What You Should Know About Separate vs Community Property in Texas

In Texas, a married couple’s property is separated into community and separate property. In the instance of divorce, this distinction is important to determine which spouse keeps which properties. Separate property belongs to one spouse and is not divided between spouses in a divorce, while community property is considered to belong to the married couple, and may be divided in divorce.

What is Separate Property?

A spouse’s separate property consists of:

  • Property owned or claimed by the spouse before marriage;
  • Property acquired by the spouse during the marriage by gift or by inheritance; and
  • The recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during the marriage.

What is Community Property?

Community property is the property, other than separate property, acquired by either spouse during the marriage. Property the was acquired by either spouse during or on dissolution of marriage is presumed to be community property. The requirements of proof necessary to establish that property was separate property is clear and convincing evidence. Otherwise it is assumed to be community property.

Gifts Between Spouses

If one spouse makes a gift of property to the other spouse, the gift is presumed to include all the income and property that may arise from that property. “Generally speaking, one who is claiming the existence of a gift has the burden of proof. However, where the conveyance is from one spouse to the other spouse, there is a presumption of gift. A gift by one spouse to another can be set aside if the gift was induced by duress or undue influence. In such a case, the burden of proof rests with the recipient to show that the gift was fair and equitable.” Roberts v. Roberts, (Tex. App.—El Paso 1999, no pet.)

Property Interest in Certain Insurance Proceeds

Insurance proceeds paid or payable that arise from a casualty loss to property during marriage are characterized in the same manner as the property to which the claim is attributable. If a person becomes disabled or is injured, any disability insurance payment or workers’ compensation payment is community property to the extent it is intended to replace earnings lost while the disabled person is married. To the extent than any insurance payment or workers’ compensation payment is intended to replace earnings while the disabled or injured person is not married, the recovery is the separate property of the disabled or injured spouse.

Separate Property in a marriage versus Community Property can be a sticky wicket. Good record keeping and clear evidence that property was held separately and that it was not co-mingled with the community property will help to establish that the property is truly separate. For more information on this subject, you can contact Tim Whitten at (512) 790-5066 or by email here.