In the event of divorce, one of the first questions asked is: who gets what? Splitting property and assets during divorce can be a simple or complex task depending on a number of factors, such as the length of the marriage, the quantity and value of property accumulated within the marriage, if either spouse owned any assets or property prior to the marriage, or if either spouse has inherited assets since beginning the marriage. Each state has its own set of
commonly-accepted rules and guidelines to provide a consistent framework for the process of splitting assets for divorce. Over this blog post series, we will explore some of these rules for divorces filed in Texas.
In Texas, the court recognizes two classifications, or characterizations, of debts and assets within a marriage: separate property and community property, and all debts and assets held, by either a spouse individually or the couple jointly, are characterized as either separate property or community property. Sometimes an asset is a mix of both- partly community property, partly separate property- and, thus, is called mixed property.
To translate this to common terms we are more accustomed to: community property is property that both spouses have an equal right to, separate property is property that only one spouse has a right to, and mixed property is property that is a little bit of both, such as a bank account that holds both community property and separate property. Determining an asset’s character is not as simple as looking at the name on the account. In fact, one of the most common misconceptions in determining who gets what is assuming that asset ownership is decided based on who the account holder is. While this may carry some weight in deciding how assets are split for simplicity and ease for the client, it carries next to no weight in determining asset character. We will dive deeper into understanding why this is the case as well as the differences between community property, separate property, and mixed property in later blog posts in this series.
As previously stated, the process of determining and assigning property character can be either simple or complex depending on the specific financial intricacies of your marriage. If you are interested in a consultation or retaining us as your financial expert, or if you have more questions, give us a call at (469) 467-4660. Or, mention our name, Ahuja & Clark, to your family law attorney, and they can reach out to us directly on your behalf.