In a typical initial divorce consultation, when the conversation gets around to the division of property, I find myself saying, “Well, now, these are the things that could possibly happen if you’re in front of a judge, but if you come to an agreement, you can pretty much do anything you want.”
That’s where I think that the collaborative divorce process gives us so many more creative options of what to do with their property. To begin that discussion, let’s first talk about:
What constitutes marital property versus separate property?
The presumption is that all property on hand at the time of divorce is community property. If one of the parties wants to claim something as separate property, that party has the burden of proving the separate character of that property. Items that can be considered separate property include anything that a person owned prior to marriage or anything that they received during the marriage, either by gift (and that includes gifts from one spouse to another) or inheritance.
The subject of separate property often arises regarding an engagement ring, a wedding ring, or other jewelry, which one party believes was a gift from the other party. If that property can be proven to be a gift, inheritance or something that was owned prior to the marriage, then those items are considered separate, and “off the table,” so to speak. Property than can be proven to be separate will not be part of the community property division. Sometimes property can be a mixture of community and separate property depending on the source of the funds used to acquire such property.
How will a court divide the community property?
The court’s authority in a divorce is limited to dividing the community property, which are the assets, and liabilities, that were accumulated during the marriage. The Family Code is the statute passed by the Texas legislature that controls the division of property in Texas divorces. The Family Code directs the court to divide the marital property in a manner that the court deems “just and right, having due regard for the rights of each party and any children of the marriage.” Many people come into a case assuming that “just and right” means a 50/50 division, but that is an incorrect assumption. The courts have the discretion to determine what is just and right so long as it is not so disproportionate that it would be considered “abuse of discretion” by an appellate court.
While it is commonly thought that “just and right” means a 50/50 division, there are factors that a court can consider to deviate from a 50/50 division. For example, the court can give one person more than 50% of the community estate if certain fault grounds or justifications for a disproportionate division are proven. The most common factors courts consider in a disproportionate division are fault in the breakup of the marriage, disparity of earning power, or if one party has a significant separate estate that is not part of the marital property to be divided.
Many judges have a range of a disproportionate division with which they feel comfortable, but to have the court consider a disproportionate division, evidence must be presented to the court as to why a disproportionate division is justified by the situation, as opposed to closer to a 50-50 division.
Property Division in a Collaborative Divorce Compared to a Litigated Divorce
In a collaborative divorce case, clients sometimes say, “Yeah, I had some separate property, but I don’t even want to consider it. Just throw it all into the pot, and let’s divide all of it as if it were all community.” Or the clients will come up with creative ways to divide the property between the spouses other than what a court might decide taking into account what types of assets are most beneficial for each party to have.
A lot of times, if you’re in front of the judge, the judge is going to divide each category in half rather than having the time to really consider what each category’s importance is to each client’s needs.
Whereas, in a collaborative case, you are really are only limited by the imagination of the clients, in terms of how they want to divide things up. For example, if a wife is returning to school and will have many years to accumulate retirement herself but needs more cash flow than retirement at the time of the divorce, the couple might decide that it would be in her interest to receive monthly payments from the husband and less of the deferred payments that will come at retirement age.
One of the core differences between the collaborative process and a litigated case is who makes the decisions about how the property is ultimately divided. If a case goes to court, the judge decides how to divide the couple’s property. If the case is handled in the collaborative process, the clients are the ones who decide how their property will be divided. As experienced lawyers, we can make an educated guess as to how a court might divide something, but certainly, we don’t have a crystal ball, so one party may end up with something that they really didn’t want.
There was once a judge in Denton County who gave each party what he knew they didn’t want so that they would be motivated to go back to the negotiation table and settle their case without his intervention. This demonstrates that you never know what judges are going to do. Clients usually know better what they need than a judge who knows very little about them or their situation, and often has a limited time to hear each side of their story.
Talk to an Experienced Attorney
Every case is fact-specific, especially the elements that are necessary to establish separate property claims. Clients are best served by sitting down with a family law attorney who has experience, particularly experience in front of the judges in the county where their divorce is or will be filed. An experienced attorney can give the client a realistic assessment of what the division might look like, whether they leave it up to a court to decide or they work it out through the collaborative divorce process or mediation.