Legal Question in Family Law in Texas

Separate Property in Divorce

I am getting divorced in a community property state (TX)

I have own stock in a privately held

corporation prior to my marriage.

The corporate charter of this corporation was revoked and then reinstated at some point after the marriage.

Does the revoked/reinstated action

affect the date of stock ownership for the purpose of establishing separate property?

Asked on 2/04/08, 11:31 pm

1 Answer from Attorneys

Arthur Bashor Arthur N. (Art) Bashor, Attorney at Law

Re: Separate Property in Divorce

It depends on what you mean by revocation and reinstatement. There are different scenarios that could possibly lead to different outcomes as to the community property vs. separate property issue.

You can argue that the stock is separate property based on the inception of title rule that prescribes that ownership is characterized based upon when the asset was first acquired. Since you purchased or established title to the stock prior to marriage it is separate property.

Your spouse may argue that the property became commingled into the marital estate when you revoked/reinstated the corporation and the stock therefore became transmuted into community property.

You could then still establish the property as separate by tracing the shares in the "new" corporation back to the "old" corporation.

I think you will prevail on this, but make sure you instruct your attorney about what you wish to accomplish and bring him/her as much documentation as you have.

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Answered on 2/04/08, 11:50 pm

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