Texas Divorce Attorney Blog
In Texas, separate property can be converted to community property by a written agreement signed by both spouses that identifies the property to be convert and specified it is being converted to community property. Tex. Fam. Code § 4.203. In a recent case, a former husband challenged the property division in his divorce decree, arguing certain assets had been improperly characterized as the wife’s separate property.
The wife was beneficiary of three irrevocable trusts set up by her grandparents. The income from the trusts was to be distributed to the wife at least annually starting when she turned 21. The trustee was also authorized to distribute principal for the wife’s care, comfort, support, and education if the trustee deemed it necessary. When she turned 32, the trustee had the discretion to distribute the balance. After the wife’s thirty-second birthday, which occurred during the marriage, the trustee terminated the trusts and put the accounts in her name. They were worth about $2.3 million at the time.
The parties hired an estate-planning attorney. They both signed an engagement letter, stating they told the attorney they considered the current assets, specifically including the funds inherited by the wife, to be community property. The trust agreement stated that the trustors contemplated that all assets that would be transferred to the trust would be community property. However, it also included a provision allowing either party to modify, revoke, or terminate the agreement with respect to any of their own separate property held in the trust. They subsequently transferred the assets from the grandparents’ trusts to the new trust account.
Courts must divide community property in a “just and right” manner in Texas divorce cases. The property division does not have to be mathematically equal, but should be equitable to both parties. To achieve a just and right division, the court needs evidence of the value of the assets before it. In a 
Texas law presumes that property possessed by a spouse during or on dissolution of the marriage is community property. Tex. Fam. Code § 3.003. The presumption can only be rebutted by clear-and-convincing evidence the property is separate. In a 
One asset that many Texans do not consider their spouse to have an interest in is their 401(k) or any other retirement fund that they have been slowly building during the course of their marriage. Having to divide up your retirement funds may throw a wrench into one’s retirement plans, but, where possible, courts often award retirement accounts to the spouse in whose name they are held. Provided the somewhat-ambiguous “just and right” standard is met, Texas divorce courts have wide discretion to divide up individual assets as they see fit. This may involve splitting each asset, such as 401(k), and dividing the funds therein between the spouses. However, more commonly, courts attempt to award whole assets to either party to avoid an overly complicated, and perhaps unnecessary, division of property.
A trial court that has divided property in a Texas divorce must provide written findings of fact and conclusions of law, including how it characterized and valued the assets and liabilities, if a party properly requests them. In a 
A trial court must divide community property in a “just and right” manner in a Texas divorce. The court must properly characterize the property before it in order to achieve a just and right division. Characterization can be complex when the parties have significant assets acquired through various means. It can get even more complicated when the parties have ownership interests in business entities that also own property.
In a Texas divorce case, property acquired during the marriage is presumed to be community property. A spouse claiming property is their separate property must show that it is separate by clear and convincing evidence. Separate property is generally property that is owned before the marriage, property that the spouse acquired as a gift or inheritance, or property recovered as damages in a personal injury case. Community property is generally property acquired after the marriage that is not characterized as separate property.