What is Community Property?

Have you ever wondered how your property is divided should you divorce? Or how your assets will distribute after you pass? Because Texas is a community property state, understanding community property principles is where you need to start making that determination.

So, what is community property? Community property is property owned jointly by you and your spouse. Conversely, separate property is the property that you own in your individual capacity. Community property includes any income you or your spouse earns, retirement or life insurance accrued during the marriage, and any income received from separate assets. Even if assets are titled in one of the spouse’s names, if the property was purchased with income earned during marriage; it is community property.

It is often easier to ask the question, “what isn’t community property?” Whatever assets you or your spouse own before marriage is each of your separate property. Additionally, once you are married, anything acquired by gift, devise, or descent will continue to be your separate property.

Be sure to keep clear records of how your property was acquired if you would like to one day be able to prove that the property is indeed your separate property. During a divorce or probate proceeding, the party wanting to claim particular property is their separate property must overcome a presumption of community property. This presumption means that without adequate proof, even property you own separately can be considered community property.

Why does it matter?

The designation of your property as community or separate property can determine how divorce, succession, and even personal injury claims will handle your assets. In divorce, community property is subject to a just and right division. On the other hand, a divorce court cannot divide separate property. Should you die, your spouse is entitled to retain one-half of all community assets despite what your Will may say to the contrary. However, if the property is separate property, you will have complete control over the asset distribution. Should your spouse have a personal injury claim won against them, all community assets are subject to satisfy the claim. However, personal injury claimants cannot touch your separate property assets to satisfy a claim they have against your spouse.

I am worried about my assets being community property. What can I do?

There are many ways that you can divorce/probate/creditor proof your assets. To begin, be sure to keep all documentation concerning when you purchased and received property, so that you can prove that property acquired before marriage was actually acquired prior to marriage. Additionally, all documentation concerning your receipt of gifts you received while you were alive or property you received through someone’s Will. For example, should your parents want to gift you a house, be sure that the deed is duly recorded and list you individually as the recipient to prove it was gifted to you alone and not to you and your spouse.

Be sure to keep separate property cash segregated in different bank accounts from community property cash. Should the two funds become mixed, it runs the risk of the separate property becoming “comingled” with the community property and thus legally indistinguishable.

If you need help making sure your seperate property remains seperate the Estate Planning and Family lawyers at Dyer & Mauro can help draft a post-marital agreement to segregate you and your spouse’s property to better protect your tomorrow.

Contact your local Mesquite and Dallas Attorneys today to see how we can assist in protecting you and your spouse’s assets.