What is Community Property? What is Separate Property?

Texas is one of only nine community property states in the United States, and this designation has a profound impact on how property is treated during a divorce. Under the Texas Family Code, property owned by married persons is classified as either community property or separate property. The classification determines whether the property can be divided by the court or whether it belongs exclusively to one spouse.

Community property is defined under Section 3.002 of the Texas Family Code as all property acquired by either spouse during the marriage, other than separate property. This includes wages, salaries, income from businesses, and returns on investments earned during the marriage — regardless of which spouse earned the income or whose name is on the account. The key principle is that both spouses have an equal ownership interest in property acquired during the marriage through the labor and effort of either spouse.

Separate property, defined under Section 3.001, consists of three categories: property owned or claimed before the marriage, property acquired during the marriage by gift or inheritance, and recovery for personal injuries sustained during the marriage (except for lost wages, which are community property). Separate property remains the exclusive property of the spouse who owns it and is not subject to division by the court in a divorce.

One of the most important concepts in Texas property law is the community property presumption. All property possessed by either spouse during or at the dissolution of marriage is presumed to be community property. A spouse claiming that property is separate must overcome this presumption by clear and convincing evidence — a standard that requires thorough documentation and, frequently, the testimony of a forensic accountant or financial expert.

Commingling — mixing separate and community funds in the same account — is one of the most common ways that separate property loses its character. When separate funds are deposited into a joint account and mixed with community earnings, tracing the separate property back to its source becomes difficult. Maintaining clear records and keeping separate property in distinct accounts are practical steps that can help preserve its classification.