Yes, it can be, if the owner of the property fails to meet the burden of proving by clear and convincing evidence that the property before the court on the date of divorce is the same property owned by one of the parties prior to marriage. It is common for people to believe that if they had money in a bank account or certificate of deposit, etc. prior to marriage – let’s say $10,000 – that he or she is entitled to receive that amount back as separate property at time of divorce. If in fact that same $10,000 remains on deposit in an account today and you can prove that, then that property cannot be divided on divorce. The trouble is, of course, that people don’t realize they might be getting divorced someday and have to keep all the records they might need to prove a separate property claim years down the road.
Because all property existing at the date of divorce is presumed by law to be community property, there is a strict burden of proof required to segregate separate property out of the community pie. Over the years a large body of case law has evolved addressing the multitude of fact situations that have arisen in actual divorces in Texas. Can you take some of your $10,000 to spend during an emergency and then pay it back later from community property and still claim the whole $10,000 as your separate property? No. Can you claim the income on your $10,000 as a separate property? No. Income from separate property is deemed to be community property. Can you move the money from one account to another and still preserve your separate property claim? Yes, if you have the paperwork to prove it. Can you buy stock with your $10,000 and then claim the stock as your separate property? Yes, if you have the paperwork to prove it was that exact money used to purchase the stock. What if the $10,000 was placed into a joint account? You can still make your separate property claim if you have the paperwork showing the movement of the money from your premarital account into a joint account, and can overcome the presumption that you intended to gift your spouse an interest in the money.
In Texas, only property owned prior to marriage or acquired during marriage by gift or inheritance is separate property. Everything else is community property. There are many, many ways you can even without a premarital agreement. Give us a call to discuss this.