Commingled Property in a Texas Divorce
At some point in many Texas divorces, the property division phase of the process becomes a bit slower and more complicated than the soon-to-be-ex spouses thought. Often, this is due to the need to properly account for and divide the couple’s commingled property.
In this post, we’ll talk through the concept of commingled property and provide a couple of examples to illustrate it. Hopefully, after reading this, you’ll have a better understanding of why property division is usually the second most complex part of a Texas divorce.
The Basics: Community Property
Divorcing couples in Texas quickly become familiar with the concept of community property. Essentially, the rules of community property say that most property acquired by either spouse during the marriage is considered to belong to both spouses. Whether it’s your name or your spouse’s name on the item doesn’t really matter a great deal. Most things acquired during the marriage will be part of “the community.”
However, some items remain the separate property of a particular spouse. One example is land obtained by a spouse through inheritance. Inherited items remain separate property and are not subject to division.
The community vs. separate property distinction may be easy enough to understand once it’s explained, but the issue gets more complicated by the next concept: commingled property. This is essentially property that is partly community and partly separate. Here are two examples that highlight how this divorce concept works.
- Husband Harry is a farmer, and he owns a farm he acquired before getting married. So the farm is his separate property. After he marries wife Wendy, he raises crops on the farm. Those crops are community property. He sells the crops and uses the proceeds to buy more land. This land is community property. While Harry and Wendy are married, Harry’s father dies, leaving farmland to Harry. This additional land is Harry’s separate property. By now, you can see that Harry owns some separate and some community farmland. His farmland is “commingled.” In this situation, however, dividing the property would not be very difficult because land records will show the history of the property and how and when it was transferred.
- Husband Harry opens a checking account using funds he inherited from a relative. This initial amount is his separate property. The next month, he deposits his own paychecks into the account. His paychecks are community property (money earning during marriage belong to the community). Now, his checking account is commingled. Wife Wendy withdraws funds to pay bills. The question is, what money did she withdraw: community or separate? Under Texas law, the presumption is that community funds come out first. So she has withdrawn community funds. Now, what happens if Wendy takes all the money out of the account, including Harry’s original deposit? Harry is out of luck—his separate property is gone.
You Don’t Have to Figure it Out on Your Own
Commingled property gets very confusing very quickly. It’s one reason why divorce may take longer than you thought. But you don’t have to sort out the details for yourself. Contact the Law Offices of V. Wayne Ward in Fort Worth if your marriage is coming to an end; we’ll be your guide.