Texas Divorce Financial Planning: Community Property, Spousal Maintenance & TRS Pensions

Texas is a community property state — but unlike California's strict 50/50 default, Texas courts divide marital property in a manner that is "just and right," which means a 55/45 or 60/40 split is common when one spouse earns significantly more, or when fault (adultery, cruelty) is proven. Texas spousal maintenance is among the most restrictive in the country — capped at $5,000/month or 20% of the obligor's gross income, and available only to spouses who meet a narrow eligibility test. And Texas has no state income tax, which changes every after-tax calculation in your settlement. Here's what the rules actually say and what they mean for your numbers.

Texas vs. other community property states. Texas, California, Arizona, Nevada, Washington, Idaho, Louisiana, New Mexico, and Wisconsin are community property states. But "community property state" doesn't mean the rules are identical. Texas uses a "just and right" division standard (not the California 50/50 default), Texas allows fault-based divorce that can shift the property split, and Texas spousal maintenance is far more restricted than California or Washington spousal support. The specific state matters — a lot.

1. Community property in Texas: what's in and what's out

Texas Family Code § 3.002 establishes the community property presumption: all property either spouse acquires during the marriage is community property — regardless of whose name is on the title, whose paycheck funded the purchase, or which spouse managed the account.¹

What counts as community property:

Wages, salaries, and self-employment income earned during the marriage
Retirement account contributions made from the date of marriage (the vested marital interest in a pension is proportional to years of participation during the marriage)
Business interests started or grown during the marriage — including appreciation in value attributable to either spouse's labor
Real estate purchased with marital funds, even if titled in one name
Investment accounts funded from marital income, including gains reinvested during the marriage

What stays separate property under TFC § 3.001: property owned before marriage, inheritances received at any time (even during the marriage), gifts received by only one spouse, and recovery for personal injuries — except for any compensation for lost wages earned during the marriage, which is community property.¹

The spouse claiming property is separate bears the burden of proof by clear and convincing evidence. Commingling (depositing inheritance into a joint account, for example) does not automatically convert separate to community — but it does require tracing, and Texas uses a "clear and convincing" evidentiary standard that is harder to meet than a simple preponderance.

2. "Just and right" division — Texas is NOT automatically 50/50

Texas Family Code § 7.001 directs courts to divide community property "in a manner that the court deems just and right, having due regard for the rights of each party."¹ The 50/50 presumption is a starting point, not a requirement.

Texas courts (following Murff v. Murff, 1981) weigh a non-exhaustive list of factors when deciding whether to award a disproportionate share to one spouse:²

Fault in the breakdown of the marriage (adultery or cruelty proven at trial can shift the split materially)
Disparity of earning power and income — the lower-earning spouse may receive a larger share to equalize post-divorce financial standing
Health and physical condition of each spouse
Benefits a spouse would lose as a result of the divorce (e.g., pension survivor benefits, health coverage, Social Security eligibility)
Children in the home — the parent with primary custody may receive the home or a larger share to maintain stability
Length of the marriage
Separate property each spouse brings in
Dissipation of community assets (gambling, wasting marital funds on a paramour)

What a disproportionate split means for settlement math. If one spouse earns $250,000/year and the other earns $45,000/year, a Texas court might award 55–60% of community assets to the lower-earning spouse. In a $2M estate, that's $200K–$400K more than an equal split. Whether your facts support or oppose a disproportionate award — and what specific assets go into which spouse's share — is exactly the kind of analysis a CDFA builds in advance of settlement negotiation.

3. Fault-based divorce and its financial impact

Texas is one of the few states where fault still has real financial teeth. A spouse can file for divorce on grounds of adultery, cruelty (physical or mental), abandonment, or felony conviction — and proving fault at trial can cause the court to award a disproportionate share of community assets to the innocent spouse.¹

In practice, most Texas divorces proceed on no-fault grounds (insupportability — Texas's term for irreconcilable differences). But in cases where one spouse can credibly allege and document adultery or cruelty, that allegation becomes a leverage point in settlement negotiation, even if it never goes to trial. The risk of a judge hearing the fault evidence and awarding 60/40 motivates the at-fault spouse to negotiate a more generous settlement.

Key distinction from other states: Texas still allows fault-based divorce as of 2026. Proposals to eliminate it (similar to a movement in some states) have not passed in the Texas Legislature.

4. Spousal maintenance: narrow eligibility, hard caps

Texas law does not use the word "alimony." The statute (Texas Family Code Chapter 8) calls it "spousal maintenance" — and the eligibility rules are significantly more restrictive than most states.

