LEGAL RESOURCES
How Is Property Divided in a Texas Divorce?
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Texas Does Not Automatically Divide Property 50/50
One of the most common misconceptions about divorce in Texas is that every asset is divided equally between the spouses.
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That is not what Texas law requires.
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Texas is a community property state, meaning that the court first determines which assets belong to the community estate and which belong to each spouse’s separate estate. Once the community estate has been identified, the trial court divides the community property in a manner that the court considers “just and right.” See Tex. Fam. Code § 7.001.
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A just and right division is not necessarily an equal division. In many cases, the property is divided approximately equally. In others, one spouse may receive a larger share of the community estate depending upon the evidence presented to the court.
The Court Must First Determine What Property Exists
Before property can be divided, the court must identify the marital estate.
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This process generally involves preparing an inventory of all assets and liabilities, including the marital residence, bank accounts, retirement accounts, brokerage accounts, businesses, vehicles, real estate, investment property, personal property, firearms, jewelry, collectibles, stock options, restricted stock units, cryptocurrency, and outstanding debts.
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The court cannot fairly divide property that has not been identified.
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Discovery frequently plays an important role in this process, particularly when one spouse believes assets have been concealed or undervalued.
The Court Must Determine Whether Property Is Separate or Community
Not every asset accumulated during a marriage belongs to the community estate.
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Under Texas Family Code § 3.001, separate property generally includes property owned before marriage, property acquired by gift or inheritance during the marriage, and certain personal injury recoveries.
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Under Texas Family Code § 3.002, community property consists of property acquired by either spouse during the marriage that is not separate property.
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Texas law further provides that property possessed during or upon dissolution of the marriage is presumed to be community property unless proven otherwise by clear and convincing evidence. See Tex. Fam. Code § 3.003.
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Because this presumption is strong, tracing and historical financial records often become necessary when one spouse claims that an asset is separate property.
Texas Follows the Inception of Title Doctrine
One of the most important principles of Texas property law is the inception of title doctrine.
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Under this doctrine, the character of property is generally determined when a spouse first acquires a legal right to the property. The Texas Supreme Court recognized this principle in Wiggins v. Wiggins, 347 S.W.2d 589 (Tex. 1961).
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For example, a residence purchased before marriage ordinarily remains separate property even if mortgage payments continue during the marriage. Likewise, retirement benefits earned before marriage generally remain separate property, while benefits earned during the marriage may become community property.
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Understanding when property was acquired is often more important than determining when it was paid for.
The Court Has Broad Discretion to Divide Community Property
Once the community estate has been identified, the trial court possesses broad discretion in determining what constitutes a just and right division.
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The Texas Supreme Court explained in Murff v. Murff, 615 S.W.2d 696 (Tex. 1981), that courts may consider numerous equitable factors when dividing community property.
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Those factors may include the spouses’ earning capacities, education, future employability, separate estates, age, health, fault in the breakup of the marriage, the size of the community estate, reimbursement claims, anticipated future needs, and other equitable considerations supported by the evidence.
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No single factor controls the outcome, and every case depends upon its unique facts.
Fault May Affect Property Division
Although Texas recognizes no-fault divorce, fault may still play an important role in dividing the community estate.
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Evidence of adultery, cruelty, fraud on the community, concealment of assets, wasting of community funds, or other marital misconduct may support a disproportionate division of community property where appropriate.
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For example, if one spouse used substantial community funds to support an extramarital relationship, engage in excessive gambling, or intentionally dissipate marital assets, the court may consider those facts when determining what division is just and right.
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The existence of fault does not automatically guarantee one spouse a larger share of the estate, but it remains one factor the court may consider.
Debts Are Also Divided
Property division involves more than deciding who receives the assets.
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The court must also allocate responsibility for mortgages, vehicle loans, credit card balances, tax liabilities, business obligations, medical debt, and other financial obligations.
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It is important to understand that while the divorce decree determines responsibility between the spouses, it generally cannot alter the contractual rights of third-party creditors.
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For example, if both spouses signed a credit card agreement, the creditor may still pursue either spouse for payment even if the divorce decree orders only one spouse to pay the account.
Retirement Accounts Often Require Special Procedures
Retirement benefits are frequently among the most valuable assets divided in a divorce.
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Different retirement plans require different methods of division. Employer-sponsored retirement plans often require a Qualified Domestic Relations Order (QDRO), while IRAs generally require transfer documents prepared by the financial institution. Government retirement systems, including TRS, ERS, FERS, military retirement, and other public plans, often require specialized retirement orders that comply with their governing statutes and administrative procedures.
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Proper preparation of these documents is essential because the Final Decree of Divorce alone is often insufficient to divide retirement benefits.
Expert Witnesses Are Sometimes Necessary
Some assets cannot be accurately valued without expert testimony.
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Business interests, professional practices, pensions, executive compensation, stock options, restricted stock units, closely held corporations, real estate, mineral interests, artwork, and valuable collections frequently require appraisers, business valuation experts, forensic accountants, actuaries, or other qualified professionals.
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An accurate valuation allows the court to divide the community estate fairly and reduces the likelihood of future disputes.
Mediation Resolves Most Property Disputes
Although Texas courts have authority to divide property after trial, the majority of divorce cases settle through mediation.
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Mediation allows the parties to negotiate creative solutions that may not be available after a contested trial. Rather than allowing a judge to decide every issue, the spouses retain greater control over how assets and debts are allocated.
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If mediation results in a binding Mediated Settlement Agreement, the parties generally prepare a Final Decree of Divorce consistent with the terms of that agreement.
Fergus & Tomanka Handles Complex Property Division Cases
Property division is often the most financially significant aspect of a Texas divorce. Properly characterizing separate and community property, valuing complex assets, tracing separate property claims, preparing retirement orders, and presenting persuasive evidence at trial require careful planning and experience.
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At Fergus & Tomanka, we represent clients throughout Central Texas in divorce cases involving substantial community estates, separate property claims, business valuation, retirement benefits, executive compensation, reimbursement claims, real estate, and complex financial issues. We work closely with financial experts to ensure that our clients’ property rights are protected and that the community estate is divided in accordance with Texas law.
Call (512) 291-6952 to setup a consultation with one of our attorneys OR simply Make An Appointment on your own!
These issues can be quite difficult to handle on your own due to the legal complexity and emotionally-charged nature of the proceedings. It’s best to consult with an experienced family law attorney in your area.