Estate Planning Series – Post #2: What’s the Difference Between Community and Separate Property? Why Does it Matter?

Texas is a “community property” state because our inheritance laws are based on Spanish law, as are 7 other states. At least a century before there was equality between spouses, Texas law acknowledged marriage to be a partnership. That means that if you are married, there is a presumption that all of your property, assets, and income is community property and is therefore jointly owned by you and your spouse, regardless of who earned it.  It is presumed to include everything you had, acquired, or earned during your marriage.  Community property includes things like: income earned by either spouse during marriage, property purchased by either spouse during the marriage, household goods, and other items.  For instance, if I’m married and I come home with a pay check – half of that paycheck is my spouse’s.  Although the presumption is that all of the property is community property, there are ways you can show the property is actually separate property and not jointly owned.


There are 3 types of separate property: (1) inherited property, (2) a gift, or (3) separate property that you came into the marriage with or acquired by inheritance or gift that you have not mixed with community property.  For example, if I inherit $100 from my great Aunt Grace, that $100 is my separate property even though I am married. But if I take that $100 and deposit it in my jointly-owned checking account, the funds have been mixed (or “commingled”), and it is not possible to distinguish my separate $100 from the other funds in the account.  Where property cannot be distinguished as separate or community, it is presumed to be community property.  On the other hand, if I deposit that $100 into a separate account that is titled in my name, I have preserved the separate property’s status. While the rules about community and separate property were historically very strict, modern Texas law allows you to vary the rules by written agreement.


Why does it matter whether your property is community or separate? When you make an estate plan, it is important to distinguish what property is yours.  You may want to keep separate property separate and preserve it for certain gifts to your children. This becomes particularly important in blended families. In addition, you can only make gifts in your Will of property that is yours.  If you are uncertain as to whether your property is community or separate or you might need a Will, give us a call or come in and see us. We’d be happy to help.


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