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What is Community Property in Texas?

If you’re asking what community property in Texas is, chances are you are facing a divorce. Texas is a community property state which means property of any kind acquired by the parties during the course of marriage is considered to belong to them both equally. This is true even if property was acquired by one of them in another state if that property would have been community property if acquired in Texas. Each party may have separate property that remains separate property when they divorce.

Texas Courts encourage the parties to come to their own agreement about how the community property is divided. If they cannot agree, the court will divide the property in a way that “the court deems is just and right.” Texas Family Code, Sections 3.001 et seq., explains the differences between separate and community property.

Separate Property vs Community Property

Certain property that is owned separately by one of the parties remains the property of that party and is not part of the community property division. There may be property that one asserts is separate property and the other one claims it is community property. When that happens, the court will have a hearing and take evidence concerning the property and make a decision as to whether it is separate or community property.

Examples of Separate Property In Texas

  • Property that was owned by one party prior to the marriage and remained separate throughout the marriage and was not co-mingled in any way with community property.
  • Gifts received by one party remain the property of the gift recipient.
  • An inheritance by one party remains that party’s separate property.
  • A personal injury award by one party to compensate that party for their injury and their pain and suffering is separate property. Since wages earned by one party is community property, the portion of the personal injury award for lost wages is not separate property but is community property.

The court will order that all separate property remain the property of its owner unless a prenuptial or postnuptial agreement was signed by both parties stating otherwise. Even in this case, a family court judge can deem a premarital or post-marital agreement invalid and unenforceable if it chooses to.

What is Community Property in Texas?

Community property is all property accumulated by the parties during the course of their marriage.

Examples of community property include:

  • Wages earned by either party and all compensation for services provided and for work performed.
  • The value of a mutually owned business:
  • The value of a private professional practice.
  • All real estate acquired with community property funds no matter how the owner is listed on the deed.
  • All real estate, even if it is located in a different state.
  • All home goods and furnishings.
  • The family pet.
  • Retirement plans, 401(k) plans and other work-related benefit plans.

A value must be placed on each item when it is time to separate assets in a divorce proceeding. Appraisers will value real estate, jewelry and other items. Experts will usually be required to value a business or professional practice. Receipts and tax returns will be necessary to prove the amount of wages and other compensation for services. The Law Offices of Frank E. Mann P.C. is experienced with separating and defining community property and separate property can help you protect your money and interests.

Distribution and Division of Community Property

If the parties have made their own Marital Settlement Agreement, as the courts encourage them to do, the court will generally honor it if it complies with the General Rule of Property Division as provided for by Texas Family Code, Section 7.001 and is “just and right.”

When the court makes a “just and right” decision of property division it considers a number of factors before dividing the property including, but not limited to:

  • The length of the marriage.
  • Education age and health of each spouse.
  •  Earning capacity of each spouse based on the specific skills and business opportunities available.
  • Whether either party was at fault for the marriage ending in divorce.
  • Tax consequences for each party.
  • Whether either party tried to conceal assets.
  • Role of the parties in the past and present and whether one stayed at home to take care of children while the other one pursued a career.
  • Whether one parent will now be the primary caregiver of the children.
  • Amount of separate property owned by each spouse.
  • Any other factor the court deems relevant.

Texas Courts have wide discretion in fashioning a property division order in a manner that it finds fair and just. Their broad control and jurisdiction of designating community property and dividing it among divorcing parties is unique to Texas.

Contact an Attorney Experienced with Dividing Community Property. Call now to schedule a free consultation with the Law Offices Frank E. Mann P.C. Attorney Frank E. Mann is a hard working family law attorney with over 33 years of experience representing clients in divorce cases.