As a Houston estate planning attorney, I often get questions concerning Texas community property laws and how they affect estate planning in Texas. There are currently nine community property states, and Texas is one of those states. Community property laws affect the nature of property ownership between spouses during marriage. This article will address a few of the basic tenets of community property law in Texas. The import of community property is that if a piece of property is characterized as community property, it is owned one-half by each spouse.
What is community property? Generally speaking, community property is any property that is acquired by a couple during marriage. Any property that was acquired by either spouse prior to marriage is the separate property of the spouse who acquired it. Any income earned by either spouse during the marriage is community property. In addition, any income earned with respect to the separate property of one spouse is community property. There are a few exceptions to the rule that property acquired after marriage is community property. For instance, property inherited by a person or gifted to a person is that person’s separate property and his or her spouse has no interest in that property.
Texas follows the “inception of title” doctrine, which means that the character of property as community or separate is determined at the time of its acquisition. As an example, if a couple buys a home after they become married, the home is community property. On the other hand, if a couple gets married and moves into a home that was purchased by one the spouses prior to the marriage, the home remains the separate property of that spouse. However, if community funds are used to pay for the mortgage or other improvements on the home, the non-owner spouse may have the right to be reimbursed for a portion of that money in the event of divorce or death of the spouse who owns the property.
Can the nature of community property be changed by agreement? It is important to note that the discussion above deals with the default rules for community property, and these can be altered among a married couple by agreement. For instance, it is common for individuals with prior marriages to enter into a prenuptial agreement prior to becoming married. This type of agreement allows the husband and wife to determine what property will become community property and what property will remain separate property during the marriage. It also allows the individuals to list what property they currently own (which will remain separate property after the marriage) so that there is no confusion in the event of a later divorce or death of one of the spouses.