Saturday, August 26, 2006

Property I: My Stuff, Your Stuff, Our Stuff

One of the and most contentious issues in many divorces is how the parties will separate the assets they have accumulated during the marriage. With this entry, we'll begin a long section on the topic of property division in divorce.

It is natural for a person going through the dramatic (and sometimes tragic) experience of divorce to feel embattled. When a person is in "battle mode" they tend to put on their emotional armor. The helmet they put on may feel protective, but it actually leaves them more vulnerable because it blocks the field of vision. Mainly, they can see only what is immediately in front of them- that is, the hard fought battle of a temporary hearing or mediation. They tend not to have a clear view of what lies ahead. Without this clear view, they cannot see that the real victory lies well down the road, not in the minor skirmishes. Meanwhile, they spend all their energy fighting only what is in front of their faces.

It is vitally important that when a person is embattled in a divorce to keep in mind that although they have every right to fight for a fair division of the property, that in the end, it is just stuff. One should not sacrifice one's peace of mind and sanity over material things. In addition, there are so many tales of married couples who exhaust all their resources fighting a legal battle over worthless trinkets that the story has almost become a cliche. Remember that movie, the War of the Roses? In it, a divorcing couple fought so much over who would get the marital home, that they invested their whole lives and fortunes in a pitched battle that had an ironic and tragic end. It may seem like that movie was a farcical exaggeration, but the dirty truth is, is that this Hollywood made fiction is not always that far from many people's actual experience. You have to be smart when it comes to your finances, and you have to know when to cut your losses and move on.

One of the most important things to know about property in Texas divorces is the definition of the terms community property and separate property. If you are married and are seeking a divorce in Texas, then everything you have is considered community property no matter whose "name it is in". This is what we lawyers call a "rebuttable presumption", meaning that the court assumes everything is community property, unless you can convince the court that it is your own separate property.

TFC 3.001, carves out the legal definition of separate property. A spouse's separate property is- (1) Property owned or claimed by the spouse before marriage; (2) Property acquired by the spouse during marriage by gift, devise or descent; and (3) The recovery for personal injuries sustained by the spouse during the marriage, except recovery for loss of earning capacity during marriage.

In addition, the following are also considered separate property: (1) Gifts between spouses (but you must meet very specific requirements to constitute a "gift"); (2) Written property agreements between spouses (by virtual of a 1999 constitutional amendment- but there must be an agreement in writing); and (3) Property obtained with the funds from separate property (a complex process called "tracing" must be used to prove this).

Again, these are the exceptions to the rule that everything obtained during the marriage is community. To call a piece of property one party's separate requires strict proof which must be properly presented to the court.

As we begin to explore property division, we will get into more detail about what constitutes sufficient proof and the certain rules such as "the community out first" rule, and the "inception of title" rule that govern the determination of property division. For now, it is enough to learn and remember that property battles should not be fought with our heads down, blindly hacking away at small issues. Our visors should be up and our eyes on the the whole field, and you need to be wise enough to know when it is time to boldly charge forward, and when it is time to cut your losses and retreat. You need to determine early on how much financial resource and emotional energy you want to spend on a fight over property, and have the courage and discipline to expend no more than what makes sense. Remember, stuff can be replaced. Your sanity and peace of mind are much more valuable.