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TEXAS DIVISION OF COMMUNITY PROPERTY

The Houston Divorce Lawyers Assist Clients Obtaining Right and Just Division of Community Property in a Divorce

Because classification of property and its division can become one of the most contentious issues in a divorce, seek the advice and assistance of a Texas divorce lawyer familiar with the particulars of Texas community property law. The Houston Divorce Lawyers and the Houston Property Division Attorneys at the Law Offices of Steven Tuan Pham have assisted numerous clients during this frustration period. Even before filing an original petition for divorce, the Houston Divorce Preparation Attorneys and the Harris County Divorce Lawyers often advise clients to take actions to protect their interests and prevent the other spouse from committing fraud, waste of community property, as well as hiding community asset. Please contact the Houston Divorce Lawyers and the Houston Community Property Division Attorneys at the Law Offices of Steven Tuan Pham for further assistance.

Community Property vs. Separate Property

Properties in a community property state, such as Texas are classified as either community property or separate property. Community property is everything that is acquired during the marriage. Generally, community property includes all income, assets, and debts that the couple acquired during the marriage. Further, Texas courts have determined that properties accrued during the separation, but prior to the divorce, are considered as community property. Separate property is anything is not classified as community property. These are properties that the own owns separately prior to the date of marriage, as well as gifts, recovery for personal injuries, and inheritances received during the marriage and maintained as separate property, and post separation earnings.

Under the “Inception of Title” rule, the characterization of whether the property is community property or separate property depends on the date in which the parties acquire title. If the acquisition is during the marriage, the property is community property, irrespective of the title of the property is under a particular party. Obviously, if the title of the property is acquired before or after the divorce, it is separate property. It is worth noting here that asset of separate property used to acquire a business or corporation is separate property. However, in Texas, income and interest from separate property during the marriage is still community property (i.e. the business and its asset in this case is separate property, but income from the separate property business during the marriage is community property. For further clarification, please contact the Houston Contested Divorce Attorneys and the Houston Community Property Division Lawyers at the Law Offices of Steven Tuan Pham

Division of Community Property at Divorce

Under Texas law, the division of property is part of the divorce proceeding. The court would decree in the final-divorce order (final decree of divorce) the division of community property in a way that is right and just. Although “right and just” sometimes means equal division of community property, including community debt, this is not always the case. In deciding whether the division of community property is right and just, the court will look at the right of one party to demand a higher division and how such division affect the children. The court may order an unequal division of the community property when there is reasonable cause for granting such relief. As stated in the previous section, some of the reasons in which the court may grant an unequal division of community property when a party is at fault for the destruction of the marriage, such as adultery, fraud, waste of community property, abandonment, and cruel and inhuman treatment. Irrespective, the court must not be so disproportionate that makes the division inequitable.

In addition to the division of community estate, the courts will also divide the certain real and personal properties. The courts will divide properties that were acquired in another state that is during the marriage, irrespective of whether the state where the property is located is a community property state. The courts will also divide properties that were exchanged or purchased using community property in another state during the course of marriage. In fact, the court would even award properties that were acquired in another country, using community property assets, during the course of marriage as community property. However, the enforcement of such decree in another country is a logistical problem because a foreign court has no obligation to enforce the action of a U.S. court. Contrary, courts in any other states would enforce an order of a Texas court based on the Full Faith and Credit Clause of the U.S. Constitution.

Division of Retirement Accounts

Just as the division of any other community property, the courts will also determine the rights of each party with respect to retirement account that are award the accounts that are NOT pre-empted by ERISA to each perspective spouse, including but are not exclusive to pension, 401K, annuity, insurance policies (other than life insurance policies), individual retirement accounts, stock options, and savings. In determining the parties’ rights, the courts will divide interests in the retirement accounts from the date of marriage to the date of divorce. However, compensation benefits under the Veterans’ Administration for service-men and women are not treated as “property” and future benefits are not subject to divisions. Please contact the Houston Division of Retirement Accounts Lawyers and the Houston Divorce Attorneys at 713-517-6645 for more information on the division of retirement accounts with regards to your divorce.

Separate Property at Divorce

Generally, separate property will not be divided to the other spouse in a divorce. However, the court can divide such property if it is right and just. The court may reach into a party’s separate property if it determines that that party committed fraud, intentionally wasting community property, or when there is an alter ego of the separate property corporation. Some Texas courts allow piercing of the corporate veil to reach assets of a separate property corporation or company when it finds alter ego exist. In a divorce, the finding of alter ego, the court will requires that (1) there is a unity between the corporation and the spouse such that there is no separation of the spouse and the business entity (such as using corporate funds for personal use or co-mingling of funds) and (2) the spouse’s improper use of the corporation damages community property. Remember, piecing the corporate veil pertains to reaching into the corporation’s assets to classify as community property. Interests and income of a separate property corporation during the marriage is considered as community property.

Taking one step further, some courts also consider the “good will” of a separate property corporation as community property; and as such, the good will can be divided at the time of divorce. One final note, Just as courts would divide community properties that were acquired in another state that is during the marriage, courts would not divide separate properties that were acquired or exchanged in another state if such property would characterized as separate property in Texas. If you are interested in knowing more about piercing the corporate veild of a separate property corporation or the division of a separate property due to fraud or intentional act that harmed community property, you are invited to contact the Houston Family Law Attorneys and the Houston Divorce Lawyers for more information. Our Houston Divorce Attorneys and the Woodlands Division of Community Property Lawyers can be reached at 713-517-6645

DISCLAIMER

Please DO NOT rely on the information above to replace a personal consultation with our Houston Family Law Lawyers and our Houston Divorce Attorneys. There may be other legal issues, depending on the fact and circumstances, in which we have not had the opportunity to discuss in this article. Every case is unique and requires our Houston Division of Community Property Attorneys and our Spring Divorce Lawyers to review and to provide a personal consultation. Please contact our Montgomery and Harris County Divorce Lawyers at 713-517-6645 or complete our Online Contact Form.