How to Transform Community Property Into Separate Property
Texas is a community property state. That means that you and your spouse are each entitled to an equal share of the marital estate upon divorce. Under certain circumstances, however, you can protect specific pieces of property from being divided and distributed on divorce. With the right legal tools and the right representation, you can convert community property into your own separately owned property. Read on to learn about how you can transform divisible community property into protected separate property in Texas. For help with property division or any other aspect of divorce in Houston, reach out to a knowledgeable and effective Texas family law attorney at the Law Office of Maria Lowry for practical advice and trusted representation.
What Is Community vs. Separate Property in Texas?
When you divorce in Texas, your community property is subject to division between you and your spouse. Community property is equally owned by both spouses, meaning the property will be divided equally between the parties unless they reach some other agreement. Separate property is owned separately by each spouse and is not subject to division, although it could affect your spousal maintenance, child support, and other divorce issues.
Community property includes all property acquired (including income earned) during the marriage, with a few limited exceptions. Separate property covers property acquired before the marriage, as well as property acquired by inheritance or gift during the marriage, under the right circumstances. “Property” is broadly defined, covering everything from cash to real estate, stocks, retirement accounts, business ownership interests, and more.
Converting Community Property: Partition Agreements
Property acquired during the marriage (outside of the noted exceptions) is considered community property. The spouses can, however, agree to convert (or “transmute”) community property into separate property. In Texas, this is done via a written agreement establishing a partition or exchange between the parties.
A partition or exchange agreement is much like a prenuptial agreement, but it can be executed at any time during the marriage. The agreement allows the parties to declare that all or part of their community property shall be transferred to one specific spouse, to be treated as that spouse’s separate property. The agreement can identify property already in one’s possession or identify future assets–such as future income–to be treated as separate property. When executed during the marriage, a partition agreement can be thought of as a post-nuptial agreement.
Texas law holds that once a property interest is transferred to one spouse via a partition and exchange agreement, it will indeed be treated as separate property, safe from division upon divorce.
Executing a Valid Partition/Exchange Agreement
A partition or exchange agreement must satisfy certain formalities to be legally enforceable. To be valid, the agreement must be in writing, it must be signed by both parties, it must identify the relevant property, and it must make clear that the property is to be transferred to one spouse as separate property. The agreement must not be intended to defraud any creditors.
A partition or exchange agreement will be enforceable unless deemed invalid or unconscionable. An agreement may be tossed out, for example, if it was not signed voluntarily, or if the party challenging the agreement was not given a fair and reasonable disclosure of the property or the obligations of either party (i.e., if the agreement was fraudulent or one party didn’t know they had rights to that property).
Call a Knowledgeable Texas Divorce and Property Division Lawyer
If you are dealing with property division issues during or after divorce, you need assistance from a seasoned Texas property division attorney. Call a trusted and professional family law attorney at the Law Office of Maria Lowry to discuss your Texas divorce and property division matter.