How Texas divides assets in a divorce

| Oct 14, 2019 | Family Law |

When a couple divorces in Texas, they must split all assets and debts accrued during the marriage equally. This law, called a community property law, can have a significant impact on your home, retirement account, investments and even your small business.

Before filing for divorce, learn more about the community property division guidelines in Texas.

Community vs. separate property

Any money earned, assets purchased or debts incurred during the marriage fall under the category of community property. Separate property only includes:

  • Assets and debts received before the marriage and kept separate from your spouse throughout the marriage
  • An inheritance or gift during the marriage specifically for only one spouse received during the marriage
  • Any personal injury settlement, except any portion awarded to compensate for loss of earning capacity

If one spouse owns a business, the company is community property if you have developed and grown it during the marriage. Sometimes, you must get a professional valuation to equally divide marital property that includes a business.

Equal distribution

When divorcing spouses cannot decide how to divide marital property, the court will make a decision on their behalf. Although equal division is the basic presumption, the judge can decide on unequal division in certain circumstances. He or she may consider the health, age and education level of both spouses, their current and future job prospects, whether one spouse primarily cares for the children and the amount of separate property owned by each individual.

Fault can also play a role in property division if one party’s actions significantly contributed to the end of the marriage. However, this is at the discretion of each judge.

Many couples use a prenuptial agreement to establish community and separate assets in the case of a divorce. If you own a business, you can also indicate the share each owner’s spouse receives in a divorce within your formation documents or bylaws.