Property Division
In a divorce, community property and debt are divided between the spouses, while separate property and debt are confirmed to the spouse who owns the property. At the conclusion of the parties’ divorce case, a judge will finalize the division of property and debt by signing a Final Decree of Divorce (commonly referred to as the Final Decree).
Community Property and Debt
Community property includes all assets acquired by either spouse during the marriage unless one spouse can prove (or both spouses agree) that a particular asset is separate property.
Community property can include:
- Real estate (such as a house or land)
- Businesses
- Vehicles
- Money
- Retirement accounts
- Furniture and other possessions acquired during the marriage
It does not matter whose income was used to purchase the property or whose name appears on the title—if it was acquired during the marriage, it is generally considered community property.
Community debt includes any debt incurred by either spouse during the marriage.
Under Texas law, community property and debt must be divided in a manner that is “just and right,” which does not necessarily mean an equal (50/50) split. There are exceptions to these general rules. If you have questions, you should consult a lawyer.
Separate Property and Debt
Separate property includes:
- Assets owned or claimed by one spouse before the marriage
- Gifts or inheritances received by one spouse during the marriage
- Compensation received for personal injuries (excluding lost wages or medical expenses)
- Stock dividends and capital gains on investments classified as separate property
A spouse must provide clear and convincing evidence to prove an asset is separate property. Otherwise, it is presumed to be community property. Separate debt refers to debts incurred by one spouse before the marriage.
In Texas, separate property cannot be divided by the judge in a divorce. Once an asset is confirmed as separate property, the judge must assign it to that spouse.
Reimbursement for Improvements to the Other Spouse’s Separate Property
If marital funds were used to enhance a spouse’s separate property, the other spouse may be entitled to reimbursement.
What If We Agree on How to Divide Property and Debt?
If both spouses agree on the division of property and debt, the judge will usually approve the agreement. The terms of the agreement must be written in the Final Decree of Divorce.
If you have significant assets (such as a house, business, or retirement accounts) or substantial debt, it is important to have a lawyer review the decree before finalizing your divorce. Mistakes in property division can be costly.
Do We Need to Include Personal Belongings in the Final Decree?
If you and your spouse have already divided personal belongings (such as furniture and clothing), you typically do not need to list them in the Final Decree. The decree assumes that each spouse keeps the personal items in their possession unless stated otherwise.
However, valuable assets—such as real estate, vehicles, businesses, jewelry, or financial accounts—must be specifically included.
What If We Cannot Agree on How to Divide Property and Debt?
If you and your spouse cannot reach an agreement, the judge will determine a “just and right” division during the final hearing. This does not always mean a 50/50 split.
What If We Own a House or Land Together?
If you and your spouse own real estate, it is critical to seek legal advice to properly handle property division. Failure to do so can have serious financial consequences, such as:
- Remaining liable for a mortgage on a home you no longer own. Divorce does not remove your name from a mortgage. If your spouse is awarded the house but does not refinance the loan, the lender can still seek payment from you.
- Difficulty enforcing payment for your share of a property’s value. If one spouse owes the other a portion of the home’s equity, a lien should be placed on the property. Without this, collecting the money may be difficult.
- Problems selling the property in the future. If you are awarded the property, your spouse must sign a Special Warranty Deed and file it with the property records office. Without this, you may have trouble selling the property later.
Why Is the “Legal Description” of a House or Land Important?
Your Final Decree must include the complete legal description of any real estate. This is different from the property’s street address or tax record description. It must be included exactly as written in the deed.
Can My Name Be Removed from a Car Loan If My Spouse Keeps the Car?
Your spouse must refinance the loan to remove your name. If your spouse fails to do so, you remain legally responsible for the debt.
Does It Matter Whose Name Is on the Deed?
No. Property purchased during the marriage is presumed to be community property, regardless of whose name is on the deed—unless it was bought with separate property funds, which would need to be established by clear and convincing evidence.
Can Retirement Benefits Be Divided?
Yes. Retirement benefits earned during the marriage are generally community property and can be divided in the divorce, even if the spouse has not yet retired. Retirement benefits may include pensions, 401(k)s, IRAs, stock options, and more. To divide retirement benefits, your Final Decree must include specific details, and the judge must sign a Qualified Domestic Relations Order (QDRO). The division of the retirement benefits does not take effect until the plan administrator receives a certified copy of the QDRO.
If both spouses agree to keep 100% of their own retirement benefits in a divorce, a Qualified Domestic Relations Order (QDRO) is not required.
