States can differ significantly with regards to the schemes and laws that they apply to family law cases. For example, certain rules may apply to a divorce in California, while quite different rules may apply to a divorce in South Carolina. The scheme under which a court will divide property and debts during divorce represents one prominent area in which certain states vary from one another.
Nine states, including Texas, follow a “community property” scheme, while the remainder follow an “equitable distribution” scheme. The main distinction between these two schemes is that in community property states, all property acquired during marriage is divided equally between spouses. By contrast, equitable distribution considers several factors in the division of assets and debts, including the length of marriage, the spouses’ respective needs, and financial contributions made by each spouse during the marriage.
The Nine Community Property States
Nine states in the U.S. are considered “community property” states. This list includes Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Interestingly, Alaska is an “opt-in community property” state which allows the parties to agree to have their property divided according to community property laws. Tennessee and South Dakota have passed elective community property laws, as well.
The Community Property Scheme
According to the community property scheme adopted by the nine states enumerated above, all property belonging to a married individual is classified as either community property or separate property. Specifically, under Texas law, community property is property which is owned by both spouses, and includes all of the property and earnings acquired during the marriage. In Texas, so long as property was purchased or money was earned after the marriage date, it is irrelevant whose income paid for the property or whose name is on the title. Some common examples of community property include, but are not limited to: (1) employment income; (2) property bought during the marriage; and (3) cars bought during the marriage (once again, it is irrelevant whose name is on the title).
By contrast, property owned prior to marriage, or acquired through gift, devise, or descent constitutes separate property. Common examples of separate property include, but are not limited to: (1) a home purchased prior to marriage by one spouse; (2) one spouse’s inheritance (regardless of when received); (3) jewelry gifted by one spouse to the other spouse; and (4) a piece of property given to one spouse by his parents.
In a Texas divorce, community property is typically divided 50/50 between the spouses, while each spouse gets to retain his or her separate property.
The Equitable Distribution Scheme
The remaining states adhere to the concept of common law property in determining who owns property acquired during the marriage. Property in a common law property state is divided according to the equitable distribution scheme. Under this scheme, property acquired during marriage is divided equitably, but not necessarily equally.
Under an equitable distribution scheme, when a judge looks to divide marital property during a divorce, they aim to account for individual circumstances in order to fairly divide the property. In an equitable distribution state, one spouse may receive a larger share of property than the other spouse. Some factors taken into consideration in equitable distribution states include, but are not limited to: (1) the length of the marriage; (2) current and future financial needs of each spouse; (3) age and health of the spouses; and (4) poor behavior by a spouse (debts, affairs, etc.).
In Texas, couples may utilize a prenuptial agreement to agree to a division of property that is something other than the typical 50/50 community property split, provided that the agreement is valid and does not violate state or federal law.
For example, couples can use a premarital agreement to eliminate future community property, meaning that during the marriage they can keep everything separate.
Understanding the myriad ways by which Texas family law differs from that of other states is critical for Texas spouses confronting divorce. Oftentimes, people will see something played out on a TV show and assume the same principles apply to them, but that may not necessarily be the case (!). Not only does Hollywood, at times, take some creative liberties with the law, the principles being portrayed on a TV show may reflect those of a state different from your own. Never assume what you saw on TV applies to your case.