SMITH & GARG, LLC

By the Estate Planning Attorneys at Smith & Garg, LLC, serving The Woodlands, Spring, Houston, Conroe, Humble, Kingwood, Tomball, Cypress, Huntsville, Westchase, Southwest, Sugar Land, West Oaks, Alief, Memorial, River Oaks, Stafford, Katy, Missouri City. Sugarland, Richmond, Alief and other surrounding areas in North, Northwest, South and Southwest Houston.

Texas is a community property state.  “Community property” is defined as “anything that is not separate property.”  “Separate property” is property a person owns before marriage, acquires with separate property, or receives as a gift or inheritance during marriage; parts of some personal injury settlements are also characterized as separate property. 

In Texas, “property possessed by either spouse during or on dissolution of the marriage is presumed to be community property.”  There must be clear and convincing evidence to prove otherwise.  The most common way to prove that certain property is is to trace the date and manner of acquisition of the property at issue.

Another way of proving or changing the characterization of property is through a Marital Property Agreement.  Marital Property Agreements (also known as Property Agreements between Spouses and “Post Nups”) are written agreements in which the spouses agree to alter the character of the property one or both of them own.  Separate property can be made into community property; community property can be made into separate property.  By virtue of such a change in character, one spouse is effectively giving property to the other spouse.  To be enforceable, a marital property agreement must be in writing and signed by both parties, and full disclosure of each party’s assets and liabilities must be made.

At any time during the marriage, the spouses may partition or exchange all or part of their community and/or separate property. This is accomplished by entering into a marital property agreement. Once the marital property agreement has been signed, the character of the property is changed to separate or community, depending on what was done.   

In Texas, income arising from separate property is community property; however, by entering into a marital property agreement, the spouses may agree that income from any, all, or some of the separate property will also be considered separate property.

Converting separate property to community property (or community property to separate property) will not affect the rights of a pre-existing creditor. When separate real property is converted to community property (or vice versa), the conversion may—and probably should--be recorded in the deed records of the county in which the real property is located. Filing and recording the change of ownership, as provided for in the marital property agreement, serves as sufficient legal notice to future good faith purchasers and/or creditors, without requiring that they be afforded personal notice.

Marital property agreements are challenged in the same manner that premarital agreements (commonly referred to as “pre-nups”) are challenged. For a list of situations in which a marital property agreement can be defeated, see the Section 4.105 of the Texas Family Code.

We invite you to contact us for a consultation. Call Smith & Garg, LLC at 1-877-517-4275 or complete our contact form.