What is Considered Community Property and Separate Property in a Texas Divorce?
Texas is one of nine states considered a community property state. This means that in a divorce, most property acquired during the marriage is considered the property of both spouses and must be divided “equitably” under Texas law. Understanding the difference between community and separate property is important to understand how assets and even debts will be divided in a divorce.
What Is Considered Community Property?
As a general rule, property acquired during the marriage is considered as belonging to both spouses equally. Community property may include the family home, the mortgage interest income earned by investments, furniture, and wages earned during the marriage by either spouse. A pension, 401k, or employee benefit plan that accumulates during the marriage is also considered community property.
Separate property is considered any property or debt that was owned prior to the marriage or after the date of separation. Gifts and inheritances received during the marriage are also considered separate property if held separately.
Some property may begin as separate property and become community property during the marriage. For example, some equity in the family home may be separate property if the down payment was provided by one spouse’s separate property prior to marriage but it may become community property as time goes by and assets are mixed. This is also true of an inheritance. While an inheritance is considered separate property, even if it’s received during the marriage, it can become community property if the inheritance is mixed with marital funds and no separation is maintained.