Texas Community Property: What Married Couples Need to Know

Texas Community Property: What Married Couples Need to Know

Texas is one of only nine community property states in the country. If you're married and living in Texas, this affects almost everything you own—and it has a major impact on your estate plan. Understanding how community property works isn't just useful. It's essential.

What Community Property Means

Under the Texas Family Code, most property acquired by either spouse during marriage is community property. It doesn't matter whose name is on the account, who earned the paycheck, or who signed the deed. If it was acquired during the marriage, it presumptively belongs to both spouses equally.

Community property includes:

• Wages and salary earned by either spouse
• Income from investments, rental properties, and businesses
• Property purchased with community funds
• Retirement benefits earned during the marriage
• Interest, dividends, and capital gains on community assets

The idea is straightforward: marriage is a partnership, and both partners share equally in the financial gains.

Separate Property: The Exception

Not everything a married person owns is community property. Under Texas law, separate property includes:

• Property owned before marriage. If you bought a house before you got married, that house is your separate property—even after the wedding.
• Gifts and inheritances. If your parents leave you an inheritance or someone gives you a gift, that's your separate property, regardless of when you receive it.
• Personal injury settlements. Compensation for personal injuries (other than lost wages) belongs to the injured spouse alone.

Here's where it gets tricky: separate property can become commingled with community property over time. If you deposit an inheritance into a joint bank account and mix it with paychecks, tracing it back to its separate-property origin becomes difficult. Without clear records, Texas courts presume that property is community property—and the burden of proof falls on the spouse claiming it's separate.

How Community Property Passes at Death

When a spouse dies in Texas, what happens to community property depends on whether there's a will.

With a will: You can leave your half of the community property to anyone you choose. Your spouse automatically keeps their half. So if you and your spouse own $500,000 in community property, you can direct where your $250,000 goes—to your spouse, your children, a charity, or anyone else.

Without a will: Texas intestacy law controls. If all of the deceased spouse's children are also children of the surviving spouse, the surviving spouse inherits the deceased's share of community property. But if there are children from a different relationship, the deceased spouse's half of community property passes to those children—not to the surviving spouse. This surprises many blended families.

Separate property follows different rules. Without a will, a surviving spouse receives all of the separate personal property but only a life estate in one-third of separate real property, with the remainder going to children.

Common Misconceptions

We see these misunderstandings regularly at our firm:

"My spouse and I keep separate bank accounts, so our money is separate property." Not necessarily. If the money in those accounts comes from wages earned during the marriage, it's community property regardless of which account it sits in.

"I inherited this money, so my spouse can't touch it." That's true—as long as you've kept it separate. If you deposited the inheritance into a joint account or used it to buy something jointly titled, you may have a tracing problem.

"Everything automatically goes to my spouse when I die." Not in every case. If you have children from a prior relationship and no will, your half of the community property goes to those children—not your current spouse.

"We signed a prenup, so community property rules don't apply." A valid prenuptial agreement can change the default rules, but only if it was properly executed and meets Texas legal requirements. Not all prenups hold up in court.

Community Property Agreements and Partition Agreements

Texas law gives married couples two powerful tools to change how property is classified:

Community property agreements convert one spouse's separate property into community property. Couples sometimes use these for estate tax planning or to ensure that both spouses share equally in all assets.

Partition and exchange agreements do the opposite—they convert community property into separate property. These can be useful for asset protection, business planning, or when one spouse wants to ensure certain property stays in their family line.

Both types of agreements must be in writing and signed by both spouses. Under Section 4.102 of the Texas Family Code, a partition or exchange agreement is enforceable without additional consideration.

These agreements are particularly important for couples in second marriages who want to keep certain assets separate for children from a prior relationship.

The Impact on Your Estate Plan

Community property rules should shape every part of your estate plan. Here's what to consider:

• Your will can only control your half. You can't give away your spouse's share of community property in your will. Make sure your plan accounts for this.
• Beneficiary designations matter. Retirement accounts and life insurance policies pass by beneficiary designation, not by will. If you name someone other than your spouse as the beneficiary of a community-property retirement account, your spouse may need to consent in writing.
• Trusts need proper funding. If you create a trust, you need to determine whether community property or separate property (or both) will fund it. Transferring community property into a trust typically requires both spouses' consent.
• Blended families need extra planning. The default intestacy rules can produce harsh results for blended families. A well-drafted will or trust is the only way to make sure your assets go where you intend.

Community property law affects your family every day—even if you never think about it. Getting your estate plan right means understanding how these rules apply to your specific situation.

Contact Dickey Law Group today to schedule a consultation. We serve families throughout The Woodlands, Spring, Conroe, and the Houston metro area. Call (832) 521-4414.