“What is the difference between Separate Property and Community Property?” – Important property rights that will affect your estate plan.

by Mr. Tracy A. Pounders, Attorney and Counselor at Law

The Pounders Law Firm can help You with your Estate PlanningWhen married persons die their property is divided into two important classes:  separate property and community property.  It is important to understand the difference between separate and community property.  The right to own separate property and the right to community property are important rights under Texas law, and they are treated very differently when a spouse dies.

When people get married in Texas they are granted special rights under the law.  One of these rights is the community property presumption.  In short, all of the property of either spouse at the time a marriage is dissolved by death or divorce is presumed to be owned by both equally.  Example: Mr. and Mrs. Smith have been married for forty years.  They have a house in both of their names, a bank account in his name only, a retirement account in her name only, and a farm in her name only.  Because of the community property presumption all of their property, even the property held in the name of only one spouse, will be treated as being owned by both Mr. and Mrs. Smith equally as community property.

Generally speaking, separate property is property that is not community property, owned by one spouse independently of the other.  It includes property owned by a spouse before marriage; property acquired during marriage by gift, will or inheritance; a spouse’s tort recovery for personal injury; property made separate by agreement of the spouses; and assets purchased with separate property.  If we return to our previous example, what if Mrs. Smith inherited her farm from her father?  Under these circumstances the farm might not be community property, but Mrs. Smith’s separate property from Mr. Smith.  But the farm will still be presumed to be community property because it is owned by a spouse at the end of the marriage (by death).  So if Mrs. Smith wants the farm to be treated as her separate property she is responsible for proving that it’s her separate property through convincing evidence.

It is important to know if a property is community property or separate property because they are treated differently under Texas law.  The rules for determining the community or separate status of property are complex, especially if out-of-Texas property is involved.  This article speaks only of general concepts and is not a substitute for sound legal advice.  If you have any questions about the community or separate nature of your property you need to talk to a lawyer.  I would be honored to answer your questions and help you put your estate in order.  But even if you don’t hire me, please consult with a lawyer you trust as soon as you can.

Previous post:

Next post: