Most individuals don’t consider the difference between community property and separate property until they are facing a divorce. At Walter & Truong PLLC we educate our clients on the importance of how property is characterized in the state of Texas because Texas is one of a few  community property states. Upon divorce in Texas all community property is subject to division by a just and right manner. However, a court may not divide a person’s separate property. Therefore, understanding the definition and how property is characterized in Texas is important. 

The Texas Family Code Chapter 3 defines separate property as: 

SEPARATE PROPERTY.  A spouse’s separate property consists 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.

On the other hand, community property is defined as: 

COMMUNITY PROPERTY.  Community property consists of the property, other than separate property, acquired by either spouse during marriage.

In Texas, there is a presumption under the Texas Family Code that all property acquired during the marriage is presumed to be community property unless proven otherwise by clear and convincing evidence. 

PRESUMPTION OF COMMUNITY PROPERTY.  

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

(b)  The degree of proof necessary to establish that property is separate property is clear and convincing evidence.

Some examples of community property assets include: 

• Money, 
• Stocks, 
• Retirement accounts (such as 401(k)s, IRAs, etc.) 
• Real estate, and 
• Cars. 

During a divorce if one spouse is claiming that a particular asset should be characterized as separate property, they have the burden of proof. This can typically be proven by showing when the property was received by them through a recorded title (before marriage), or that the asset was a gift or inheritance (through a properly probated will). 

One of the many common mistakes that are made is that if an asset is titled in your name separately that it belongs solely to you. This is oftentimes incorrectly assumed because the Texas Family Code presumes that any property possessed by the parties during or on the dissolution of marriage is community property. As such, a court may conduct its due diligence and determine that an asset titled in one party’s name is in fact characterized as community property. It is not the end of the world and an experienced attorney with a background in real estate and family law can assist you. However, we believe that it is best to take precautions and be proactive rather than reactive. So, the best plan of action is to discuss a prenuptial agreement with your significant other before tying the knot. Read more about prenuptial agreements.

Regardless of where you are in the process of your divorce, contact an attorney at our office to seek legal advice in your matter. We have experienced attorneys in real estate and family law who can help guide you through your case. 

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