When a court divides property in a Texas divorce, it presumes all property possessed by either spouse during the marriage or upon the divorce is community property. Community property is all property acquired by other spouse during the marriage, other than separate property. Separate property is either property owned or claimed by the spouse before the marriage or acquired by one spouse during the marriage by gift, devise, or descent. Personal injury recoveries are separate property, but the community estate may recover for medical expenses , lost earning capacity, and other expenses the community estate incurred due to the injury. The spouse asserting that the property is separate has the burden of showing which part of the settlement is separate property. Language in a settlement agreement identifying the basis for the payment may displace the presumption of community property and create a new presumption that the funds are separate property. In such cases, the spouse claiming the property is community property must provide evidence to rebut the presumption that it is separate.
A husband recently challenged the trial court’s property division, partly because it denied his reimbursement claim related to funds from a settlement. He had settled a discrimination claim against his employer during the marriage. The settlement included mental anguish, pain and suffering, and physical injuries, but did not include back pay or front pay. He agreed to resign as part of the settlement. He deposited the funds into a savings account.
Funds from the savings account were used to make a down payment on the couple’s home, the monthly mortgage, and the final payment. The mortgage was in the husband’s name, but the deed was in both names.