|October 24, 2013|
Previously published on Winter 2013
I often find myself dispelling the many myths surrounding the divorce process when the topic comes up among friends, family or clients. I usually start by saying, “Divorce in real life is nothing like divorce on reality TV.” With that said, I begin by explaining how the actual process unfolds and what clients can expect along the way. One of the most common myths of divorce is that by law, “the couple’s assets will be divided equally.”
The Texas Family Code requires that, at the time of divorce, the court divide the community property of the spouses “in a manner that the court deems just and right.” This does not mean that a court is required to divide the marital property on a 50-50 basis.
In fact, the court can look to a variety of factors in deciding what percentage each spouse is awarded to arrive at a “just and right” division. The factors that can influence the court’s division of the couple’s property include, fault in the breakup of marriage, conduct of the spouses during the marriage, fraud, waste, earning power of the spouses, who will be the primary caregiver of the children, the nature of the property to be divided, whether a specific asset will be subject to taxation, attorney’s fees and more.
Another misconception held by many is what constitutes “community property” and what constitutes “separate property” in a divorce. Here are the definitions:
Separate property consists of property owned or claimed by a spouse before marriage; property acquired by a spouse during marriage by gift, devise, or descent; and, recovery for personal injuries sustained by a spouse during marriage, except any recovery for loss of earning capacity during marriage.
Community property consists of the property, other than separate property, acquired by either spouse during marriage. This is true regardless of which spouse has possession of the property. The fact that one spouse is named on the title, deed, or account, or that one spouse receives the asset as payment for personal services (e.g. salary), or the asset will not be paid until a later date (e.g. retirement benefits), will not change the character of the property.
Presumption of Community Property
In Texas, there is a legal presumption that property possessed by either spouse during or on dissolution of marriage is presumed to be community property. This legal presumption can only be overcome by “clear and convincing evidence” that the property in question is indeed separate property. The most common way of proving separate property is by tracing the asset from the date of acquisition to the present date.
Right to Reimbursement
The increase in value of a spouse’s separate property during marriage is generally considered separate property. However, a spouse may have a claim for reimbursement when the community estate in some way improves the separate estate of one of the spouses, or vice versa. The right of reimbursement is not an interest in property or an enforceable debt; rather, it is an equitable right that arises upon dissolution of the marriage through death, divorce, or annulment.
For example, the court can determine the rights of spouses in any pension or retirement plan or their rights under any life insurance policy.
Valuation of a particular asset of the parties can sometimes be difficult. Family businesses, stock options, unique collections such as wine, antiques or interests in retirement plans can all pose questions as to their real worth.
Much of the time, determining the value of complex marital assets requires expert appraisal or testimony. In all cases, individuals going through divorce should evaluate all property and assets currently owned by each spouse and discuss them with their attorney.
An individual’s best asset in divorce is the advice and counsel of an experienced, board certified family law attorney who can help sort through the applicable divorce laws in your case. It is also a good idea to make sure he or she is well acquainted with the courts and judges in your community since that information may also factor into a couple’s unique settlement outcome.