Community versus Separate Property

Presumption of Community Property
Texas is a “community property” state. In other words, all property owned by married persons on the dissolution of a marriage, whether by death or divorce, is presumed to be the property of both the husband and the wife. Likewise, any debts incurred during marriage are presumed to be be community debt. This means that the debts are presumed to be owed by both the husband and the wife. Like community property, community debt must also be divided in a divorce.

The presumption of community property may only be overcome by clear and convincing evidence that certain property is separate, rather than community property. this is generally done by tracing and clearly identifying property as separate property at the inception of the title, or the moment when the property was first acquired. Documentation that clearly proves that the property is separate is almost always necessary if the parties do not agree whether an asset is separate or community. Consequently, testimony that property is separate will likely be insufficient to prove separate nature of an asset.

Separate Property
Generally speaking, property acquired before a marriage and property acquired during marriage through gift or inheritance, or with funds that were themselves separate property, is separate property. A recovery for personal injury by a spouse for a loss sustained during the marriage is also separate property. However, it is worth noting that a recovery for loss of earning capacity is not separate property. Finally, spouses may enter into a signed, written agreement known as a premarital or marital property agreement, which documents the separate property rights or can convert community property into separate property.

Claims for reimbursement
When the spouses contribute community property funds or pay debt towards one spouse’s separate property or if a spouse’s separate property contributes funds or pays debt that is community or the other spouse’s separate debt, a claim for reimbursement can’t be made. An example of this would be if a spouse purchased a home before marriage, but then paid down the mortgage on the home during the marriage or if one spouse used inherited funds to pay down a community credit card. There are certain types of payments or debts that are not subject to a claim for reimbursement. A party cannot seek reimbursement for payment of student loans, payments of nominal value, living expenses of a child or a spouse for for payments for child support or spousal maintenance. The laws on reimbursement claims can be complicated depending on the situation, so it is available to consult an attorney if this issue arises.