decree allocates responsibility between the spouses; it does not bind the lender, which is why the way debt is handled matters as much as who is assigned it.
• Deferred compensation, stock and crypto holdings, which are frequently undervalued or simply not disclosed.

What counts as separate property

Property owned before the marriage, and anything received during it by gift or inheritance. Compensation for personal injuries is also separate — with the significant exception of the part that represents lost earning capacity during the marriage and medical expenses paid with community funds, which stays community. It is a distinction worth getting right, because injury settlements are frequently the largest asset in the case.

What a court weighs in dividing the estate

• The earning capacity, education and employment skills of each spouse.
• Which spouse will have primary caregiving responsibility for the children.
• The financial needs and the liabilities each spouse will carry afterwards.
• Fault in the breakup of the marriage, and any waste of community assets.
• The size and nature of each spouse's separate property.
• The age and health of each spouse.

The assets that need valuing properly

Investments and stock holdings, deferred compensation and options, business ownership and partnership interests, retirement accounts and pensions, and real property. Large or complex portfolios usually need an expert valuation rather than a statement balance, and a business almost always does. The cost of a proper valuation is small next to the difference it makes to the division.

Settling rather than trying it

Most property cases should settle, and there are good reasons beyond avoiding a courtroom: it costs less, it finishes sooner, both spouses keep control of the outcome instead of handing it to a judge, and the result is usually easier to live with afterwards — which matters when there are children and decades of co-parenting ahead. We prepare as though it will be tried, which is precisely what makes a reasonable settlement possible.

When assets are being hidden

Sudden loans to relatives, deferred bonuses, a business that stops being profitable the month a petition is filed, transfers to a new account — these patterns are recognisable. Discovery, subpoenas to financial institutions and, where warranted, a forensic accountant bring them back into the estate, and a court can take the conduct into account when dividing what is left.

Common questions