Yours, Mine or Ours? The Enigma of Property in a Family Law Case

The following is a brief overview of characterization of property in Texas.

Property is characterized as separate or community at the time of the inception of title to the property. This is known as the “Inception of Title Rule.”

Separate Property (SP) is property owned prior to marriage; acquired during the marriage by gift, devise or descent; property/proceeds acquired by the sale of SP assets and recovery for personal injuries sustained during marriage, except for recovery for loss of earning capacity.

Community Property (CP) is property acquired by either spouse during marriage, other than SP. There is a presumption that all property is CP upon divorce, and “clear and convincing” evidence is required to establish the property as SP.

Quasi-Community Property is divisible in Texas in a decree of divorce even though it is not CP. Texas courts can treat property acquired in another state that would have been SP in such a state as CP if at the time of acquisition, the property would have been CP in Texas.

Proportional Ownership Interest and Mixed Character – This interest arises when both the separate estate of a spouse(s) and the community estate of the spouses have interests in property. This can occur when a party or the parties acquire property prior to marriage. If a purchase is made partially with SP and partially with community credit, the separate and community estates own the property as tenants in common, and each estate owns an undivided interest in the proportion that it provides consideration for the property.

The names on the title to property do not determine the character of the property as SP or CP. Property cases can be fact intensive, and nuances in transactions can make significant differences in the outcome. Consult with an attorney skilled in this area to insure the outcome is a correct one.

“Treat the earth well. It was not given to you by your parents; it was loaned to you by your children. We do not inherit the earth from our ancestors; we borrow it from our children.” – Ancient Indian Proverb