Everything you and your spouse own is considered “community property.” Meaning, you and your spouse have an undivided 50/50 claim to everything in a Divorce proceeding in Carrollton | Addison | Dallas area. However, some property may have been owned before the marriage, or obtained during the marriage as a gift or an inheritance. In these instances, the property is considered “separate property.” Call our Carrollton Divorce & Family Lawyers to go over your rights and remedies and to help you through your Texas Divorce. (469) 910-0085.
In a Texas Divorce, separate property belongs to the spouse who owned the property prior to the marriage or obtained it by gift, devise or inheritance. If a party can show that some of the property is their separate property, the court in a divorce proceeding must award that property to that party. In a divorce, separate property cannot be divided, only community property can be divided by the court. But, this may sound easier than it really is in practice.
Before the court can confirm that property is in fact separate property, the party claiming the property as their separate property must prove it is their separate property by “clear and convincing evidence.” Clear and convincing evidence is a pretty high standard to meet especially when you have separate property commingled with community property. If the property is commingled your divorce attorney will need to show what portion of the property is separate and what portion is community property. For example, a bank account with $100K in it on the date a divorce suit is filed is considered all community property. But, if one party can show that they inherited $40K recently and placed all the funds in that same bank account then it could be argued that $40K is separate property and $60K is community. As such only the $60K can be divided in a divorce proceeding. This method of following the money trail is called “tracing.”
Separate property can be traced through community property, but when extensive commingling occurs, it may become necessary to hire an expert, like a forensic accountant, to trace the separate property out of the community property. Experts are expensive but necessary in some cases. If there is a significant amount of alleged separate property at stake, it would very risky to proceed without an expert because if you fail to trace your separate property clearly from the community property, you risk the court declaring the property at stake as community property and subject to a just and right division.
Wife inherits $100,000.00 during the marriage. Subsequently, wife and husband purchases 10 acres of land for $60,000 and uses $40,000 as a down payment on a home. Husband and wife reside in the home, raise two children, and continue to pay the mortgage and make improvements on the house and property for 20 years. After the children leave home, to attend college, Husband and Wife decide to downsize. They sell the home and use 50% of proceeds to purchase a smaller home, and the remaining 50% of the proceeds are invested in the stock market and Husband’s business. Unfortunately, five years later the couple files for divorce. At this point, Wife wants the court to confirm $100,000.00 of the funds remaining in the marital estate as her separate property from her inheritance. The problem in this example is that there are a lot of unknown facts. For instance, we do not know how much money the couple had in their bank account at the time the 10 acres and the home were purchased. Additionally, we don’t know if it was wife’s money that was used in it’s entirety to buy the property and the home. The couple could have used all the inheritance to pay off other debt or they could have invested it. Moreover, perhaps husband and wife used $100,000 to pay for their children’s college. In order to prove that of the entire marital estate $100,000 is wife’s separate property, it will probably be necessary to hire a forensic accountant or other expert to trace the $100,000 from the time it was inherited through all the subsequent financial transactions until it can be shown where the money currently exists in the marital estate. If the expert cannot clearly show the court that $100,000 of the marital estate clearly came from wife’s inheritance and is traceable through the land and housing purchase, the sale of the house, the purchase of the smaller house, and the investments in the stock market and husband’s business, the court will not confirm the $100,000 as wife’s separate property. Instead, it will all be considered community property and divided.
If you are facing a divorce and you have separate property that you want to protect you need to contact an experienced Addison | Dallas Divorce Attorney immediately. If on the other hand you are trying to fight against your spouse’s claim that a large portion of property is separate property you should also contact an experienced Addison | Divorce Lawyer to help put obstacles in the way of your spouse being able to meet the “clear and convincing standard.”