LEGAL RESOURCES
What Is Community Property in Texas?
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Community Property Is the Foundation of Texas Divorce Law
Texas is one of a small number of states that follows the community property system. Every divorce involving property begins with the same question: Which assets belong to the community estate, and which belong to one spouse individually?
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The answer to that question determines what property the divorce court has authority to divide.
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Under Texas Family Code § 3.002, community property consists of the property, other than separate property, acquired by either spouse during marriage.
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The rule appears straightforward, but applying it to retirement accounts, businesses, real estate, investment accounts, stock options, and other assets is often far more complicated.
Texas Presumes Property Is Community Property
One of the most important statutes in Texas divorce law is Texas Family Code § 3.003.
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That statute provides that property possessed by either spouse during or upon dissolution of the marriage is presumed to be community property. A spouse claiming that property is separate property must prove that claim by clear and convincing evidence.
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This presumption is significant.
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The burden is not on the other spouse to prove that an asset is community property. Instead, the burden falls upon the spouse claiming separate ownership to overcome the statutory presumption.
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Without sufficient evidence, the court will generally classify the property as community property.
Community Property Does Not Mean “Everything We Own”
Many people believe that everything owned by either spouse automatically becomes community property once they are married.
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Texas law does not operate that way.
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Property owned before marriage generally remains separate property. Likewise, gifts made to one spouse, inheritances received during the marriage, and certain personal injury recoveries are classified as separate property under Texas Family Code § 3.001.
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Only property that is acquired during the marriage and that does not qualify as separate property becomes part of the community estate.
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Accordingly, every significant asset should be analyzed individually before determining how it should be divided.
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Texas Follows the Inception of Title Rule
Whether property is community or separate is generally determined under the inception of title doctrine.
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The Texas Supreme Court has repeatedly held that the character of property is fixed when a party first acquires a right or claim to the property. See Wiggins v. Wiggins, 347 S.W.2d 589 (Tex. 1961) and Strong v. Garrett, 224 S.W.2d 471 (Tex. 1949).
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For example, if a spouse purchases a home before marriage, the home generally remains separate property even though community funds may later be used to reduce the mortgage.
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Likewise, if an employee begins participating in a retirement plan before marriage, the benefits earned before marriage ordinarily remain separate property, while benefits earned during the marriage may become community property.
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The date an asset is acquired is often more important than the date it is paid off.
Wages Earned During Marriage Are Community Property
One of the clearest examples of community property is income earned during the marriage.
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Generally speaking, wages, salaries, bonuses, commissions, and employment income earned by either spouse during the marriage become community property regardless of which spouse actually earned the money.
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Those earnings frequently become the source of funds used to purchase homes, vehicles, retirement accounts, brokerage accounts, and other marital assets.
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For that reason, many assets accumulated during a marriage ultimately become community property because they were acquired using community earnings.
Community Property Can Include More Than
Bank Accounts
The community estate often consists of far more than cash.
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Depending upon the circumstances, community property may include:
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The marital residence.
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Retirement accounts earned during the marriage.
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Brokerage and investment accounts.
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Businesses created or expanded during the marriage.
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Stock options and restricted stock units.
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Vehicles.
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Jewelry.
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Cryptocurrency.
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Vacation homes.
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Mineral interests.
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Personal property accumulated during the marriage.
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Every asset should be analyzed individually because different rules may apply depending upon how and when the property was acquired.
Property Can Have Both Community and Separate Interests
Many assets contain both separate and community components.
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For example, a retirement account may contain contributions made before marriage, contributions made during marriage, employer matching contributions, and investment gains.
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A residence purchased before marriage may remain separate property while the community estate acquires reimbursement claims arising from mortgage principal reductions made with community funds.
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Similarly, an investment account may contain inherited funds together with deposits of community income.
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These assets are often described as having a mixed character, and determining the respective interests frequently requires tracing by a forensic accountant or other financial expert.
Tracing Is Often Necessary
Because Texas presumes that property is community property, proving a separate property claim often requires tracing.
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Tracing involves following the history of an asset through bank records, brokerage statements, retirement account statements, deeds, closing documents, tax returns, and other financial records to establish its origin.
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In many complex divorces, tracing becomes one of the most important issues in the case.
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Without sufficient documentation, the statutory presumption may result in property being classified as community property even though one spouse believes it should be separate.
The Court Divides Only Community Property
The distinction between community and separate property has important legal consequences.
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Under Texas Family Code § 7.001, the trial court divides the community estate in a manner the court considers just and right.
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By contrast, the court generally cannot divest a spouse of his or her separate property. The Texas Supreme Court made this clear in Eggemeyer v. Eggemeyer, 554 S.W.2d 137 (Tex. 1977), holding that a divorce court lacks authority to award one spouse’s separate real property to the other spouse.
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Correctly identifying community property therefore determines what assets the court has authority to divide in the first place.
Fergus & Tomanka Helps Clients Protect Their Property Rights
Determining whether property is community or separate is often one of the most valuable aspects of a Texas divorce. A mistake in characterizing an asset can permanently affect the division of substantial wealth. Early analysis, thorough tracing, and careful preparation frequently make the difference between protecting separate property and unintentionally losing it to the community estate.
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At Fergus & Tomanka, we represent clients throughout Central Texas in divorce cases involving community property, separate property, tracing, reimbursement claims, retirement accounts, business interests, real estate, executive compensation, and complex financial disputes. We work closely with forensic accountants and valuation experts to ensure that every asset is properly characterized before the community estate is divided.
Call (512) 291-6952 to setup a consultation with one of our attorneys OR simply Make An Appointment on your own!
These issues can be quite difficult to handle on your own due to the legal complexity and emotionally-charged nature of the proceedings. It’s best to consult with an experienced family law attorney in your area.