The difference between community and separate property is one of the key issues that affect the division of assets between married individuals, especially during a divorce. Understanding how property ownership is regulated in Texas will help you better protect your rights and financial interests. In this article, we provide a brief overview of the difference between community and separate property in the Lone Star State.
What Is Community Property?
Texas is classified as a community property state. This means that all property – including money, real estate, personal property, and other assets – acquired by either spouse during the time of their marriage is presumed to be community property and thus shared and jointly owned by both spouses, regardless of how the asset is titled. If one party claims an asset as separate property, they will have to prove it to be true.
What Is Separate Property?
In Texas, a married person may obtain assets that can be claimed as separate property only through exceptional circumstances. Such circumstances include:
- Property and assets obtained before the marriage began
- Gifts received by one spouse only
- Property inherited by one spouse only
- Money awarded in compensation in a personal injury claim for injuries sustained by one spouse only (with the notable exception of damages for loss of earnings)
Unlike some of the other community property states, in Texas, income from separate property is classified as community. For example, if you owned a rent house prior to your marriage and then, during the marriage, you receive rent payments, those rent payments are community property. Or, if you own a certificate of deposit before marriage, the interest from the certificate of deposit accumulated during the marriage is community. On the other hand, if you own shares of stock before marriage, the increase in value of the stock remains separate property.
What About Retirement and Pension Benefits?
Money accumulated by a married person as a pension, retirement plan, or other employee benefit is likewise viewed as community property in Texas. Therefore, such funds will also be subject to the division of property during a divorce.
How Is Community Property Divided in a Divorce?
According to Texas family law, spouses are allowed to prepare an agreement with regards to how to divide marital property. However, if the spouses are unable to reach such an agreement, the court will divide the community property in a way that must be “just and right.” In some cases, this will result in the property being split in half between the two spouses. However, it must be noted that “just and right” doesn’t have to guarantee an equal division. A judge may opt for a different kind of distribution that he or she deems fair in the view of the unique circumstances of a marriage.
The best way to make sure that your financial interests are well represented in a divorce is to hire an experienced attorney. Fraser, Wilson & Bryan, P.C. are trusted Texas family law attorneys who will answer all your questions related to the divorce process and help you ensure you receive the just and fair share of your marital property that you deserve. Contact us today to schedule a consultation with a member of our legal team.
