The Community Property Presumption
Under Texas Family Code §3.003, all property either spouse possesses at the time of divorce is presumed to be community property. This presumption applies regardless of whose name the property is in — a bank account, a business interest, or a retirement fund held in one spouse's name alone may still be community property if it was accumulated during the marriage. To overcome the presumption, a spouse must prove by "clear and convincing evidence" that property is separate.
What Is Community Property?
Community property includes:
- Wages and salaries earned by either spouse during the marriage
- Real estate purchased with marital funds, regardless of whose name is on the deed
- Bank and investment accounts funded with marital income
- Retirement account contributions made during the marriage (including the earnings on those contributions)
- Businesses started or significantly developed during the marriage
- Debts incurred during the marriage (community debts)
Timing Matters
Property acquired before marriage, after a legally valid permanent separation, or by gift or inheritance is generally separate property — even if the other spouse's name is on the title. The date of acquisition and the source of funds used are critical facts.
Separate Property
A spouse's separate property is not subject to division in divorce. Texas Family Code §3.001 defines separate property as:
- Property owned before marriage
- Property received during the marriage as a gift, devise, or descent (inheritance)
- Recovery for personal injuries sustained during the marriage (excluding lost wages and medical expenses, which are community)
The Separate Property Burden
Proving property is separate requires clear and convincing evidence — a higher standard than the preponderance standard used for most civil claims. This means documentation: pre-marital account statements, deed records, gift letters, inheritance documentation, and tracing analysis when funds have been moved or commingled. The longer the marriage, the more documentation typically required.
Commingling and Tracing
When separate property is mixed with community property — for example, a pre-marital savings account used for joint household expenses — tracing becomes necessary. Tracing follows the money from its original separate source through subsequent transactions to identify what remains separate. In complex cases, this requires forensic accounting expertise.
The "Just and Right" Division Standard
Texas does not require a 50/50 split of community property. Instead, courts must divide the community estate in a manner that is "just and right, having due regard for the rights of each party and any children of the marriage" (Texas Family Code §7.001). Courts consider numerous factors in determining what is just and right, including:
- Fault in the breakup of the marriage (if fault is pled and proven)
- Disparity in the parties' earning capacity and future earning potential
- Age and health of each spouse
- The size of each party's separate estate
- The nature of the community property
- Benefits one spouse would have received had the marriage continued (such as pension rights)
- Tax consequences of the division
- Whether one spouse has primary custody of children (affecting their housing needs)
Fault grounds — such as adultery, cruelty, or abandonment — can result in a disproportionate division of the community estate, sometimes significantly so. This is one reason why the decision to plead fault should be made strategically with your attorney.
Hidden Assets
Both spouses have a fiduciary duty to disclose all community assets and debts during divorce proceedings. When a spouse controls business finances, maintains separate accounts, or has taken steps to conceal marital assets — through transfers to family members, artificially suppressed business income, or undisclosed accounts — discovery tools and forensic accounting can identify what was hidden.
Consequences of Concealment
A spouse who conceals community assets breaches their fiduciary duty under Texas Family Code §3.003 and the Texas Family Code's disclosure requirements. Courts can sanction concealment, award a greater share of the community estate to the innocent spouse, and impose attorney's fees. If assets are discovered after the decree is final, Texas law allows an action to divide undivided assets (Texas Family Code §9.201).
Retirement Accounts and the QDRO
Retirement accounts — 401(k) plans, pensions, and similar accounts — often represent a significant portion of the marital estate. The portion of a retirement account contributed during marriage, including investment earnings on those contributions, is community property. Dividing retirement accounts in divorce typically requires a Qualified Domestic Relations Order (QDRO) — a separate court order that instructs the plan administrator to pay a specified portion to the non-employee spouse.
Why QDROs Matter
Without a properly drafted QDRO, the non-employee spouse may receive nothing from a retirement account even if the divorce decree says they are entitled to a share. QDROs must comply with both the divorce decree and the specific plan's requirements. We work with QDRO specialists to ensure retirement division is properly executed.
The Marital Home
The family home frequently has the highest emotional stakes in property division. Options for addressing the marital home include:
- Sale and division of net proceeds
- One spouse buying out the other's equity (typically by refinancing the mortgage)
- Deferred sale, where one spouse remains in the home for a set period (often until children finish school) before the home is sold
- The home being awarded to one spouse as part of an offset division (one spouse keeps the home; the other receives offsetting assets of equal value)
Each option carries different tax, financial, and practical implications. The right choice depends on available equity, mortgage qualifications, liquidity needs, and the children's circumstances.
Frequently Asked Questions
Texas is a community property state, but it is not a 50/50 state. Courts divide community property on a "just and right" basis, which often results in a roughly equal split — but can deviate significantly based on fault, disparity in earnings, separate estates, custody arrangements, and other factors.
In Texas, wages earned by either spouse during marriage are community property, regardless of which spouse earned them. If you contributed to the household in any way — including raising children — you have community property rights in the estate accumulated during marriage.
Debt incurred during marriage is presumed to be community debt. The court can assign responsibility for debts to either spouse, but the assignment in the divorce decree does not bind creditors — if your spouse is ordered to pay a joint debt and defaults, the creditor can still pursue you. Refinancing joint debts into individual accounts, or selling assets to pay debts, is often the only clean solution.
Without a QDRO, the plan administrator will not divide the retirement account. If the divorce decree provided for a share of a retirement account, a QDRO can often be obtained after the fact through a separate court order. However, this is more complex and expensive than doing it correctly during the divorce. We address QDROs as part of every divorce involving retirement accounts.
Serving Collin County
Landers Family Law serves clients throughout Collin County and the surrounding communities of North Texas. Our McKinney office is centrally located for clients in McKinney, Frisco, Plano, Allen, Prosper, Celina, and the surrounding areas.