The Basics: Community Property in Texas

People's reactions when they find out that property in Texas belongs to the community is that of surprise when I explain to them the basics of property. For those of you that are new to my blog or new to Texas in general welcome. For those who are avid readers, welcome back. 

What is Community Property?

Texas is one of the few unique community property states. Community property means any property acquired in the marriage by a spouse unless otherwise classified as separate property. The exception to this is property acquired by gift, devise or descent. In Texas, the presumption is everything is community property unless rebutted. 

What Does Community Property Include?

Community property in Texas can be characterized as the following: 

  1. Income of either spouse during the marriage 
  2. Property purchased with income during the marriage 
  3. Real estate purchased during the marriage 
  4. Dividends, Interest, and capital gained earned on community property 
  5. Dividends and interests earned on either spouse's separate property during the marriage 
  6. Pension, Retirement, Any Employee Benefit Sharing Plan accrued during the duration of the marriage

It is also important to now that community funds that are used to maintain, fund, or pay the expenses of a spouse's separate property does not give the community any ownership in that property. note that some assets may be characterized as community property and separate property at the same time. 

Community Property and Divorce 

When splitting community property in Texas, the Texas Family Courts follow the "just and right" provision. Often times clients and attorney's interpret this to mean an even 50/50 split which is not true at all. A "Just and Right" provision simply means that the division of the property must be equitable under the circumstances. In some cases it may mean 50/50, 60/40, 70/30 etc. Te court looks at fault in the breakup of the marriage, disparity of earning power between the spouses, health of spouses, which spouse has custody of the children, future employability of a spouse, education of a spouse and so forth

The distribution and characterization of property in Texas can be confusing. Especially when a party has separate and community property that may need to be traced. Here we covered just the basics of community property and the examples. I will cover the basics of separate property in the next blog post and do a side by side comparison showing off the differences between each property type. Stay tuned.