Texas Divorce Attorney Blog
High-net-worth divorces often involve inherited wealth, family gifts, investment accounts, and closely held business interests that one spouse believes should remain separate property. Under Texas law, however, having witnesses assert that an asset is separate property is not enough.
A recent decision from the Texas Third Court of Appeals demonstrates how that burden is applied in practice. In O’Connor v. O’Connor, the court examined whether testimony from multiple family members could establish that mineral interests acquired during the marriage were purchased with the husband’s separate property.
Ultimately, the court concluded that the evidence did not satisfy Texas tracing requirements because the financial documentation left critical gaps. (O’Connor v. O’Connor, No. 03-23-00407-CV, 2025 WL ___ (Tex. App.—Austin July 30, 2025).
The Dispute
During the divorce proceedings, the husband argued that several valuable mineral interests should be characterized as his separate property because they were purchased with money his father had gifted him. Multiple family members testified regarding the father’s intent to make a gift, and the husband maintained that the gifted funds were used to acquire the mineral interests.
The documentary evidence, however, told a less complete story. The court noted that the available banking records, copies of checks, and account documentation did not establish a continuous chain connecting the alleged gift to the later purchase of the mineral interests.
Deposits and withdrawals occurred between the relevant transactions, certain records lacked identifying information, and even the husband’s tracing expert acknowledged limitations in reconstructing the movement of the funds.
Because the husband could not trace the funds by clear and convincing evidence, the court concluded that he failed to overcome Texas’s community property presumption.
Community v. Separate Property
The outcome reflects longstanding Texas law. Property possessed during or upon dissolution of a marriage is presumed to be community property. A spouse claiming that an asset is separate property bears the burden of rebutting that presumption through clear and convincing evidence. Tex. Fam. Code § 3.003.
Texas law recognizes inherited property and gifts made to one spouse as separate property. That legal classification, however, does not eliminate the need to prove the asset’s separate character when it becomes disputed during divorce proceedings. Tex. Fam. Code § 3.001. For many high-net-worth families, that proof depends on financial tracing.
Planning Before Litigation Begins
Business ownership, investment portfolios, family partnerships, real estate, and inherited wealth often pass through multiple parties over many years. Without careful recordkeeping, even assets that began as unquestionably separate property may become difficult to trace decades later.
Couples who intend to preserve separate ownership should maintain documentation from the initial acquisition of the asset through the date of divorce or final disposition. That includes records identifying the source of funds, subsequent transfers, account statements, purchase documents, and any transactions that could later become relevant in tracing analyses. Premarital or post-marital agreements provide an additional level of certainty.
Protect Your Property with McClure Law Group
If you’re interested in a pre- or post-marital agreement or are concerned about the categorization of your property in an upcoming divorce, our family law attorneys at McClure Law Group are here to assist. We understand how much you have to lose when property is miscategorized in a divorce. Call our team today at (214) 692-8200 or send us a message to schedule a consultation.