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Community Property/Marital Property
South Texas College of Law Houston
Paulsen, James W.

Marital Property OutlinePaulsen –Spring 2012

A. What’s the course about?

i. Between H and W, who owns what in Texas?

ii. Why do we care? à Money

1. Ex. Divorce

a. Community Property – judge decides what is “just and right”

b. Separate Property – Divorce Courts/ Judge cannot touch SP – mistake is a constitutional error

2. Ex. Death with Will

a. CP – Testator cannot touch ½ community property – belongs to surviving spouse

b. SP – Testator decides (ditto for ½ community property)

3. Ex. Death

a. Half CP to surviving spouse

i. Other half, and decedent’s SP, by will

iii. Between H and W, who owns what in Texas?

1. Why just between husband and wife?

a. Because marital property law is “second level” law

i. Rules not applicable to third parties

ii. Rules not applicable to other areas of law

b. 2nd level insider law; laws can be completely opposite of other law like real property, contract, etc. When they collide generally marital property law will lose.

i. BUT Within the marriage – marital property wins

2. Ex. Rules may not apply to 3rd parties

a. Creditors

b. Good faith purchases

3. Ex. Rules may not apply to other areas of law

a. Especially real estate law

i. Ex. a deed to land given from genuine 3rd party to H and W.

1. Who presumably owns property? H and W as joint tenants

2. Just to H or W? Marital property makes them all community property regardless of whose name is on the deed. It’s a partnership and either partner can receive or give

b. Contract and debtor/creditor law, too

iv. Between H and W, who owns what in Texas?

1. Why just in Texas?

a. Because Community property is a minority rule

i. Texas is a minority CP jurisdiction

b. Texas is a minority (8 or 10 of 50 states) rule – community property Spanish rule so mostly along Mexico border – TX before California (copied from TX)

c. Remember the states?

2. Within community property states we are still a minority

a. All income from separate property is community prop in TX

i. Ex. crop land >

b. Acquisition over time? Inception of Title – when you buy something on time (ex. house with mortgage, car, credit purchase) most other jurisdictions say the portion before marriage is separate and the portion after is community property.

i. TEXAS: Look to when the title incepts (the first time you have some sort of legal ownership-type right in the property). Look at the time you sign the docs that theoretically transfer title. Don’t care what happens afterward.

c. Division at divorce, alimony, separate, etc.

3. But CP principles are conquering the world

v. Organization

1. How could a marital property system be organized? Compared to partnership

2. How is the Texas marital property system organized?

a. Texas à Marriage is a partnership – default rule 50/50 owners

i. Two individuals engaged in a common business –the business is marriage

b. There is no such thing as “the community” as an entity

3. Categories of Marital Property

a. 3 Categories:

i. HSP à husband separate property

ii. WSP à wife’s separate

iii. CP à community property

1. Yours, mine and ours!

vi. Basic Characterization Rules

1. Everything presumed CP -Family Code § 3.003(a)

a. Burden of proving something is separate property is on the person who wants it to be separate

2. SP needs to be proved by Clear and Convincing Evidence -Family Code § 3.003(b)

3. Clear and convincing evidence – realistically there isn’t great record keeping and can’t meet burden

4. Two Test to figure out what is SP or CP”

a. “Onerous Efforts” (Spanish) Test

i. Property resulting from the labor of either H or W during marriage is CP (Love, 1851)

1. Everything earned by hard work of either spouse during marriage is CP

a. Everything else is SP

2. This is a Rule of inclusion (i.e. stuff is included as CP)

3. “Conclusive presumption” of equal input – doesn’t matter what they are actually doing to contribute

b. “Implied Exclusion” Test (constitutional)

i. Anything not listed as separate then it IS community property (Arnold, 1925)

1. Implied exclusion generally wins ties (Vallone, 1982)

a. Example: Passive income (profit) = CP

2. The Texas Constitution lists all SP

a. Everything else is CP

i. Example of Implied Exclusion: “Constitution says X is SP, so X is not CP”