Eligibility requires the requesting spouse to meet one of four conditions under TFC § 8.051:³

Long marriage + inability to earn: The marriage lasted at least 10 years AND the requesting spouse lacks sufficient property to provide for minimum reasonable needs AND lacks earning capacity to provide for those needs
Domestic violence: The other spouse (or a child in the household) was convicted of, or received deferred adjudication for, family violence within two years before the divorce was filed
Physical or mental disability: The requesting spouse has a physical or mental disability that prevents self-support
Dependent child with disability: The requesting spouse is the custodian of a child of the marriage who has a physical or mental disability requiring substantial care

Note that condition 1 (the most common) requires both a 10-year marriage AND an inability to meet minimum reasonable needs. A 12-year marriage where the requesting spouse simply earns less than they used to does not automatically qualify — courts look at earning capacity, assets received in the settlement, and whether the spouse can acquire skills to become self-supporting.

Amount caps under TFC § 8.055: maintenance is limited to the lesser of:³

$5,000 per month, or
20% of the obligor's average monthly gross income

If your spouse earns $15,000/month gross, the maximum is $3,000/month (20% × $15,000). If your spouse earns $30,000/month, the ceiling is $5,000/month — not $6,000. This cap is a federal ceiling; it cannot be overridden by a court order, though spouses can agree to a higher contractual support amount in an agreed settlement under TFC § 8.059.

Duration limits under TFC § 8.054:³

Marriage length	Maximum maintenance duration
10–19 years	5 years
20–29 years	7 years
30 or more years	10 years
Disability (spouse or child)	Indefinite while the condition persists

Courts are directed to award maintenance for the shortest reasonable period that allows the receiving spouse to develop earning capacity — duration tables are a ceiling, not a default.

Post-TCJA: no federal tax deduction. For divorces finalized after December 31, 2018, spousal maintenance is neither deductible by the payer nor includable in the recipient's taxable income — TCJA § 11051 eliminated the old rules. Texas has no state income tax, so the federal treatment is the only tax treatment that matters. In a state like California, post-TCJA support costs more to the payer in after-tax terms than pre-TCJA support did. In Texas the structure is the same — the payer gets no deduction. A CDFA models the after-tax present value of the full obligation before any settlement is proposed.

5. No Texas state income tax — and what it changes

Texas has no individual state income tax. This is not a minor detail for divorce financial planning — it changes every after-tax asset comparison in the settlement.

Practical effects on your settlement:

Pre-tax 401(k) / pension comparisons: When modeling 401(k) vs. home equity vs. taxable brokerage, the only income tax drag on 401(k) withdrawals is federal. In a high-income-tax state like California or New York, state income tax adds 9–13% on top of federal rates when comparing a $500K pre-tax retirement account against other assets. In Texas, the comparison is simpler — federal tax only, which can change which asset is more valuable on an after-tax basis.
Spousal maintenance present value: Because maintenance is not deductible and Texas has no state income tax, the payer's after-tax cost equals the gross payment. In an equitable-distribution state where maintenance was historically deductible and income-taxable, the present-value calculation was more complex. Texas divorces are simpler on this dimension.
Post-divorce income rebuilding: Both spouses benefit from no state income tax as they rebuild post-divorce. For a spouse who relocates to Texas after divorce from another state, the income tax savings compound meaningfully over time — worth modeling when evaluating relocation scenarios.

6. Texas public pensions: TRS and ERS DROs

Texas has two major state pension systems that handle divorce division differently from private-employer 401(k) plans.

Teacher Retirement System of Texas (TRS):

TRS covers teachers, administrators, and other employees of Texas public schools and many higher-education institutions. TRS is a government plan — it is not subject to ERISA, so a standard QDRO cannot be used.⁴ Instead:

The court issues a Domestic Relations Order (DRO) dividing the TRS benefit
TRS reviews the DRO for administrative compliance
Since January 1, 2015, parties must use TRS's official model orders — TRS will reject non-model language, creating delays and additional legal costs
The alternate payee (non-member spouse) typically receives payment only when the TRS member retires, takes a refund, or the member dies
The TRS benefit is a defined benefit pension — the community interest is calculated using a time rule (months of credited service during the marriage ÷ total credited service at retirement)

CalSTRS vs. TRS: a key difference. Like California's CalSTRS, Texas TRS is a non-ERISA government pension that requires its own division order — not a standard QDRO. Unlike CalSTRS, TRS requires use of specific TRS model orders. Attorneys who work primarily in private-employer plan QDROs can make costly errors when drafting TRS division orders if they're unfamiliar with the TRS-specific requirements.

