By: Will Powell Watson
Marital Property in Texas
You’ve probably heard that Texas is a “community property state,” and you probably have some general notion that this means that spouses living in Texas own property “fifty-fifty.” Perhaps you even know that there’s also something called “separate property” and that it’s somehow different than community property. If you know that much, you’re well on your way to understanding how the Texas community property system works.
In a nutshell, the Texas Constitution states that any property a person acquires (1) outside of marriage or (2) by gift or inheritance is that person’s separate property. This means that if you bought a mint-condition Craig Biggio rookie card the day before your wedding, that card is yours and yours alone. You can sell it, use it as collateral for a loan, or rip it to shreds and no one could say a thing about it.
Further, if, five years after your wedding, your grandad left you that same baseball card as a gift under his will or if he gave it to you as a birthday present, it would still be your separate property. Sell it, encumber it, or shred it up as your heart desires. It is your separate property and yours alone.
Community PropertyWe’ll paraphrase the law here: “If it ain’t separate property, it’s community property.” This generally means that any property you acquire during marriage (other than property acquired by gift or inheritance) is community property. We’ll stick with the Biggio card as an example. Let’s say your paycheck posts to your bank account the day after your wedding, and, in a frantic whirlwind of eBay bids from the resort in Cancun, you spend your entire month’s wages on the card. Whether you realized it at the time you made the purchase or not, that card is community property by virtue of your newly minted marriage (and you are probably in trouble, but that’s a Family Law matter for a different firm). This means that even though you might have bought the card solely for your enjoyment with money that you earned by yourself, your spouse automatically owns an undivided one-half interest in the card simply because they’re married to you. Selling it, using it as collateral, or tearing it to bits becomes a bit trickier because half of the ownership interest in the card belongs to someone else.
Community and Separate Property Considerations in Estate Planning and Probate
When you make the wise decision to have an attorney with Middleton & Middleton draft your Will, it’s important to remember that, if you’re married, you’ll only be able to use your Will to gift away your separate property and your half of your and your spouse’s community property. Your little select ballplayer may really want you to leave him that Biggio card, but if you purchased it during marriage, your spouse will retain their 50% interest in the card’s value no matter who your Will leaves it to. If you are married and you die without a Will, the way your property will be divvied up can be complicated and will depend on several factors, including whether the property is community or separate and whether you have children. But hat’s a topic for a different article.
The attorneys at Middleton & Middleton can help you craft a clear and comprehensive estate plan that directs both your separate property and your share of your community property to your chosen beneficiaries. Further, if you’re needing representation in a probate matter, our attorneys can help you distribute your loved one’s assets in a manner that accounts for the separate or community property nature of the assets in their estate. If that’s something you need help with, let us know.