Separate property refers to assets that courts are required to award exclusively to one spouse during a divorce. While community property is subject to a “just and right division” at a court’s discretion, separate assets are awarded in entirety to their respective owners. In Texas, all assets are presumed to be community property.
To claim separate property, a party must demonstrate one of the following through “clear and convincing evidence”:
- The asset was acquired before the marriage;
- The asset was a gift;
- The asset was acquired by inheritance; or
- The asset is a recovery from a personal injury.
Here are four scenarios exploring each basis for separate property claims:
Acquired Before the Marriage
Assets (including real property, vehicles, personal possessions, or securities) and accounts owned before marriage are considered separate property. A court is required to award these exclusively to their respective owners.
Under Texas law, a gift is an item given voluntarily and without consideration (an expectation of a return or exchange). For example, engagement rings are frequently deemed to be gifts to spouses, and subsequent articles of separate property.
Acquired Through Devise or Descent (Inheritances)
Devise refers to acquisitions by way of last wills. Descent refers to acquisitions through bloodline inheritance. If an individual inherited $500,000 from an aunt and later spent $150,000 of those funds towards a community asset (like improvements on the marital home), courts would be required to characterize the remaining $350,000 as separate property.
Recovery for Personal Injuries
Texas law considers most compensation for personal injuries to be separate property. For example, courts will likely be unable to divide a judgment for medical expenses won by either spouse. However, compensation for lost earning capacity is an exception to this rule. Because wages are community property, restitution for lost wages also falls into this category.
Learn more by downloading the guide to Texas Martial Property, teaching you how property like your home or business may be subjected to division in your divorce.