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How do community property and separate property differ?

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Texas is what is known as a “community property state.” In short, that means that most assets that you acquire following your marriage belong equally to you and your spouse. Assets you acquired prior to the marriage is usually considered separate property and not subject to division in divorce.

Of course, there are always exceptions and that rule may not be as simple as it seems. For example, consider this situation:

You own a home before you even met your spouse. You marry but never put your spouse’s name on the property. Over the years, you naturally upgrade some items, do some repairs, enhance the property a little in small ways. It’s value grows over time.

Now that your divorce is imminent, is the house really still your separate property? More than likely, the money you used on repairs and upgrades came from marital funds, so the value of those upgrades could be considered community property. The increased value of the property — which occurred as the housing market expanded in your area during your marriage — could also be considered community property.

Complex divisions of assets are not unusual issues in many divorces — often because people don’t have a clear idea of what constitutes community property and what doesn’t. For another example, consider this:

Your spouse inherited a large sum of money from her parents. She put the money into an account that was meant to start a savings account and listed you as co-owner. Over the years, you both contributed to your nest egg. Now that you’re divorcing, she considers the bulk of that money to still be hers — but the court may think otherwise since you are listed as co-owner and funds were co-mingled.

If you’re anticipating a fight with your soon-to-be ex-spouse over property division and assets, take the time to find out more about your legal options and rights before you start.

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