Texas Division of Property Lawyer ● Divorce Attorney

Home Ownership ● Financial and Personal Assets

Almost every divorce involves division of property. Texas is a community property state, so both spouses have ownership rights in the marriage’s community property. But, what is community property and what is separate property? Will the property be divided 50/50?

At the Enos Law Firm, property division attorney Greg Enos and our legal staff have extensive experience and knowledge in Texas community property law. We understand how to trace ownership, track commingled property, and protect the ownership rights of our clients.

If you are facing a divorce in which community property is likely to be a source of disagreement (especially in dividing medical and dental practices), talk to a law firm experienced in Texas community property legal issues – the Enos Law Firm, serving clients in Galveston County and Harris County, Texas.

Property Division

What property is divided in a divorce?
The court can only divide and award the “community estate” in a divorce. The community estate consists of community property and debts acquired or incurred during the marriage. A person’s separate property cannot be taken away in a divorce. Sometimes, however, people decide they must sell their separate property in order to pay debts or obligations created by a divorce.

• Community property is presumed to include all property and income acquired by the husband and wife during the marriage (including income earned after a divorce is filed up until the divorce is actually granted).
• Separate property is property owned by a spouse before a marriage or property a spouse receives during a marriage by way of inheritance or gift (including a gift from the separate property of one spouse to the other).

What are some examples of community and separate property?
Employee benefits (such as a pension, disability payments, workers’ compensation or funds in a 401K plan) acquired during a marriage are community property. If separate property, such as a rental house, generates income during the marriage, that income is community property. Increases in the value of a sole proprietorship or partnership that is separate property are community property, but corporate stock retains its separate nature, even if it increases in value. Dividends paid during the marriage from separate stocks or mutual funds are community property as are the profits from a separate partnership. Damages for pain, mental anguish and loss of consortium from an injury suit are separate property, but damages for loss of wages and for medical bills are community property. Crops grown on separate property and livestock born during the marriage are community property.

Tracing commingled property
If money that is separate property has been mixed or commingled with community funds, it may be possible to go back and trace the separate money and recover it.

Economic contribution claims and reimbursement
If community property funds are used to increase the value of separate property, the community estate may have a right to seek reimbursement from the spouse who so benefited (this is called “economic contribution”). There may also be a reimbursement claim if one spouse spent an unusual amount of time and effort building up a business that is separate property. Reimbursement claims are complicated and should be discussed with a lawyer experienced with community property issues.

How is community property divided?
The best way to divide community property is for the spouses to agree on a fair division. If the husband and wife cannot agree how to divide things, Texas law requires the judge to divide community assets and liability in a way that is “just and right.” This does not always mean that community property is divided evenly.

When will a judge make an uneven division of property?
The judge can award an unequal division of community assets and/or debts after considering:

• Who was at fault in breaking up the marriage
• Earning capacities and education of the parties
• The parties’ ages and health
• Any special needs of the children
• The separate property owned by either spouse

How does the judge know what property the parties have and what it is worth?
Each side will file a “sworn inventory and appraisement” that lists all property and debts (community and separate) and shows the approximate value or amount of each.

Often, the two inventories do not agree, but the judge uses them as a guide to deciding the property division. If the case goes to trial, evidence will be submitted about the nature and value of property. Sometimes, the parties hire expert appraisers to decide what land or businesses are worth.

How are community debts divided?
Community debts are also divided by the court on a “just and right” basis. A divorce decree cannot rewrite a mortgage or loan agreement, however. If, for example, the judge decides the husband must pay a certain loan but the loan was taken in both parties’ names, the creditor will usually look to the wife to pay if the husband does not or cannot repay the loan.

Can pensions, 401K plans, and other employee benefits plans be divided in a divorce?
Yes. Employee benefits earned during the marriage, including most pensions and 401K plans, are community property that will be divided in a divorce.

How is a traditional pension that is not yet vested or being paid divided in a divorce?
Dividing pensions in a divorce is a very complicated area of the law and you need to consult a qualified attorney about your particular situation. Generally speaking, pension benefits are divided as follows: the accrued benefit is calculated as of the time of divorce as if the employee had stopped working on that date and then that amount is multiplied by a number that equals the number of months of marriage divided by the number of months in the pension plan. The resulting dollar figure is the community amount that will be divided. The amount awarded to the non-employee spouse will not be paid by the pension plan until retirement benefits are due.

How will the money in a 401K or cash balance pension plan be divided?
Again, the exact manner of dividing your funds will depend on the specific facts of your case. In general, the community portion of a 401K plan or cash balance pension that will be divided equals the balance on the date of divorce minus the balance on the date of marriage. Usually, the amount awarded to the non-employee spouse is ”rolled over” into his or her own 401K or IRA to avoid having to pay taxes and penalties on a distribution.

What is a “QDRO”?
A Qualified Domestic Relations Order (QDRO) is a separate order signed by the judge in addition to the divorce decree which directs a pension, 401k or other employee benefit plan to divide the plan benefits. A QDRO must be signed by the judge and approved by your plan administrator in order to divide retirement or other plan benefits.

When you have questions about property division issues in a divorce, contact the family law firm that understands –The Enos Law Firm of Houston and Galveston, Texas

The Enos Law Firm, P.C., represents clients with legal matters involving divorce, family law, and injury and death claims in Harris County and Galveston County, Texas, including the communities of Houston, Galveston, Clear Lake, League City, and Texas City.

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The Enos Law Firm, P.C.?
Texas Property Division Lawyer