What Are Commingled Assets in a Texas Divorce?

 Posted on December 17, 2020 in Complex Property Litigation

When couples get divorced, one issue that they will need to deal with is how to divide the property they own. In some cases, this may involve complex property litigation, especially if a couple has a high net worth or owns complex assets. One issue that can complicate this process is distinguishing between community property and separate property. In some cases, these forms of property can become commingled, making it difficult to determine what types of property should or should not be divided between the spouses.

Examples of Commingled Property

Community property includes all property or assets that either spouse acquired while the couple was married, while separate property includes property the spouses owned before they were married, as well as assets received by a spouse as a gift or inheritance. Separate property can become combined with community property in a variety of ways, including:

• A spouse may own a house before they were married, but during the couple’s marriage, both of the spouses may have contributed to ongoing mortgage payments or improvements, maintenance, or repairs to the home. During divorce, the house may still be considered the separate property of the spouse who originally owned it, but the other spouse may be reimbursed for their contributions to the equity in the house or the improvements that caused the house to increase in value.
• A spouse may receive an inheritance during the couple’s marriage, and this amount may be deposited into a joint bank account, with both spouses making additional deposits to and withdrawals from the account during the marriage. Under Texas law, it is presumed that community funds are withdrawn from joint accounts before separate funds, so if the balance of the account is higher than the amount of the inheritance, the inherited funds will be considered separate property. If the balance of the account is less than the amount inherited, the spouse who received the inheritance may retain ownership of the full balance.
• A spouse may use funds or other assets owned before getting married to make investments, and money earned from these investments may be reinvested or used in other ways during the couple’s marriage. Distinguishing between community property and separate property may be complex in these cases since dividends earned during the marriage will usually be considered community property. To determine what portion of these assets are considered separate property, it will be necessary to trace assets back to their source and demonstrate that they originated from separate property.

Contact Our Austin, TX High Net Worth Divorce Attorneys

If you own complex assets or have a high net worth, determining how to divide property with your spouse during your divorce may be a complex undertaking. At Powers and Kerr, PLLC, our attorneys can help you understand how Texas law applies to your community property and separate property, and we will make sure these matters are addressed properly during your case. Contact our Austin property division lawyers today by calling 512-610-6199.

Sources:

https://statutes.capitol.texas.gov/Docs/FA/htm/FA.3.htm

https://www.texasbar.com/AM/Template.cfm?Section=articles&Template=/CM/HTMLDisplay.cfm&ContentID=35144