1. Types of Property

a. Separate Property

"Separate property" is property either (1) owned or acquired by a spouse before marriage, or (2) acquired by a spouse during marriage by either (a) gift or (b) inheritance. It is the date of acquisition and the source of the property that controls, not how it is eventually paid for. For example, if one spouse owned a house or a car before marriage, it will be characterized at the time of divorce as that spouse's separate property, even if it was paid off in whole or in part during marriage.

A gift includes, for example, any Christmas or birthday gifts from one spouse to another during marriage (even if purchased with community funds). If a gift or inheritance goes to both spouses (e.g., wedding gifts), then each spouse has an undivided fifty percent interest in that one piece of separate property.

Owned before marriage can be wedding rings (also gift), 401K contributions or a house.

Separate property can change forms without changing its character as separate property (this is often referred to as a "mutation"). For example, if wife has $5,000 in cash which is her separate property and uses that $5,000 cash alone to purchase outright a $5,000 boat, then the boat would likewise be her separate property.

b. Community Property

"Community property" is any property acquired by either or both spouses during marriage by other than gift or inheritance. This includes virtually everything purchased during marriage. It is important to remember that a marriage legally endures even after separation: therefore, anything earned, purchased, or even merely contracted for, during your separation (whether before or after the divorce petition has been flied) will be characterized as community property. This is true even if the property is not physically received until after marriage. For example, if the day before the divorce is granted a wife contacts to purchase a new home (with closing set off for one month later), or husband enters into a partnership agreement, this will be characterized as community property.

All property which exists in whole or in part in the name of either spouse at the time of divorce is presumed by law to be community property. This is referred to as the "community property presumption". Therefore, if you have any separate property, or if you are in possession of property which does not belong to either you or your spouse, you must point these out to your attorney.

In Texas, earnings from separate property are community property. For example, if husband has $5,000 in a bank account at the date of marriage, the $5,000 remains his separate property, but all interest earned on the $5,000 becomes community property.

Unlike separate property, a court has the authority to divide community property in any manner that it deems to be "just and right' (as discussed in more detail below).

C. Out Of-State Real Property

Real estate located outside of Texas, which was purchased while either or both spouses were domiciled outside of Texas, is treated somewhat differently than "community property" or "separate property". If such foreign realty exits, please let me know.

D. Mixed Title to Property

Title to property can be both separate property and community property in character. For example, suppose a car is bought during marriage for a total of $10,000 in cash; $6,000 of that was from husband's separate property account which he had prior to marriage, while $4,000 of it was from a bank account established during marriage and containing the community property earnings of the parties. In such event, title to the automobile would be sixty percent husband's separate property and forty percent community property.

2. Debts and Liabilities: Taxes

Debts and liabilities incurred before marriage, if still in existence at the time of divorce, shall remain the debt of liability of the party who incurred it. Debts incurred during marriage will be divided by the court between the parties at the time of divorce. One spouse may be required to assume a debt incurred solely by another spouse during marriage. There is no such thing as a "community" debt, although the term is commonly used.  Although not an absolute rule, the general rule of thumb is that, following the filing of the divorce petition, courts are usually going to award a debt to the spouse who incurred the debt during separation. Decisions will also need be made regarding contingent liabilities, such as past income tax liabilities which may arise in the future if the parties are audited, as well as tax liabilities for the year of divorce.

Caution: Although a court will order each spouse to be solely responsible for certain debts and to pay them immediately when due, this is binding only as between the parties. This division, however is not binding upon the third party creditors who are not parties to the lawsuit. This is unavoidable unless every creditor (e.g., Master card, Visa, etc.) is actually made a party to your suit and, even then, the court would probably make one party primarily liable and the other party secondarily liable. The only protection is by way of indemnification, that is, if Spouse A is obligated to pay a bill, but does not do so and the creditor goes after Spouse B, Souse B has the right to sue Souse A to recoup those funds. While this is not a very good solution, it is the only practical one available while a lien can be placed against one spouse's property to assure the payment by that spouse of court ordered debts, most parties and judges will not agree to so indefinitely tie up a person's property in this respect.

3. Reimbursement

Pursuant to the rules above, there may at the time of divorce exist three different "estates": (1) husband's separate property estate; (2) wife's separate property estate; and (3) the community estate. Each of these estates may have a "claim for reimbursement" back against the other estate or estates. For example, if husband owned a car, as well as a note on that car, before marriage, then at the time of the divorce the car will belong to husband's separate estate, but the community estate would have a right to ask a court to order the husband (i.e., his separate estate) to "reimburse" the community estate for community funds used to pay off his separate property car. This is one very simple example of the doctrine of "reimbursement". Again, reimbursement can be by, against, and between any of the three estates.

Since reimbursement is an "equitable" doctrine, a court is not required to order reimbursement, but may choose to do so if the court considers it equitable under all of the circumstances of the case. lt should be noted, however, that to prove reimbursement, if often requires a great deal of time, accounting, "tracing" of funds (discussed below) and expense to prove the claim. Whether reimbursement should be sought is a decision you and your attorney will make after weighing all of the factors.

3. Reimbursement

Pursuant to the rules above, there may at the time of divorce exist three different "estates": (1) husband's separate property estate; (2) wife's separate property estate; and (3) the community estate. Each of these estates may have a "claim for reimbursement" back against the other estate or estates. For example, if husband owned a car, as well as a note on that car, before marriage, then at the time of the divorce the car will belong to husband's separate estate, but the community estate would have a right to ask a court to order the husband (i.e., his separate estate) to "reimburse" the community estate for community funds used to pay off his separate property car. This is one very simple example of the doctrine of "reimbursement". Again, reimbursement can be by, against, and between any of the three estates.

Since reimbursement is an "equitable" doctrine, a court is not required to order reimbursement, but may choose to do so if the court considers it equitable under all of the circumstances of the case. lt should be noted, however, that to prove reimbursement, if often requires a great deal of time, accounting, "tracing" of funds (discussed below) and expense to prove the claim. Whether reimbursement should be sought is a decision you and your attorney will make after weighing all of the factors.

4. Tracing

To determine title to property as being separate property and/or community property, and to determine rights to reimbursement between the different marital estates, an accounting method referred to as tracing" if often employed in divorce cases. For example, one bank account may contain funds which consists of both separate property and community property. Or. community property funds may be used to pay off a balance of a separate property debt. Tracing is employed to determine the title to property or the amount of reimbursement:.