Separate vs. Community Property: Navigating Disputes and Premarital Agreements in Texas Divorce

As a Dallas divorce attorney, I understand that protecting assets is a top priority for many clients. In Texas, community property laws can make asset division during a divorce complicated. In this blog post, I’ll discuss premarital agreements (PMAs), the community property presumption, and exceptions to the rule.

Premarital Agreements

PMAs are legal contracts that outline how a couple’s assets will be divided in the event of a divorce. These agreements can be helpful for couples who want to protect their assets before getting married or during a marriage. However, a PMA may not apply to all assets acquired during the marriage, as seen in a recent case. It’s important to understand the limitations of a PMA and how it can impact asset division during a divorce.

The Community Property Presumption

In Texas, all property acquired during a marriage is presumed to be community property, unless the property is acquired through a premarital agreement, gift, or inheritance. This means that both parties have an equal ownership interest in the property, and it will be divided equally upon divorce. The community property presumption can make asset division during a divorce complicated, especially when there is a dispute over the characterization of assets.

Exceptions to the Rule

There are exceptions to the community property rule. For example, property acquired before marriage is separate property, as is property acquired during the marriage through a gift or inheritance. Additionally, a premarital agreement can impact the characterization of assets. It’s important to understand these exceptions and how they can impact asset division during a divorce.

Case Example

In a recent case, a couple executed a premarital agreement because the wife had a significant separate estate before marriage. However, finances became a subject of marital discord, and the characterization of their assets was the central area of dispute during the divorce. The husband argued that the existence of the premarital agreement negated the community property presumption. The court disagreed, noting that the PMA allowed for joint bank accounts and certain terms applied only to specifically listed separate property assets. The court ultimately found that most assets were community property, but one piece of property was the husband’s separate property based on a legal rule.

Conclusion

As a divorce attorney, it’s important to understand the community property laws in Texas and the limitations of premarital agreements. Understanding the community property presumption and exceptions to the rule can help clients protect their assets during a divorce. If you are going through a divorce, it’s important to work with an experienced divorce attorney who can help you navigate the complexities of asset division.