Complex Property Division

Community Property vs Separate Property

Texas law presumes that property obtained by either spouse during the course of a marriage is community property. If one spouse argues that property presumed to be community property is separate property, he or she must provide clear and convincing evidence to establish the separate nature of the property. Separate property refers to any property that either spouse owned before the marriage and any property acquired during the marriage by one spouse as a gift, inheritance, or devise.

Comingling Property on Texas

Commingling refers to the mixing of separate property with community property. In a divorce case, the court divides the community estate, which includes all property that either spouse acquired during the marriage. This property is divided in a just and fair manner, while separate property is not subject to division. However, if separate property becomes commingled with community property, the determination of how to divide the property depends on the extent of commingling. If the assets are so intermingled that they cannot be separated, they will be treated as community property and divided accordingly.

Inception of Title Rule

Texas law applies the inception of title rule when determining the nature of disputed property. This rule requires that the characterization of a property be based on the manner and time in which a person first obtains interest in that property. For instance, if a property is purchased before marriage, it is considered separate property under this rule. The separate property will continue to be separate even if it is exchanged for other property. Even if a person sells their home, which is separate property, and deposits the proceeds in a bank account, the funds will remain separate property.

However, if a party argues that a property is separate property under the inception of title rule after it has changed form, they have the responsibility of tracing and clearly identifying the separate nature of the property. If the separate property has been commingled with community property, the presumption that the property is community property will take precedence. In cases where the nature of property is disputed, it may be necessary to seek the services of a forensic accountant to trace the property's nature from the time it was acquired.