When a marriage in Texas ends, one of the most contentious aspects of the divorce tends to be the division of property. Texas follows the community property system, meaning that most assets the spouses acquire during the marriage are subject to an equitable division.
However, separate property (versus community property) may not be subject to division and encompasses assets from before the marriage or that a spouse receives as inheritances or gifts. It is important to make sure separate property stays separate if you want to keep it.
One of the most effective ways to safeguard your separate property is to create a prenuptial agreement before marriage. This legally binding document outlines what assets are separate property and what could follow community property rules in the event of a divorce.
Maintain clear and organized records of your separate property. This includes documentation for any separate bank accounts, investments or property deeds in your name before marriage. Keep receipts and financial statements that demonstrate the source of funds you used to acquire or maintain separate assets.
Refrain from mixing your separate property with marital assets. For example, if you inherit money or receive a gift, deposit it into a separate bank account in your name only. Do not use this account for marital expenses. Similarly, do not use funds from your joint accounts for personal separate property expenses.
When making significant financial decisions during the marriage, consider using written agreements, such as postnuptial agreements or property agreements. These documents can clarify the status of certain assets, making it easier to prove their separation in case of a divorce.
If you purchase property during your marriage with separate funds, ensure the title remains in your name only. This applies to real estate, vehicles and other significant assets. It helps establish the asset as a separate property.
Improvements with separate funds
In 2022, 55% of U.S. homeowners said they had renovated a section of their home. If you use separate funds to renovate, remodel or maintain an asset such as your home, be careful not to unintentionally convert it into community property. Clearly document the source of the funds used and ensure they do not come from joint accounts.
Periodically review and update your financial records and agreements. Life circumstances can change, and it is important to adapt your strategy to protect your separate property accordingly.
Open and honest communication with your spouse is important. Discuss your intentions and agreements regarding separate property and make sure both parties are aware of and understand the situation.