Characterizing and Tracing Property in Texas Divorces

The decision to end a marriage carries not only emotional consequences but also significant financial ramifications. As such, in many divorces, the biggest sticking point is who has the right to claim certain property as separate, and parties will often hire experts to determine the character of any property obtained during or before the marriage. It is critical, therefore, that anyone considering a divorce retain an attorney that can help them seek an accurate assessment of any property they or their spouse own. At McClure Law Group, our assertive Dallas divorce attorneys have ample experience with characterizing and tracing property in Texas divorces, and, if you or your spouse intend to end your marriage, we can help you fight to protect your interests.

In Texas divorces, any property the parties own is characterized as either community or separate. Separate property only belongs to one spouse, while community property belongs to both spouses. During a divorce, separate property will remain the sole property of one spouse, while the courts divide community property in a way that they consider just and right. As such, it is critical that all property is accurately characterized.

According to the Texas Family Code (the “Code”), community property consists of any property acquired by either spouse during the marriage, other than separate property. The Code defines separate property as anything either spouse owned prior to the marriage and any asset either spouse acquires during the marriage via descent, devise, or gift. Damages recovered for personal injuries that do not constitute compensation for loss of earning capacity are considered separate property, as well. Parties can also define property as separate via a prenuptial or post-nuptial agreement.

The courts presume that any asset either spouse possesses is community property. In order to refute this assumption, the spouse arguing a possession is separate must offer the court evidence that is both clear and convincing. In other words, the proofs offered must show that it is substantially and highly likely that the asset in question is separate rather than community property. The Texas courts employ the inception of title rule, which means that property is defined as separate or community based on when it was acquired.

When parties dispute the character of property, they may need to trace the title of the asset. Generally, tracing is the process of establishing the separate nature of property by demonstrating when and how either party obtained possession of the property. Specifically, tracing involves uncovering the paper trail that begins at the time of the acquisition of the asset and ends on the date of divorce to prove that the property was separate due to the date the title was obtained and the character of the funds used to acquire the asset.

Notably, the separate character of property will not change due to the sale, exchange, mutation, or alteration in the form of the property. As such, tracing is also frequently used to show that an asset retained its separate character despite any changes in the property over time. Notably, however, if a party combines community property with a separate asset, it makes the tracing process more complicated. If, after tracing, any doubt remains as to the character of a property, it will likely be deemed a community asset.

It is common for married couples to share assets, but it can present challenges with regard to characterizing and tracing property in Texas divorces. If you or your spouse want to seek a divorce, it is smart to talk to an attorney about your options. The dedicated Dallas attorneys of McClure Law Group can advise you of your rights and help you take the steps necessary to safeguard your property. Our main office is located in Dallas, and we can meet clients by appointment at our Collin-County office in Plano. We regularly represent people in divorce actions in Dallas, McKinney, Rockwall, Fort Worth, Richardson, Frisco, Garland, and Irving. We also represent parties in family-law cases in cities in Dallas, Collin, Tarrant, Grayson, and Denton Counties. You can reach us by calling us at 214.692.8200 or using our form online to set up a confidential meeting.