Community Property vs. Separate Property

Texas is a community property state. In general, all of the property that you own prior to getting married is your separate property. Once you get married all of your earnings and newly acquired property is owned one-half by you and one-half by your spouse. It doesn’t matter which of you paid for the asset & it doesn’t matter whose name is on the asset if the asset has a title, such as a car.

Once you are married, there are only two (2) ways to acquire separate property. One is by a gift. Any gift that you receive is your separate property. So, if your parents purchase a house for you and your spouse, that house is one-half your separate property and one-half the separate property of your spouse. (It is impossible to give a gift to “the community estate”, as all gifts are separate property in Texas.)

The other way to acquire separate property during a marriage is through an inheritance. If your grandfather dies and leaves you $50,000, that money will always be your separate property. However, if you invest the money in the stock market and you earn dividends, those dividends will be community property. The only way to keep the investment “all yours” would be to annually determine how much money the investment earned during the previous year & to give your spouse a check for his or her half of the earnings. If you meticulously keep up with that, if you ultimately divorced, you could show that what is in the account is your separate property along with your one-half of the community property you earned.

There are two exceptions to these general principles that are worth noting. If your spouse gives you a gift during your marriage, such as stock, all earnings from that gift are your separate property, so the dividends are your separate property. (If the gift came from someone other than your spouse, then the earnings are treated as community property.) And, if you have separate property land that has mineral interests on it (such as oil and gas), all income from the mineral interests is your separate property.

This area of the law has lots of “twists and turns” and if you have any separate property, you likely should consult with a lawyer about how to keep it separate. For instance, if you own separate property land, any earnings from the land are community property, owned one-half by you and by your spouse. (This would include rents, revenues, profits, interest, right-of-way payments and all other forms of income derived from the separate property land.) If you owned a herd of cattle prior to marriage, once you marry if any of the cattle are bred, the calves will be community property.

If you have any property, such as stocks, and you are about to marry, you should be sure to keep in a very safe place the earnings statement from the month that you marry. That way, if your marriage fails some day you will always be able to prove how much money was in your account (or what the value of your separate property home was) on the date of your marriage.

If you have any questions about community or separate property, you should consult with an experienced family law attorney. Janis Alexander Cross would be happy to meet with you in order to help you determine the nature of your property and what the impact of a marriage or divorce would be on your property. Call 806.322.7777 to set up an appointment at your convenience!