The short answer is: However you and your spouse can agree to handle it.
There is a much longer answer, but before you get it, you need to make sure that you understand what separate property is.
Under Texas law, the only property that is separate property is:
- Property owned before marriage;
- Property acquired by gift;
- Property acquired by inheritance;
- Property acquired based upon certain elements of personal injury claims;
- Property designated as such by a Prenuptial or Post-Marital Agreement;
- Income from Separate Property in certain limited situations; and
- Any property directly traceable to any of the other categories.
That’s the list.
As you can see, there is nothing there about whose name the property is in, whose name is on the account, whether one person has always thought of it as “theirs,” or any other commonly held misconception about what is and isn’t separate property.
More importantly, when a couple is divorcing, everything they own is “presumed” to be community property. A presumption in the law is a big thing. It means that unless someone proves to the contrary, that’s the way it is.
So, if you believe that some of your property is your separate property, the burden is on you to prove it — if you are in court.
How Is Property Handled Collaboratively?
In Collaborative Divorce, you and your spouse are working on an agreement on how to resolve all of the issues in the case, including how to divide your property.
Although a court cannot take away someone’s separate property in a divorce without their permission, in Collaborative Divorce, you and your spouse can agree on whatever you think is best.
In a Collaborative case, both spouses are asked to identify things that they believe are their separate property. The Financial Professional and your attorney are there to help you determine what is and isn’t your separate property under the law and the strength of your proof, should you ever need to prove it. From there, the spouses are asked how they would like to deal with the separate property that has been identified.
Some divorcing couples agree to recognize each other’s claimed property without any proof other than the statement of the spouse. Others ask that the spouse claiming the separate property produce proof, such as bank statements, closing statements, etc.
Some take the position that they won’t recognize the other person’s separate property — meaning allow the other spouse to have that property in the division without any quid pro quo — regardless of the amount of proof produced.
In Collaborative Divorce, you have the right to take any position you want to, no matter how unreasonable the other side may believe it to be. But, since the entire goal of the collaborative process is to come to an agreement, taking any position that is a deal-breaker for the other side may cause your case to fail eventually, and you will end up back in the litigation model.
So, now you have the basics. In a Collaborative Divorce, separate property is dealt with in whatever manner you and your spouse agree to handle it. To go beyond the basics, talk to an experienced attorney that can give you a more detailed explanation and help you understand how the law applies to your situation.