Yours, Mine, Ours...Community or Separate Property?







Often times when people think of community property, they think that this only includes property: 1) that has been purchased with funds contributed by both spouses; and 2) that has been purchased in both spouses names. This is a common mistaken belief. 

The Community Property Presumption

Texas Family Code § 3.003 expressly states that any property possessed by either spouse during or upon dissolution of the marriage is presumed to be community property. This includes property that was acquired in one spouse's name during the marriage. 

A prime example of this would be earnings during marriage.  Spouses often believe that what each person earns during the marriage is their own separate property. While it may be true that the property is subject to the sole management and control of one spouse rather than the joint management and control of both spouses, the earnings during marriage are nonetheless community property absent a marital agreement stating otherwise. 

Another example would be the purchase of a vehicle during marriage.  A couple marries on November 1st, and on November 15th the  wife purchases a brand new Cadillac Escalade in her name only.  She is the only person obligated on the promissory note and she makes the payments on the note from her checking account which her bi-weekly earnings from her employer are directly deposited into.  Her husband is not listed on the promissory note, he is not listed on the checking account, and there is no marital agreement.  As such, the Cadillac Escalade is presumed to be community property.   The following year, on November 1st, the husband files for divorce from the wife.  Absent a written marital agreement between the husband and wife, or clear and convincing evidence that the vehicle was purchased with separate property funds, the vehicle is presumed to be community property and belongs to both spouses. Based on the size of the community estate and separate estates of the spouses, the court may determine that a just and right division of the community estate would include awarding the Cadillac Escalade to the husband.

It is not necessary that both spouses participate in the purchase of property for the property to be characterized as community property. The fact that the property was purchased during marriage gives rise to the community property presumption. Spouses can contractually agree in a written (pre or post) marital agreement on what property will be separate property during the marriage and what property will remain in the community during the marriage. 

When Is Property My Separate Property?

Texas Family Code § 3.001 defines separate property as any property owned or claimed by spouses before marriage, property acquired during marriage by gift, devise, or descent, and recovery for personal injuries sustained during marriage, except any recovery for loss of earning capacity during marriage (because remember...earnings during marriage are presumed to be community property unless a marital agreement states otherwise). 

Though property acquired prior to marriage is separate property, the income from that property is community property unless the spouses have contractually agreed otherwise. 

An example would be a home owned by a wife on the wedding date, November 1st. The home itself is separate property because it was owned by the wife prior to marriage. Assume that on December 1st of that same year the wife executes a 10-month lease with Tenant A, and is paid rent of $1,500.00 each month, beginning on that same day. The wife deposits the rents into a savings account titled "Rents Savings" that contains only the rent proceeds and is solely in her name. On December 1st of the following year the wife files for divorce from her husband.  At the time of divorce, the wife has $15,000.00 in Rent Savings account which she received from Tenant A under the lease agreement.  The $15,000.00 is presumed to be community property, while the property for which she received the rent payments is separate property.

Need Help? 

Understanding the characterization of property as separate and community property can sometimes be a difficult task.  Family law attorney Leneice D. Parker can help you protect your property interests prior to and during marriage, and will advocate for the best distribution of community property during your divorce. 

For further assistance, contact The Law Office of Leneice D. Parker at (713) 520-5153 or visit us on the web at lparkerlawtx.com.


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