Property that either spouse possesses or acquires during marriage is presumed to be community property. Separate property is defined as all property, real and personal, owned by a spouse before marriage and any property acquired after marriage by gift, devise or descent. In Texas, the income from separate property is community property. Separate property also includes the recovery for personal injuries by a spouse. The party asserting that a particular asset is separate property has the burden of proof to show by “clear and convincing” evidence that asset’s separate character.
The separate or community character of a particular asset is determined when the asset is acquired. Generally, no later actions will affect or change its character. Determining the character of property belonging to a deceased spouse can be important when completing an inventory, appraisement, and list of claims for the deceased spouse’s estate.
Common disputes involve situations where one spouse purchased property before marriage under an installment contract. Payments were made during marriage from community funds. Under the inception of title rule, the property is the separate property of the spouse who purchased it before marriage. The community, however, has a claim for reimbursement as community funds were used to discharge secured debt on the other spouse’s separate property. Claims for reimbursement may also arise when community funds are used to reduce a debt secured by a lien on property received by a spouse through gift, devise, or descent during a marriage, to the extent the debt existed when the spouse received the property. Reimbursement claims are also appropriate where one spouse has used their separate property to pay down another spouse’s debts incurred before marriage.