What is separate property under Texas divorce law?
Texas Family Code § 3.01 defines separate property as property owned by each spouse individually. It is created or obtained apart from the marriage does not owe its existence to the marriage. While Texas divorce courts divide community property in a just and right manner, they cannot take away your separate property and award it to your estranged spouse as part of the divorce process in Texas. It is vitally important that your divorce lawyer characterizes your separate property correctly so that no court can divest you of your ownership rights. Click here for more information about the general divorce process in Texas.
Texas divorce law characterizes the following types of marital assets as separate property:
Characterization is the process by which courts determine a spouse’s ownership interest in property. Since Texas is a community property state, courts presume that all marital property is community property, and each spouse owns an undivided interest in that property. This presumption, however, can be rebutted through the characterization process when one spouse provides clear and convincing evidence that the asset is separate property.
Property acquired before marriage
Any property you owned before getting married is your separate property. If you bought a home or vehicle prior to your wedding with your funds, then the asset is your separate property. Real estate is where characterization can get tricky. For example, both spouses may be listed as borrowers on loan documents, but if one spouse purchased the home before the marriage using solely her funds, the home will be deemed her separate property. Real estate is most often a married couple’s most valuable asset. If the home was purchased before the marriage or during the marriage with gifted or inherited money, it is important to consult a divorce attorney before making any property settlement agreements.
Property acquired by inheritance
If you inherit property through a will or any other legal process, that property is your separate property. No court in Texas can take away your inheritance and award it to your estranged spouse during the divorce process.
Property received as a gift from a third party
Gifts are separate property. For property to be considered a gift, the gift-giver must: 1) intend to give the property as a gift at the time the gift is given; 2) deliver the property to the recipient; and 3) the recipient must accept the gifted property. If the gift is given to both spouses, such as the case of an engagement gift, each spouse has an undivided one-half interest in the property as their separate property.
Property that was a gift from your estranged spouse
When one spouse gives property to the other spouse as a gift, that property becomes the receiving spouse’s separate property. If that gifted property generates income or additional property, the proceeds of the gift are also the recipient spouse’s separate property.
Property acquired from personal injury lawsuit
Property that a spouse recovers for bodily injury, mental anguish, and pain and suffering will be that spouse’s separate property. Property recovered due to loss of earning capacity, however, will be characterized as part of the community estate.
Property acquired by agreement
Written agreements such as partitions, exchanges, and rights of survivorship can designate certain assets as separate property.
Property acquired while living in another state
If a spouse acquires property while living in another state, and that property would be qualify as separate property under Texas divorce laws, then the out-of-state property will be characterized as separate property by courts in Texas.
Property acquired in exchange for separate property
If one spouse exchanges her separate property for other property, the newly exchanged property remains her separate property.
Property acquired with separate funds or separate credit
If a spouse receives a monetary gift from a parent and then purchases property using solely the funds obtained by gift, the property purchased with the gifted funds remains his or her separate property.
Negotiating a marital property settlement
Most couples resolve their divorce by some sort of mediated or negotiated settlement agreement. Spouses have many options as to how they agree to divide property. It is important, however, to know how a judge would characterize your property so that you have the strongest negotiating position possible.
For example, courts presume the house in which you and your spouse lived during your marriage is community property. As such, a court could award the marital home to one spouse exclusively if the judge deemed such a property division to be just and right. Let’s say, however, that the funds used to purchase the home were a wedding gift. Under that scenario, each spouse would have an undivided one-half separate property interest in the home. Since courts cannot divest you of your separate property, no judge could award the home to one spouse over the other. In that circumstance, it would not make sense for you or your attorney to agree to give possession of the house to one spouse without compensation for the other spouse’s one-half interest.