Employees Retirement System of Texas (ERS):

ERS covers Texas state employees (state agencies, state universities, other state entities). Unlike TRS, ERS uses a QDRO framework — parties submit a court-entered QDRO along with a certified copy of the divorce decree.⁵ ERS provides model QDRO templates. As with TRS, the alternate payee receives payment when the member retires, takes a refund of contributions, or a distribution is otherwise required.

Private-employer 401(k) plans: Standard ERISA QDROs apply — same rules as any other state. The Texas-specific complexity is limited to TRS and ERS.

7. The Texas homestead and divorce: the owelty complication

Texas has one of the strongest homestead protections in the country — Article XVI, Section 50 of the Texas Constitution protects the homestead from forced sale for most debts. In a divorce, this creates a specific complication.⁶

The problem: If the marital home is the homestead and one spouse wants to keep it by buying out the other's equity, the standard mechanism — a cash-out refinance — runs into the Texas constitutional limits on homestead liens. Texas restricts home equity loans, and a buyout refinance structured incorrectly may violate the homestead lien rules.

The solution: owelty of partition. Texas courts can award an owelty of partition — a lien against the homestead in favor of the departing spouse — as part of the divorce decree. The owelty lien is expressly permitted under the Texas Constitution as one of the limited exceptions to the homestead protection. A properly structured owelty lien lets the buying spouse refinance the home and pay off the departing spouse without violating Article XVI, Section 50.⁶

If the settlement agreement doesn't include the owelty lien language and the refinance fails, the departing spouse may be stuck on the mortgage and unable to clear their credit for a home purchase. This is one of the more common settlement-drafting mistakes in Texas divorces involving a home buyout.

8. Financial disclosure: the Inventory and Appraisement

Texas divorce courts require each party to file a sworn Inventory and Appraisement — a comprehensive list of all property (separate and community) and liabilities, with current values and characterization.⁷

The Inventory & Appraisement requires you to:

List and value every asset — real estate, vehicles, bank and investment accounts, retirement accounts, business interests, life insurance cash value, receivables, and personal property
Characterize each asset as separate property or community property (and provide the factual basis for any separate property claim)
List all liabilities, characterize them as separate or community, and note which spouse is obligated on each

Swearing to a materially false Inventory & Appraisement is perjury. If concealment is discovered after the divorce decree is signed, the defrauded spouse can return to court — Texas courts retain jurisdiction to divide community property that was omitted or fraudulently concealed from the original proceeding, even years after the decree.

In high-asset divorces, the Inventory & Appraisement is the starting point for financial analysis. A CDFA cross-checks the opposing spouse's Inventory for omitted assets, mischaracterized property, and undervalued business interests. Undisclosed deferred compensation, unvested equity, and offshore or crypto holdings are the most commonly missed items in complex Texas estates.

9. Child support: the 2025 income cap increase

Texas child support is set by statutory guidelines based on the obligor's net monthly resources. As of September 1, 2025, the monthly net income cap used to calculate guideline support was raised from $9,200 to $11,700.⁸ This means:

For obligors earning below the cap: guideline support is a straight percentage of net monthly resources (20% for 1 child, 25% for 2, 30% for 3, 35% for 4, 40% for 5)
For obligors earning above the $11,700 cap: courts must make a separate finding that additional support beyond the guideline amount is in the child's best interest
If your divorce was finalized before 2025 with a guideline support order referencing the old cap, the new cap does not automatically change your existing order — you would need to petition for modification

10. After-tax asset comparison: what Texas divorcing couples often get wrong

Because Texas has no state income tax, there's a temptation to treat asset values at face value. But the after-tax equivalency problem is just as real in Texas as anywhere else.

Example — $600K community estate:

Spouse A receives: $300K in a 401(k) (all pre-tax contributions, no Roth)
Spouse B receives: $300K in a taxable brokerage account with a $200K cost basis

On paper, this looks like a 50/50 split. It isn't:

The 401(k) is worth $300K before federal income tax. Withdrawals will be taxed as ordinary income — at 22–24% for most people in this range, the after-tax value is approximately $228K–$234K
The brokerage account has $100K of embedded long-term capital gain ($300K value − $200K basis). Under IRC § 1041, the receiving spouse takes the $200K carryover basis. The embedded gain — taxed at the 2026 15% federal LTCG rate — represents roughly $15K of latent federal tax liability. After-tax value: approximately $285K
Net inequity: Spouse B received approximately $51,000–$57,000 more in after-tax value from the same nominal split

No state income tax reduces the gap slightly compared to a California or New York divorce, but the federal divergence between pre-tax and after-tax assets remains very significant and is almost always worth modeling before the settlement is signed.

