Property Distribution

Property Distribution (Texas Family Code – Chapters: 7.001-7.006)

Wedding rings and moneyIn a decree of divorce or annulment, the court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage. The law requires the Court to divide both real and personal property, wherever situated, in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage.

Texas is a “Community Property” state and in general, that means all the communities property is divided between the communitie members (husband and wife) at time of divorce. The most used definition of Community property = all property that was acquired during the marriage. A more correct definition of community property = all property owned by either member of the community that is not proven to be separate property. This definition is more correct since it is the actual application used by the Courts. Everything is presumed to be community property and it is the burden of the party claiming the property is separate to establish it is separate property. Fail to prove it is separate and it is community property subject to division by the Court. This is an important distinction since the court cannot divide separate property, it belongs to the party who brought it into the marriage. In order to show property is separate property, it must be established that the property was in possession of one spouse prior to the marriage or; was acquired during the marriage by gift, devise, or purchased with property/assets that are separate (tracing).

Common misconception is that income belongs to the person working. That may be true in 42 States but in Texas and the other seven states that subscribe to community property, all income and earnings from the spouses’ property, wages, salaries, and other forms of compensation received during the marriage is community property regardless of the nature of the income producing property. Stated another way, you can buy a house before you get married. That house is separate property. You can then buy a second house which is community property and rent the first house. The income from the rental stream (note-income, not all the rent, the actual profits or income stream after the mortgage and expenses are paid) is community property, even if the asset (the rent house) is separate property. This concept can be very tricky when parties try to figure out how to divide assets since.

Pension and retirement accounts are often the one of the two largest assets in any marriage (the residence/home being the other). Much like the home, spouses tend to attach a great deal of emotional value to the retirement/pension accounts. While a discussion of this subject can and does fill volumes of books, a Court in Texas must determine the rights of both spouses in a pension/retirement plans as part of the divorce. Generally, the division is accomplished through a Qualified Domestic  Relationship Order (QDRO) that orders the pension administrator to calculate each spouse´s respective interest and mail two checks when the employee spouse retires. Again, this subject is too lengthy to discuss here and each case is different, but the formula most commonly used is to establish the value on date of marriage, and date of divorce and award each party 1/2 of the amount accrued during the marriage. Of course the QDRO contains language that the administrator is to determine the residual interest for each spouse´s interest independently.(For military retirement, the formula is established in the case of Berry v. Berry (number of months in which marriage and service overlap divided by the number of months of credible service at time of retirement with the result divided by 2 = non-member spouse´s respective interest). NOTE: a military spouse DOES NOT GET 1/2 just because you were married for 10 years. The 10-year rule may apply in other states but in Texas the Berry formula rules. If military retirement is at stake, you really need to call us at 972-596-4000 before you settle your divorce, we have experience in this area and can help you preserve your rights.