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What if separate and community property become commingled in Texas?

Sometimes, in the midst of a contentious divorce, one party will try to misinform the other about how marital property is divided. For example, maybe the husband tells the wife that an inheritance received by only the wife is nonetheless subject to property division. It's in such a case that the question of commingled assets may arise. 

Texas is one of nine states that divide marital property based on the principles of community property and separate property. Community property is divisible in divorce; separate property is generally not. Separate property remains as such as long as it isn't commingled with community property. Examples of separate property include the following:

  • Inheritances received by one spouse
  • Gifts one spouse receives from a third-party
  • Payments received by one spouse through a personal injury settlement
  • Assets or debts acquired by one spouse prior to the marriage

You can also use a prenuptial agreement or a postnuptial agreement to name certain assets as separate.

Community property consists of assets and debts acquired during the marriage, and Texas law calls for community property to be divided equally. However, matters can become complicated when complex assets and commingled property are involved.

For example, if you alone received a monetary inheritance through a relative's will, then the money you receive is separate property. The money can be commingled with community property, though, if you use the cash to renovate the home you share with your spouse. Likewise, if you put the money in a bank account that both of you use, then the money may be commingled with community assets and thus divisible in the divorce settlement.

To achieve a fair division of property in a contentious, high net worth divorce, it may be necessary to carefully trace separate property back to its origin. Expert help from appraisers and forensic accountants may be necessary to achieve a fair and just settlement.

Source: Forbes, "Divorcing Women: Here's How to Protect Your Inheritances and Gifts," Jeff Landers, Aug. 19, 2014

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