Texas Is a Community Property State (One Of Nine)

Community property in matrimonial law refers to the assets and liabilities accrued during a marriage. It includes all income, acquisitions, and debts that either spouse has acquired during a marriage. But not all states are the same when it comes to dividing property when a marriage comes to an end.

Texas is one of the nine states in the United States that has adopted community property law. Under the Texas matrimonial system, all common property will be shared in a right and just manner between both spouses. Separate property will not be divided if traceable, or a valid will is in place.

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Texas State And Community Property

The Texas matrimonial system acknowledges two types of property: community and separate. Texas and eight other states have adopted the Law of Castile when dealing with the division or allocation of property in legal or common-law marriages within their state.

Most assets and liabilities acquired in a marriage in Texas are considered community property. This contrasts common-law states where “what’s yours is yours” and “what’s mine is mine.”

A Quick History Of Community Property In Texas

Before 1913 and from 1923 to 1968 (with some exceptions), community property had to be managed by the husband. In 1967, change came about where both spouses controlled their earnings. However, if the other spouse was allowed control over a portion or aspect of their spouse’s earnings, it became community property.

From 1980, a spouse’s individual property was considered separate (i.e., not community property) if acquired before marriage. Separate property remains so unless it becomes commingled, transmuted, or transferred into common property.

Since 1987, spouses have been allowed to agree in writing as to how they would like their property to be allocated in the event of divorce or death.

The Nine Community Property States In The United States

Texas is one of nine community property or “equitable distribution” states in the United States. The others are:

  • Arizona,
  • California,
  • Idaho,
  • Louisiana,
  • Nevada,
  • New Mexico,
  • Washington, and
  • Wisconsin.

This means these states deal with property (assets and liabilities) differently than the other “common law” states. Their laws regarding community property are stringent, so in the event of the death or divorce of a spouse, a lot of evidence is required to prove that property is “separate.”

It is possible to avoid community property in a marriage in Texas. To do so, you would need a prenuptial or postnuptial contract saying that you and your spouse wish to keep earnings and acquisitions separate during the marriage.

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Defining Community Vs. Separate Property In Texas

Community property can also be called marital property. Marital property includes assets and debts accrued during the marriage. Separate property is sometimes called non-marital property as they are owned by one spouse only.

The terms community property and separate property are used more in the nine “equitable distribution” states, including Texas. Marital and non-marital property is used more in the other “common law” states.

The following are examples of community property:

  • “Commingled” property (separate property that has become inextricably linked with community property),
  • “Transmuted” separate property funds used to purchase a community property,
  • Items or properties bought with money earned during the marriage,
  • Money earned by either spouse during their marriage, and
  • Non-marital property that was transferred into the community property.

The table below gives more examples of the differences between what would be considered community or separate property.

ExampleType of PropertyReason
An antique cupboard your spouse inherited during the marriageSeparate property (belonging to spouse)If a spouse inherits property alone, it is their separate property.
An apartment you own, which you bought before marriageSeparate property belonging to youProperty acquired and owned before marriage is that person’s separate property.
Your inheritance money which you put into a combined checking account early in the marriage.Community propertyUnless excessive proof is presented, this money will probably be considered community property as it was blended into community property.
A car you bought during marriage with your money, in your name.Community propertyThe car was bought with community property income.
A home you bought during the marriage, with both your names on the title deed.Community propertyThe house was bought with community property income.
A bicycle you received as a giftSeparate propertyA gift given to a spouse is that spouse’s separate property.
Table 1: Examples of what would be considered community property or separate property in Texas

Community And Separate Property And Divorce In Texas

If you live in Texas and are considering divorcing your spouse, it’s a good idea to understand the Texas Family Code (TFC). The TFC will determine the classification of your assets and debts and how they will be divided in a divorce proceeding and settlement.

A court will only divide the community or marital property in the event of the divorce or death of a spouse. When they do this, they do so in a “just and right” manner for both spouses. If the community property and separate property have become permanently entwined or commingled, the court might attempt to trace the portions of each before dividing it.

Community Property And Divorce In Texas

Under this law, community property includes assets and debts acquired by either spouse during the marriage. It does, however, exclude separate property. This means that, by default, both partners will be entitled to half (an equitable share) of the community property assets. Each spouse will also be held responsible for half of the community property liabilities (debts) in the case of divorce.

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Without a prenuptial or postnuptial agreement stating otherwise, a divorce in Texas will default to community property. If the equitable split of assets and liabilities doesn’t suit you, you must challenge the state law in court with “clear and convincing evidence” to back you up. The proof you need will have to be excessive – a “preponderance of evidence.”

If you cannot supply sufficient evidence of separate property, you can expect it to be treated as community property during divorce proceedings. As such, it is an excellent idea to have a prenuptial or postnuptial agreement drawn up, despite not seeming too romantic at the time.

For example, these contracts protect you from taking on half of your spouse’s community property debt in the event of a divorce. They can also save you if your spouse divorces you to “earn” half of your assets.

Separate Property And Divorce In Texas

According to the Texas Family Code, separate property is defined as including:

  • Property, assets, or liabilities owned by either spouse before the date of marriage,
  • A third-party gift or inheritance to one of the spouses during the marriage, and
  • Compensation from an injury claim during the marriage.

To be classified as separate property, you would have to prove the asset (or liability) was acquired outside of the marriage or the state of Texas. In most instances, personal gifts would be classified as separate property, even if received during the marriage. Gifts listed as separate property would need to be proven as “personal” gifts given to one spouse only.

The court might request excessive proof if there is contention surrounding personal property. Otherwise, they will see it as community property.

Community And Separate Property And Death Of A Spouse

Texas deals with marital property differently from the “common law” states. When a spouse passes, half of the community property goes straight to the surviving spouse unless a valid will states otherwise.

When referring to separate property in inheritance claims, it is classified as personal or real property. Personal property is not fixed to the ground (e.g., a vehicle), whereas real property is fixed to the ground, for example, a house.

Separate property owned by the deceased spouse can be inherited by anyone the deceased specified in their will; it does not always go to the surviving spouse. For example, family heirlooms can be passed between generations in this manner. Also, the laws around real property will differ depending on if there are surviving children or parents of the deceased.

To avoid a spouse potentially losing real property when the other spouse dies, they should ensure the property title is listed as “a community property with the right of survivorship.” This way, there will be no probate court proceedings when a spouse dies.

In common law states, if a spouse dies, they can leave their separate or non-marital property to whomever they choose. However, most states have an exception for the partners of deceased spouses whereby they can claim up to one-half of the deceased spouse’s estate, despite what their will states.

Community Property In Texas FAQs

How Do Courts Divide A Business That Is Community Property?

A divorcing couple would need to hire business appraisers and public accountants to determine the value of the business. Much of the business’ value will be based on the intangible nature of “goodwill.” Based on the reports the appraisers and accountants give, the courts will judge how the business should be split.

Is Alimony A Part Of Community Property?

Alimony is seen as separate from community property in Texas. Therefore, spousal maintenance will only be paid under certain circumstances. These can include marital violence or the disability of a spouse or child.

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