Texas Community Property

Genta Hataoka
Attorney and Counselor at Law
Investment Analyst
Law Office of Walter Wm. Hofheinz
© 1999 Genta Hataoka

 

I. Intro.

I hear the comment "Property of husband and wife are half and half" often.

1. Divorce Case
2. A spouse dies leaving surviving spouse

I could not explain fully without mentioning community property system. Please note that the following information is extremely general, and that a lawyer should be consulted with respect to any particular factual situation.

II. Classification *This is a Texas Rule!

A. Separate property and community property

Question to ask: When and How was the property acquired?

1. Define: "community property is all property except separate property"

a. Community property presumption:

Property possessed by either spouse during or on dissolution of marriage is presumed to be community property.

b. Separate property: Inception of Title *Texas rule, different from California.

A spouse's separate property consist of

1. The property owned or claimed by the spouse before marriage;
2. The property acquired by the spouse during marriage by gift, devise, or descent; and
3. The recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage.
4. Property transferred to a spouse by a partition or exchange agreement becomes his separate property.

c. Agreement between spouses change community property to separate property, and vice versa.

B. Personal and Real property

• Real Property: Land, and generally whatever erected or growing upon or affixed to land.
• Personal Property: All property other than real estate; as goods, chattels, money, notes, bonds, stocks chooses in action generally, including intangible property.

C. Additional Considerations

Question to ask: Where and how was the asset acquired?

1. Jurisdiction

a. What happens when a couple moved from common law jurisdiction?

• Title governs on death: separate property
• Rule of characterization governs on divorce (quasi-community)

b. What happens when a couple moves to common law jurisdiction and purchase a house?

• Rule of characterization govern
• Title governs if inconsistent with regular characterization

III. Will or Intestate?

A. Probate or non-probate?

Non-probate property includes the following:

• Contractual right to payment - ex: Insurance
• Transfers by operation of law - ex: joint tenancy with right of survivorship
• Property held in trust

A decedent can dispose of his or her half of the community, and all of his or her separate property under a valid will.

B. Texas law of descent and distribution

If there is no valid will, then property passes under descent and distribution, sections 38 and 45 of the Probate Code. On death, one-half of the community property remains with surviving spouse, and the other one-half of the community property passes by descent and distribution.

All separate personal property passes one-third to the decedent's surviving spouse, and two-thirds to the decedent's descendants. If there are no surviving spouse or descendants, then to other family members.

Who receives community property depends on whether all the children of the decedent are also the children of the surviving spouse. If so, the surviving spouse receives the community property. If not, then all of the decedent's one-half of the community passes to his or her descendants, or if there are no descendants, to other family members.

IV. Divorce

A. Separate property or community property?

Each spouse is entitled to his separate property, but the community property is divided by the court's just and right division between the spouses.

B. Just and Right Division / Court's decision

Trial court may divide community estate as it deems "just and right." Unequal division of community property can be made in cases where the trial judge deems this appropriate. In most courts in Texas, this is rare absent unusual justifying circumstances, usually there is a 50-50 split after satisfaction of community liabilities.

C. Agreement between the spouse

Spouses may agree to certain treatment of their property in a premarital or postmarital property agreement.