The CDFA's role in a Texas divorce

Texas-specific complexity — the "just and right" division standard and fault analysis, the strict spousal maintenance eligibility test, TRS model DRO requirements, the owelty of partition structure for a home buyout, and the Inventory & Appraisement review — layers on top of federal financial issues every divorce involves (QDRO mechanics for private plans, post-TCJA maintenance tax treatment, carryover basis traps under IRC § 1041, Social Security ex-spouse benefit planning).

A CDFA-credentialed fee-only advisor in a Texas practice models all of it: after-tax asset equivalency, the present value of spousal maintenance (short or long), TRS community-share calculation, the owelty lien structure, and a side-by-side settlement comparison before the MSA is signed. Because they're fee-only, they have no incentive to push a particular outcome — which matters when decisions are irreversible and amounts are this large.

Get matched with a Texas divorce financial advisor

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Sources

Texas Family Code Chapter 3 — Marital Property Rights and Liabilities (Texas Legislature Online). TFC § 3.001 defines separate property; TFC § 3.002 establishes the community property presumption. TFC § 7.001 (Chapter 7) governs the "just and right" division standard for community property at divorce. All provisions cited are current through the 2025 Texas legislative session.
Murff v. Murff, 615 S.W.2d 696 (Tex. 1981) — Justia. Texas Supreme Court case establishing the non-exhaustive list of factors courts consider when awarding a disproportionate share of community property under TFC § 7.001. Factors include fault, earning disparity, health, and benefits lost due to the divorce. Still the controlling authority on disproportionate division in Texas.
Texas Family Code Chapter 8 — Maintenance (Texas Legislature Online, PDF). TFC § 8.051 — eligibility criteria for spousal maintenance. TFC § 8.054 — duration limits (5/7/10 years by marriage length; indefinite for disability). TFC § 8.055 — amount cap: lesser of $5,000/month or 20% of obligor's average gross monthly income. TFC § 8.059 — contractual maintenance by agreement not subject to statutory caps. All provisions current through the 89th Texas Legislature (2025 session).
Teacher Retirement System of Texas — Divorce and Domestic Relations Orders (Official TRS). TRS is a government plan not subject to ERISA. Court-issued Domestic Relations Orders (DROs) — not QDROs — are required to divide TRS benefits. Since January 1, 2015, TRS model orders are mandatory. Alternate payee receives payment when the member retires, takes a refund, or dies. Time-rule calculation for the community property interest in the defined benefit pension.
Employees Retirement System of Texas — Divorce (Official ERS). ERS uses a QDRO framework (unlike TRS). Submission requires a certified copy of the QDRO and the divorce decree. ERS model QDRO templates are available by retirement status. Alternate payee payment begins when member retires, takes a refund, or a distribution is required by law.
Texas Constitution, Article XVI, Section 50 — Homestead (Texas Legislature Online). Establishes the constitutional homestead protection against forced sale for debt. Subsection (a)(3) expressly permits a lien for owelty of partition as one of the limited constitutional exceptions. The owelty of partition mechanism is the standard tool for enabling a buyout refinance of a Texas homestead in a divorce without violating the homestead lien restrictions.
Texas Courts — Court Forms (Office of Court Administration). Texas courts require each party in a divorce to file a sworn Inventory and Appraisement listing all separate and community property and liabilities with characterization and current value. Failure to disclose or fraudulent characterization can support post-decree relief. The court retains jurisdiction to address omitted or fraudulently concealed community property after the final decree.
Texas Family Code Chapter 154 — Child Support (Texas Legislature Online). TFC § 154.125 governs the application of child support guidelines; TFC § 154.126 addresses cases where the obligor's net resources exceed the guidelines cap. Effective September 1, 2025, the monthly net resource cap was raised from $9,200 to $11,700. Guideline percentages: 20% (1 child), 25% (2), 30% (3), 35% (4), 40% (5 or more).

Texas Family Code provisions cited are current through the 89th Texas Legislature (2025). Federal tax treatment references (TCJA § 11051, IRC §§ 1041 and 121) reflect 2026 rules verified against IRS Rev. Proc. 2025-32. TRS and ERS administrative procedures are subject to change; verify current requirements directly with each system. Values and procedures verified May 2026.