Texas is one of nine states that is a community property jurisdiction (which we’ll explain), but the key sections of the law we’ll be discussing is Chapter 3 and Chapter 7 of the Texas family code. Chapter 3 deals with Marital Property and Chapter 7 explains how the court is able to award marital property in the event of a divorce. We’ll have to define some terms before explaining the full detail of the law but just know that the state law attempts to protect those that were wealthy before the marriage from having to give up all of their assets.
What Is Marital Property?
Before we get to who gets what, we need to first address the question of what actually is constituted by ‘Marital Property’–hint: the word “property” confuses many because it assumes that the only thing that is shared is physical property (or perhaps even just real estate). Not only is this not the case, it also seems to miss just how extensive and all encompassing the law must be track and divide anything with any value. That said, here is a full list of what is considered marital property in Texas:
- Houses: First and perhaps most obvious, yes houses are considered a type of marital property and among the major points of contention during a divorce hearing. Texas’ exorbitant property Tax (which is the seventh highest in the nation) makes the question of home ownership particularly tricky as only one person can be awarded the home and that person will be required to pay the ongoing taxes on the home.
- Land: In the same vein, land or undeveloped property owned by one of the spouses is a type of property.
- Cars: Another high priced item but also a depreciating asset, cars count as well.
- Furniture: Getting less and less obvious, furniture is a type of marital asset that has to be assigned to one spouse. Some conditions apply (see below) however such as whether the furniture was a gift to one spouse or when the furniture was acquired.
- Collectibles: Whether it be sports cards, memorabilia, art collections or jewelry, items that are considered collectibles are also a shared marital asset.
- Income: Money may all be fiat, but income earned while both parties have been married is also considered a type of shared asset that the court may divide between the parties.
- Pension: This is a dicey area but pension funds in particular, and retirement savings accounts in general, are types of marital property. However, keep in mind that only pension earned during the period when the two parties were married counts towards shared benefits.
- Social Security Benefits: Social security benefits may indeed be considered shared assets but it depends on whether or not the marriage has lasted for longer than ten years and whether one spouse was the primary earner in the ‘household’–in which case the other spouse may be eligible for 50% of that spouses social security.
- Stock Options: One of the fairly newer additions to Marital Property is the idea of stock options obtained from one of the spouses employer (see history). A 2005 change to the law that sought to close loopholes.
Community Property Jurisdiction
Texas is one of the few states (9/50) that utilize what is called Community Property Jurisdiction instead of common law when allocating property during a divorce. While it gets a little technical, the thing to know is that the distinction between Community Property Jurisdiction and Common Laws in is that Community Property Jurisdiction only divides marital assets that have been earned after the marriage became official.
Defining ‘Community Property’
In more specific words, if you were the beneficiary of a trust fund before you got married then that money remains untouched according to Texas state law. However if you or your spouse became a doctor or a high powered attorney after getting married, all of that money earned and saved since the marriage was earned and saved equally. There are three exceptions which we’ll get to in subsequent sections but that is pretty much the gist of it.
Separate Property Meaning and Exceptions
Separate Property is a term used by the Texas Family Code (defined in sec. 3.001) that seeks to define exceptions for when one person attained personal valuables (money, property..etc) during marriage and is not considered equally owned by both spouses. Those three exceptions are if:
- The property in question was acquired by the spouse before marriage.
- The property in question acquired by the spouse during marriage but was a gift from someone else.
- The money spent on recovery for person injuries, whose injuries were a product of the other spouse (be it bride or groom) while the marriage was still active. Important to note that “any recovery for loss of earning capacity during marriage” is not included in this list of exemptions.
Other States With Community Property Jurisdiction
The other eight states that utilize community property over common laws? Those states are, in alphabetical order, the states Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Thus, Britney Spears’ was very lucky (or not so much) to have been married in Las Vegas (a city of Nevada). That high profile 2004 divorce was stalled because the husband, James Allen Alexander, knew that every second was worth a larger settlement.
While we might think of American law deriving from the British Empire, Texas is actually quite unique. The idea of Community Property Law actually dates back to the Spanish empire. The land that now encompasses the state was actually the final piece of land in the New World that was conquered by Spain.
As Historian Jean Stuntz puts it “Under Queen Isabella, Castilian law became the law of all Spain. As Spain discovered, explored, and colonized the New World, Castilian law spread. The Recopilacidn de Los Leyes de Las Indias complied the laws for all the colonies. Texas, as the last area in North America settled by Spain, retained Castilian law.”
Dating back before the current online archive has available, a major change came in 1987 when couples were finally allowed to make contractual agreements on property claims. Remember that the idea of No Fault Divorce is a fairly new, and somewhat controversial, policy trend in not just Texas but all of the United States. Reactionary conservatives once fought hard to prevent any changes to policy that might make Divorce easier and thereby more common.
More recently, in 2005 the legislature added certain types of employee benefits in H.B. 410 which allowed for stock options and certain insurance claims to be considered as property. With the tech boom and fancy tax avoidance maneuvers, states scrambled to make sure spouses could not avoid compensating their spouse by declining salaries in exchange for stock considerations down the road.
In 2009 S.B. 866 sought to further close loopholes by including the right of the court to allow for claims of reimbursements for, quoting from the bill, if one spouse was inadequately compensated for their “time, toil, talent, and effort of a spouse by a business entity under the control and direction of that spouse.”
Additional Sources on Property Rights
There are several official sources and non-official, but high quality, sources that might help better explain who gets what in the event a household separates. Not only is the law complicated and dependent on individual features of the circumstances (How long were you married? Was there a single person making the most money in the relationship? How did you acquire the assets in question?) we think this particular area of Texas law can use all the good sources at our disposal.
Official Government Sources on Marital Property
For the official laws regarding marriage in the state as a whole, see Chapter 3 of the Family Code “Marital Property Rights and Liabilities.” The benefit of this site is that it is authoritative and is up to date, but is very difficult to read if you do not understand legal language. Additionally the same is true for the official subsection of the family code that deals with how property is divided following the dissolution of a marriage.
Unofficial sources can be terrific as they are less formal and more accessible however can be out of date, vague or inaccurate. Two terrific sources is this article by the Texas State Historical Association on Community Property Law.
History of Castillian Law in Texas: A dissertation by Jean Stuntz on the history of Castillian Law and following all the way from the Spanish empire to the Texas frontier. The paper looks at case law archives to show how the history and philosophy of the practice of the type of law influenced the formations of Texas law.
Marital property rights in transition: A fairly highly cited paper for such a niche topic, LW Waggoner provides a historical background of Community vs Separate Property in the Untied States. Though a bit dated, published in 1994, the paper looks at the question of Spousal Rights in regards to property ownership and different theories (particularly The Partnership Theory of Marriage) which seeks to explain how law changes have impacted marriages (and vice versa).