Community Property

Texas is one of a handful of states that recognizes community property in marriage.  Property owned by married persons is either community property or separate property.

A.      Definitions

1.         Separate Property consists of:  Property owned by a spouse before the marriage;  Property acquired by one spouse during the marriage by gift, devise, or descent; and. Proceeds recovered in a lawsuit for personal injuries sustained by one spouse.

2.         Community Property consists of:  Everything acquired during marriage that is not separate property.  For example, a spouse’s earnings are community property.

B.      Tracing separate and community

3.         Community property belongs jointly to husband and wife; each spouse controls only his or her undivided one half.  Separate property, on the other hand, belongs exclusively to one spouse.  One spouse’s creditors generally cannot reach the other spouse’s separate property, but they may be able to reach community property.

The name on the deed or certificate of title does not matter.  What matters is whether the property was acquired during marriage.

4.         At the dissolution of a marriage (death or divorce), all property on hand is presumed to be community property, absent clear and convincing evidence to the contrary.  If separate property has been “commingled” with community property, the community acquires a claim on the separate property.

5.         To keep separate property separate, you must segregate it from community property and keep clear records of its ownership.  In some situations, recording a schedule of a spouse’s separate property in the county’s deed records is appropriate.

For example, when a spouse makes mortgage payments on a separate property house from his earnings, then the community “estate” owns a claim against the separate “estate.”

6.         Rents, revenue, and income earned from separate property are community property.  However, the proceeds from the sale of separate property are separate property, provided they are tracked and not commingled.

7.         A couple may use a Marital Property Agreement to convert community property to separate property or vice versa.  Separate property created under such an agreement has the same characteristics as other separate property, so income derived from this property would be community property (and the proceeds from the sale of this property would be separate property) unless the agreement states otherwise.

See Texas Family Code § 3.001 et seq.

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