What is Community Property in Texas?

Section 3.002 of the Texas Family Code defines community property simply as “…the property, other than separate property, acquired by either spouse during marriage.” Section 3.003 provides that at the time of divorce or annulment all property possessed by either spouse is presumed to be community property. This is an initial presumption that can be overcome. If a spouse wants to prove that some property is “separate” he or she must do so by “clear and convincing evidence.”

This article is about how Texas defines community and separate property. Please see the earlier article entitled The Best Way to Divide Property in Texas for information about dividing the community estate.

Basically, at the time that a divorce is filed Texas law initially presumes that all of the property owned by either spouse, regardless of whose name is on it, is community property. Everything that is not community property is most likely going to be separate property.

Separate property is defined as:

1. All property that a spouse can prove by clear and convincing evidence that he or she owned before marriage.
2. Any property that a spouse acquired during marriage by gift, including gifts between spouses. If the husband gave his wife a gift of jewelry it might be the wife’s separate property or it might be an investment depending on the circumstances and purpose for which it was acquired.
3. Any property that a spouse acquired during marriage by devise or descent (inheritance).
4. Any recovery by a spouse for personal injuries, except that portion of a recovery that was for lost wages.

The issue of income produced by separate property can be thorny. Generally, income produced by separate property during a marriage is considered community, so rental income received during a marriage from a separately owned piece of real property would be community income. However, Texas Family Code section 3.005 provides that when one spouse makes a gift to the other, the income from that gift is also separate property. Royalty income is considered depletion of the separate property and not pure “income” generated by the separate property so it is also considered separate property.

Separate property is not divided in a divorce. Only community property is divided. If a spouse does not have the records or evidence to prove by clear and convincing evidence the exact extent of his or her separate property, all of it will be presumed to be community. The importance of records and good lawyering in this type of case cannot be over-emphasized. If a spouse does not specifically plead for separate property, he or she could find at a trial that everything is presumed to be community and is then divided. This happens, and can lead to a result greatly different than it would have been if the case had been properly plead.

Even if plead properly, the extent and value of the separate property must still be proven by clear and convincing evidence, which is the highest burden imposed in civil law. Clear and convincing means evidence on which “a reasonable trier of fact [a judge or a jury] could have formed a firm belief or conviction that its finding was true.” This is a much higher, and harder, burden than the usual ‘preponderance of the evidence.’ If is not overcome, then the property is treated as community and divided “in a manner that the court deems just and right” (Tex. Fam. Code sec. 7.001).

A marital property agreement, such as a prenup (before marriage) or a postnup (during marriage), can avoid all of these issues. Such an agreement defines what constitutes separate and community property. It can also draw a bright line that makes clear, without any proof needed, what is separate property and which spouse owns it.

Future articles will explore what Texas law means by a “just and right” division of community property.

© Brian McNamara, 2013, may be reproduced with credit to the author.