The concept of Separate Property is central to understanding how your property will be divided in a divorce. Texas is a Community Property state. This means that ALL property owned by either party at the time of divorce is presumed to be Community Property and would be divided in a 'fair and just' (not 50/50) manner. A spouse can overcome this presumption by 'clear and convincing evidence' that the property in question was owned before the marriage, inherited or gifted.

Also, here is a video from Jim Piper of our firm on this issue:

Here is a a hypothetical example to help you understand. Harold married Julie several years ago. Prior to getting married, Howard inherited a vacation home from his paternal grandfather, Henry. Excited and inspired by the property, Howard made $100,000 in renovations to the vacation home while he was married to Julie. He and Julie have now decided to get a divorce, so they are dividing their assets. Is Howard's vacation home his separate property?  Would the increase in the value of the home be considered to be community property since the improvements were made during the marriage? What about the renovations?

How Does Texas Define Separate Property?

Generally, property acquired before the marriage is the separate property of the person who had it. ATexas Family Code Sec. 3.001 defines a spouse's separate property as:

  • Property owned or claimed by the spouse before marriage;
  • The property acquired by the spouse during marriage by gift, devise, or descent; and
  • The recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage.

However, property acquired before the marriage can become community property if there is an agreement between the spouses to convert the property to community property and divide it; or if it becomes hopeless co-mingled with community property.

If a spouse gifts their separate property to their spouse during the marriage, that becomes the separate property of the receiving spouse.

Property Owned or Claimed By the Spouse Before Marriage

In our example, Howard acquired the vacation home before he married Julie. Therefore, the vacation home is Howard's separate property.

What if Howard had added Julie's name to the Deed of the vacation home during the marriage? He likely just gave her half of the vacation home as her separate property. This does NOT make the vacation home community property.

Property Acquired By the Spouse During Marriage By Gift, Devise, or Descent

Let's say that Howard and Julie married first and then Howard inherited the vacation home from his grandfather. Would the vacation home be considered Howard's separate property? The general answer would still be yes, because Howard inherited the vacation home. This is what devise/descent means.

Reimbursement

Howard made $100,000 in renovations to the vacation home while he was married out of money they had earned. Does Julie have any ownership rights to Howard's vacation home? No, since the house remains Howard's separate property. However, Julie can seek "reimbursement" on behalf of the Community. Reimbursement allows a contributing spouse (spouse who contributed money to another spouse's separate property) to be reimbursed for their contribution. In this case, she might get $50,000 back from Howard (her half of the total spent).

Recovery for Personal Injuries Sustained By the Spouse During Marriage

Let's say that Howard was injured while working before his marriage to Julie. Howard obtains a large personal injury settlement two months prior to getting divorced from Julie. Is Julie entitled to receive any of Howard's personal injury settlement? The answer will depend upon the characterization of the personal injury settlement. Specifically, according to the Texas Family Code, the following is considered to be a spouses separate property:

1. Pain and Suffering from a Tort Recovery;

2. Disfigurement from a Tort Recovery; and 

3. Loss of Consortium from a Tort Recovery is separate property.

Community Property Presumption

In Texas there is a presumption that the property at issue in a divorce proceeding is community property. This is called the community property presumption. Any party that claims that certain property is separate property has the burden of rebutting the community property presumption. See Boyd v. Boyd, 131 S.W.3d 605 (Tex. App. 2004).

Likewise, property acquired after the dissolution of marriage, is the separate property of a spouse. It is important to note that the characterization of separate property does not occur when two legally married parties cease living together or when two legally married parties separate. Texas does not recognize legal separation. Therefore, property acquired while legally married persons are separated from one another is not considered separate property.

Summary

In Texas, there is a community property presumption that covets property at issue in a divorce proceeding. Generally, separate property is not divided in a divorce proceeding. Separate property is property that was acquired before the marriage or by gift or devise during the marriage. Separate property cannot be acquired when parties separate because there is no legal separation in Texas. Your separate property must be proven with clear and convincing evidence. You should speak with a lawyer to determine whether or not your property may be considered separate property. If you don't, you could risk losing property that should have be given to you. 

Citations

[1] Hinton v. Burns, 433 S.W.3d 189 (Tex. App. 2014).

[2] The husband presented no documentary evidence to establish the separate origin of the funds that he utilized to pay down the parties' mortgage. Additionally, he provided no testimony, other than his own, to corroborate or substantiate the transactional trail leading up to his claim for economic contribution. Thus, the husband did not discharge his burden to rebut the community property presumption. Boyd v. Boyd, 131 S.W.3d 605 (Tex. App. 2004).

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