5. The Texas Constitution Art. 16 §15 :

a. “All property, both real and personal, of a spouse owned or claimed before marriage, and that acquired afterward by gift, devise or descent, shall be the separate property of that spouse; and laws shall be passed more clearly defining the rights of the spouses, in relation to separate and community property; provided that . . . spouses . . . may by written instrument from time to time partition between themselves all or part of their property . . .”

b. Separate Property List in TX Constitution (Memorize List)

1. Property owned or claimed before marriage

2. Property after marriage by gift,

3. devise, or descent

4. Spouse may by written instrument agree to keep separate

a. Test: Owned before marriage as gift, inheritance or agreed SP?

i. YES à SP

ii. NO à CP

c. SP MASTER LIST – all inclusive list [+ Their Authority]

i. Owned before or claimed (constitution)

ii. Gift – same elements as property (constitution)

iii. Inheritance (constitution)

iv. Mutation – parents gives cash for birthday, you use it to buy stereo – stereo is still separate property but it requires a showing that the money was used to purchase property (called tracing) by clear and convincing evidence. Must Prove/Show and Tell. (Love, 1851)

v. Agreement (constitution ) (post- 1948)

vi. Personal Injury Recoveries – Paulsen not a separate category but a type of mutation – but the statutes lists it separately (Graham, 1972)

vii. Credit-separate – most everything acquired on credit is community property because you can be sued and if lose they can take community property to satisfy judgment à as a result it puts the community property at risk so it is CP. (Case Dicta/ Paulsen Doubts)

viii. OGIMAPC

1. EXCEPTION – a separate property secured non-recourse loan creates separate property – non-recourse loan is secured only by property and

em did NOT treat women as an appendage of her husband

2. The community property system—at least in theory–viewed marriage as a co-equal partnership, in which both spouses are assumed to participate in the acquisition of all marital assets, and in which both spouses rightfully expect an equal share of the rewards for either spouse’s efforts.

ii. Origins date back to as far as the Visigoths!

1. Marital property comes from the Visigoths.

2. Visigoths à warrior culture, the only people that would scare Attila the Hun.

a. Visigoth Women were equally good at fighting if not better than the men. They would take captures for sport. Had worse attitudes than the men.

b. Visigoth System: Partnership Only! Uber equality!

i. Visigoths settled in Spain, came to Mexico then South Texas =Now Spanish Law

iii. Early Texas:

iv. Texians invented the homestead, implemented the concept of universal jury trial, and accomplished the first successful merger of law and equity.

1. When Texas entered the union as a community property state, it did so as the first American jurisdiction to provide constitutional recognition for married women’s property rights.

v. Hemphill emphasized the basic distinction between the Common Law and the Texas Community Property system:

1. In Common law à “the husband and wife are but one person; the very being as [sic] legal existence of the woman is suspended during marriage,”

2. In the Texas community property system à “they are considered distinct persons, at least so far as their estates or property are concerned”

a. Sir William Blackstone (Marriage as sole proprietorship )à “By marriage, the husband and wife are one person in law: that is, the very being or legal existence of the woman is suspended during the marriage, or at least is incorporated and consolidated into that of the husband . . .”

i. Blackstone View: 2 become 1, the 1 is the husband!

vi. A closer scrutiny of early Texas marital-property laws reveals no notion of the wife as equal partner. [Sarah Grimke –Condition of wife same as a slave; H would manage her Prop.]

1. Under Spanish law and Texas law a married woman was considered to have the same disabilities as an infant or idiot

2. Marriage could at best be characterized in nineteenth-century as a limited partnership with the husband as a general partner and the wife as a limited partner with few rights

a. Was not like a business partnership à “In business the law protected each partner equally but in marriage a wife who ‘takes the male for better or worse . . . risks the consequences.'”