The concept of community property originated with Spanish civil law and came to Texas via Mexico. Today, Texas is one of only nine community property states in the country. The term community property applies to the concept of combining separate assets, typically through marriage. The Texas Constitution and Texas Family Code provide definitions and procedures to determine how property should be classified and divided.
Community Property
According to Texas Family Code § 3.002, “Community property consists of the property, other than separate property, acquired by either spouse during marriage.” Houses, cars, furniture, and other purchases made after marriage fall into the category of community property. Surprising to some is that even purchases paid for and used exclusively by one spouse usually still qualify as community property if those purchases are made after marriage. Also sometimes surprising is that the money earned from one spouse’s separate property during the marriage, such as accrued interest and cash dividends, is classified as community property. The presumption is that all property owned by either or both spouses is community property, unless proven otherwise.
Separate Property
Texas Family Code § 3.001 defines separate property as “(1) property owned or claimed by a spouse before marriage; (2) property acquired during marriage by gift, devise, or descent; and (3) recovery for personal injuries sustained during marriage except loss of earning capacity recovery.” A party may claim property as separate if that party owned the property prior to marriage. If property is gifted to or inherited by one of the spouses, it may be separate property; however, ample proof must be provided that these assets are not part of a transaction but instead have been freely given to the party. Compensation for personal injury is also separate property. A party may claim that an insurance settlement from a car accident is separate, for example. The party claiming separate property must provide “clear and convincing evidence” in order for property acquired after marriage to be classified as separate property. Texas Family Code § 3.003.
Protecting assets from creditors and determining the rights to property in the probate process often hinges on the proper classification of the property as separate or community. In difficult situations, working with an experienced probate attorney will ensure a knowledgeable, level-headed approach, leading to the best possible outcome for the client.
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