If you are planning on marrying with a lot of properties in your name or in the unfortunate position where divorce is imminent, you may wonder what assets are considered marital property. Marital property law does vary from state to state, so you should seek legal counsel in the state where you reside to clarify what the marital assets definition is for your particular case.
Nine states—including Texas—abide by community property laws, which generally means property acquired during marriage is subject to either equal or just and right (which isn’t necessarily equal) division upon divorce.
Should you and your spouse end up divorcing in a community property state like Texas, it’s important to understand the difference between community property and separate property. You should also educate yourself regarding how to ensure your separate property will be protected and how the marital home will be dealt with upon divorce.
Marital assets definition in Texas
The definition of marital assets in Texas is clearly defined in Chapter 3 of the Texas Family Code, “Marital Property Rights and Liabilities.” The state defines separate property (which is solely the property of one spouse and generally not subject to division upon divorce) as:
- Property owned or claimed by a spouse before marriage;
- Property acquired by a spouse during marriage by gift, devise or descent; or
- Recovery for personal injuries sustained by a spouse during marriage (except any recovery for loss of earning capacity during marriage).
Texas’ marital assets definition for community property includes the “property, other than separate property, acquired by either spouse during marriage.” Seems pretty cut and dried, right? However, you should know that there is a big presumption when it comes to community property in Texas marital property law: “Property possessed by either spouse during or on dissolution of marriage is presumed to be community property.”
Why is the presumption of community property such a big deal?
The reality is, property ownership tends to get fuzzy as years go by. Paperwork gets lost and people simply forget when and where they acquired things. The state of Texas also requires parties to provide clear and convincing evidence to prove an asset is separate property and not community or joint marital property—otherwise it will be subject to just and right division upon divorce.
Again, Texas abides by the Inception of Title rule, which means if the date of purchase reflected on the title is prior to the date of marriage, that property would be considered separate. If you lose the title and the county has no record of it, you will have an uphill battle ahead of you.
One way to avoid confusion is to file a record of your separate property in the county where you reside and/or where the property exists (say you live in Tarrant County but own 200 acres of land in Harris County). You and your spouse could also execute a legal agreement between the two of you, such as a prenuptial agreement or postnuptial agreement, that clarifies which property would be considered separate in the event of divorce.
What is the marital home definition in Texas? And what happens to it during divorce?
The marital home is one of the biggest (if not THE biggest) assets many couples own. What is a marital home and how is it divided in the event of divorce in Texas? The marital home is simply the place a couple resides in as their primary residence during marriage.
The question is: Who owns the marital home? If a couple purchased the home together during the marriage it would be considered community property. Alternatively, if one of the spouses purchased the home prior to the marriage, based on the Inception of Title rule, that house would be considered separate property.
Worried about getting kicked out of the marital home your spouse owns? Check out our “Can a spouse kick you out of the house” post on this topic.
Now, if the couple used community funds to improve the “separate property” home, say they added a third-floor addition or guest house to the property, the other spouse could file a reimbursement claim for a portion of those expenses during the property division portion of the divorce. The same applies to improvements—which does not include regular maintenance or wear and tear type repairs—to other types of properties, like a rental property for example.
Learn why Justin believes couples should be cautious about buying property, including homes, together prior to marriage in this past post: “What happens to property owned before marriage in Texas.”
What is considered marital property in common law marriage?
If you meet the conditions of common law marriage in Texas, the same marital assets definition that applies to traditional marriages will apply to your common law marriage should you decide to divorce. The three conditions required for a legally valid common law marriage in Texas include:
- Both parties agreed to be married; and
- After agreeing to be married they lived together as husband and wife in the state of Texas; and
- They represented to others (often described as “holding out” to others) that they are a married couple.
Couples who are legally common law married—which means they are legally married—will need to go through the same legal process to disentangle themselves and their assets from each other as traditional married couples. And of course, the same laws regarding community property and separate property will apply.
Things to consider when marrying with a lot of properties (either in your or your future spouse’s name)
If you’re reading this article, you’re probably wondering how your marital assets will be divided in the event of divorce. Some people with few assets enter marriage to a party with sizeable assets assuming they will have a stake in those assets should they divorce. On the flip side, high earning individuals and those who enter marriage with multiple properties may be worried about losing valuable assets in a divorce.
While we’d like to believe that most people enter marriage hoping it will last a lifetime, we all know that’s not always the case. I encourage people with few to no assets not to assume their spouse will be generous with their separate assets in the event of divorce (oftentimes they are not). This is especially true later in life when it will be more difficult to support yourself as time goes on. You may want to get a prenup or postnup to clarify what your financial settlement will look like if you divorce and/or continue to earn your own income and save for retirement just in case you end up on your own.
As for the affluent individuals who are fearful of losing sizeable chunks of their separate properties in a divorce, Texas is a favorable state when it comes to separate property (as noted in the section above). However, you should know that any income you earn from your separate property during marriage is generally considered community property. And of course, you will need to overcome the presumption of community property for your separate assets in the event of divorce. Taking the proper legal steps to formally establish what is your separate property can save you a lot of headaches down the road.
Have questions about divorce and property division in Texas?
If you live in the Dallas / Fort Worth area, the experienced legal team at the Sisemore Law Firm is here to help. To schedule a confidential case review with a family law attorney at our firm, please call our office at (817) 336-4444 or schedule a consultation online.