- A corporation that owns a building and a bank account might be community property owned by both spouses, but the building and account are the property of the corporation. In a divorce, the court can divide or award the ownership interest in the corporation, but the court cannot award the building to the husband and the bank account to the wife.
Bravo v. Bravo, No. 05-24-00419-Cv (Tex. App. – Dallas 7/22/2025)(mem. op.) is a 2025 case that held:
While a spouse’s ownership interest in a corporation can be characterized as either separate or community property, corporate assets and liabilities are owned by the corporation and, absent a finding of alter ego, are not part of the community estate. In re Marriage of Collier, 419 S.W.3d 390, 403 (Tex. App.-Amarillo 2011, pet. denied) (citing Thomas v. Thomas, 738 S.W.2d 342, 343 (Tex. App.-Houston [1st Dist.] 1987, writ denied) (citing McKnight v. McKnight, 543 S.W.2d 863, 868 (Tex. 1976)).
Similarly, a limited-liability company is a separate legal entity, and property owned by such a company is neither the community property nor the separate property of its members. Touponse v. Touponse, No. 02-20-00285-CV, 2021 WL 2753504, at *5 (Tex. App.-Fort Worth July 1, 2021, no pet.) (mem. op.) (citations omitted). The business property that is subject to division is the interest in the limited-liability company itself, not the company’s specific assets. Id. (citations omitted). A trial court is authorized to divide only the parties’ community estate. Id.
Application
Here, the trial court included in its property division the assets of three corporate entities-Segundo Rentals, Inc., AB Logistics, LLC, and MJB Rentals, LLC. The court made an express finding that Segundo Rentals is 100% owned by the community estate. The court also characterized thirteen real properties and a bank account held by Segundo Rentals as community property and decreed these assets would be divided between Alberto and Maria. The court made no finding as to the ownership of AB Logistics and MJB Rentals; however, it characterized two bank accounts owned by these entities as community property and ordered they be divided between the spouses. We conclude the trial court abused its discretion by characterizing the corporate assets as community property and simply dividing them between Maria and Alberto.
Our sister court encountered a similar situation in Touponse. 2021 WL 2753504, at *5. There, several limited-liability companies were formed during the parties’ marriage. Id. at *4. There was little dispute the companies themselves were a part of the community estate. Id. at *3 n.5. The LLCs owned two real properties. Id. at *4. In its findings and conclusions, the trial court characterized the two real properties as part of the community estate. Id.
The court of appeals held this characterization was error. Id. at *5. “A limited-liability company is a separate legal entity, and property owned by such a company is neither the community property nor the separate property of its members.” Id. Thus, the trial court clearly abused its discretion by characterizing the real properties owned by the LLCs as part of the community estate and, thereafter, awarding them to the husband as his separate property. Id.
Here, there seems to be little dispute that Segundo Rentals was formed during the marriage and is therefore, community property. However, the trial court could not simply characterize its assets as community property and divide them between the spouses. The property that is subject to division is the interest in Segundo Rentals itself, not the company’s specific assets. Touponse. 2021 WL 2753504, at *5. Similarly, even if the trial court had found that AB Logistics and MJB Rentals were community property, the court could not simply split its assets between Alberto and Maria. See id.; In re Marriage of Collier, 419 S.W.3d at 403; Thomas, 738 S.W.2d at 343; see also McKnight, 543 S.W.2d at 868 (trial court erred in awarding wife specific partnership property, but it would have been proper to have given the wife an interest in the partnership, under former Texas Uniform Partnership Act, Texas Revised Civil Statutes Annotated article 6132b).