FAQ’s regarding Texas Marital Property Law

Marital property law in Texas is based upon the community property system. Texas is a community property state.

What does characterization mean? Characterization is the determination of which marital estate (community, separate or a combination of the two estates) owns an asset.

What does this mean? Assets acquired prior to marriage are considered separate property. Assets acquired during the course of the marriage are presumed to be community property, unless an asset is acquired by a spouse by gift or inheritance. Money received from a personal injury settlement by one spouse is that spouse’s separate property except for that portion that compensates the injured spouse for lost earnings during the marriage and medical/other expenses, which is community property.

What is the Inception of Title Rule? According to the Texas Family Code, a property’s character is based upon the time and manner in which a person first acquired an interest in the property. For example, if a party purchases a house prior to marriage, subsequently marries and the parties reside in the house together, the house remains the separate property of the party that purchased the house. Be forewarned that if the married couple subsequently refinances the house during the marriage and the house is titled in the names of both spouses the character of the house can become muddled.

What does “tracing” mean in the context of Texas divorces? Tracing is the means used to establish the separate origin of the property through evidence (often a paper trail) which clearly shows that the acquisition of the asset was acquired prior to marriage. It is necessary that the evidence can be followed through to the date of divorce.

What if a couple comingles assets like bank accounts? Commingling community property and separate property can create characterization problems.

Sometimes the questions are complicated and the answers are simple. - Dr. Seuss