You hear it all the time: Texas is a community property state. But what exactly does that mean? One common misconception is that as long as an account is in one spouse’s name only, it is that spouse’s separate property. This is not always the case. While Texas family law does not define what community property is, it defines what it isn’t. The Texas Constitution defines one’s separate property as any owned prior to the marriage or acquired by a device (through a will) or dissent (through inheritance). At the dissolution of a marriage, whether by divorce or death of a spouse, there is a presumption that everything owned by the couple is community property. This presumption is rebuttable by clear and convincing evidence.
It is important to establish, or characterize, the marital property as separate or community because a court is not permitted to divest one spouse’s separate property when dividing up the marital property in a divorce. The most common method used to establish one’s separate property is by the “inception of title” rule. Under this method, a spouse’s property is characterized at the time and manner in which he or she first acquired it. For example, property purchased prior to a marriage is the separate property of that spouse because the title was taken before marriage. Another common method for characterizing property as separate is by tracing. Tracing goes hand-in-hand with the inception of title rule as it “traces” property, money for example, back to a separate property source. For example, one spouse inherits some money and uses that money to buy a car during the marriage. During a divorce, the car would be presumed to be community property; however, the spouse would be able to “trace” the funds used to purchase the car to a separate property source: her inheritance.