So how does one determine the character of property?  As a starting point, understand this blog post does not attempt to answer every question related to determining the character of property.  There are numerous factors that determine whether property is classified as community property or separate property.  This discussion is intended to provide the “guidepost” or the starting point.

Let us start out with a few definitions:

Community Property:

Community property consists of the property, other than separate property, acquired by either spouse during marriage. Texas Statutes Family Code Section 3.002

Separate Property

Sec. 3.001.  SEPARATE PROPERTY.  A spouse’s separate property consists of:

(1)  the property owned or claimed by the spouse before marriage;

(2)  the property acquired by the spouse during marriage by gift, devise, or descent; and

(3)  the recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage.  Texas Statutes Family Code Section 3.001

Ok, that gets us to a starting point.  There is one other rule that needs to be stated — it is the “Rule of Inception.” (1)  The Rule of Inception basically states the character of property is determined at the time the property is acquired.  For example, if a person acquires property when they are single but then a year later marries, the character of the property would be considered “separate property.”  This is because the property was acquired acquired prior to his marriage.  The marriage did not affect the character of the property.  The Rule of Inception is the first place to start in determining the character of property.

Now consider the same scenario where a husband acquires property, say a home, prior to getting married.  He later marries.  The couple then expends community assets to fixing and reparing the home.  Does this change the character of the property from “separate property” to “community property”?  No.  Look back at the Rule of Inception.  The Rule of Inception determines the character of the property.  The husband purchased the home when he was single.  Therefore, the property is considered separate property.  If the couple later divorces, it is possible for the wife to make a claim of economic contribution; however, that does not change the character of the property.   Texas law provides a forumla on how to determine the amount of economic contribution. (2)  This calulation is beyond the scope of this post.

There is a presumption that property acquired during the marriage is community property.  (3)  Which means that the default rule is that property acquired during the marriage is community.  It is only the default rule though.  This default rule can be overcome by showing by clear and convincing evidence that the property is their separate property.  One common way to show this is specifically stating on the transfer document that it is being acquired as his/her separate property.

What about a husband who inherits property from his deceased mother?  He is married at the time he acquired the property.  This is the husband’s separate property.  The property was a devise/descent from his mother.  Property acquired by a spouse during marriage by gift, devise, or descent is his/her separate property.

Recap:  Property acquired prior to marriage is considered separate property.  Property acquired during a marriage is presumed to be community property unless it is acquired by gift, devise, descent, or recovery for personal injuries sustained during the marriage (except loss of earnings capacity).

It is important to characterize property because the law treats the character of the property differently.  In divorce, community property is subject to just and right division.  At death, the law of descent  and distribution or intestate laws  (e.g. the laws governng the disposition of property when there is no will) treat community property and separate property differently.