Community Property Issues in Texas Divorces - Economic Contribution

This is the 3rd installment of a series of posts discussing certain special situations which often occur in Texas divorces.  Previously, I talked about the issue of reimbursement, which is a claim by one of the marital estates (either the community estate or the separate estate of one of the spouses) against another marital estate.  That issue usually involves a claim by the community against one spouse's separate estate brought about when community income was used to pay off unsecured debt that one spouse had before the marriage.  Your Texas divorce lawyer should be able to explain these and other issues to you in detail.

The next special situation involving separate property/debt is an issue called "economic contribution."  Economic contribution is similar to reimbursement, but has some very important differences.  "Economic contribution" claims most commonly involve the situation where community income is sued to pay the mortgage note on a residence or other real estate which then appreciates in value after the date of the marriage.  The formula is very complicated, and in fact was set out in the Texas Family Code with an error in the formula, which was only corrected in the most recent legislative session.  The general principal is that any appreciation in value of a spouse's separate property should be considered partially community property, at least to the extent that the debt on the property was paid down during the marriage, and taking into consideration community property money used to make improvements on the property.

Any Texas divorce attorney should be thoroughly familiar with reimbursement and economic contribution issues, but you'd be surprised at how many Texas divorce attorneys misunderstand these principals.  If you are involved in a divorce and either you or your spouse owned property before you got married, or had debt before you got married, be sure your Texas divorce lawyer is thoroughly versed in the nuances of these special issues.

J. Michael Clay is a Texas attorney/lawyer licensed to practice law in all Texas state courts.  He is also licensed to practice law in federal courts in the Western District of Texas.  His practice focuses on family-law issues in Texas, including property division issues in divorce, child support, child custody, enforcement, modification, and adoption.