· Texas Marital Property System
o Overview of Statutes
§ § 3.001- Separate Property
· A spouse’s separate property consists of:
· 1 – The property owned or claimed by the spouse before marriage;
· 2 – The property acquired by the spouse during the marriage by gift, devise, or descent;
· 3 – The recovery for personal injuries sustained by the spouse during the marriage, except any recovery for loss of earning capacity during the marriage.
§ § 3.002 – Community Property
· Community property consists of the property, other than Separate Property, acquired by either spouse during the marriage.
§ § 3.003 – Community Property Presumption
· 1 – Property possessed by either spouse during or on dissolution of marriage is presumed to be Community Property.
· 2 – This presumption can only be rebutted by clear and convincing proof that property in question is Separate Property.
· 3 – Always begin with this presumption – person claiming Separate Property must show by clear and convincing evidence.
§ Characterize: To determine whether marital property was acquired at a time or in a manner which would deem it Separate Property of a spouse.
· 1 – Only Community Property can be divided by the judge in a divorce.
· 2 – Property division is always ordered at the trial level – never during appellate review.
o Appellate courts may deem division of property improper, but the judgment must be ruled on by a trial court.
§ 3 Characterizations
· Community Property
· H’s Separate Property
· W’s Separate Property
§ 5 Management
· Joint Managing of Community Property
· Community Property Managed Solely by W
· Community Property Managed Solely by H
· W’s Separate Property Managed by W
· H’s Separate Property Managed by H
o Doctrine of Onerous Title
§ Whatever is acquired by the joint efforts of the spouses is Community Property.
· Test: Was it acquired by the labor of spouses?
o Yes à Community
o No à Separate
· Texas courts have adhered strictly to the doctrine that dividends, interests, rent, and other income derived from Separate Property of spouse comprise Community Property.
§ § 3.005 – Gifts Between Spouses
· If one spouse makes a gift of property to another spouse, the fit is presumed to include all the income and property that may arise from that property.
§ Stringfellow v. Sorrells
· Offspring of livestock that is Separate Property is Community Property.
o Offspring are Community, but increase in value in the livestock is Separate Property.
o Separate Property livestock remains Separate Property despite any increase in the net weight or value of such livestock during the marriage.
§ Kellet v. Trice
· RULE: Character of property is set at the time of acquisition, and an agreement cannot change what has been constitutionally defined.
o Conveyance of property to trustee, and back to H is ineffective to change character of property to Community Property.
o Doctrine of Implied Exclusion
§ If the constitution says that this is the only way you can acquire a right in something, anything not specifically listed is implied to be excluded.
· Test: Was it acquired by gift, devise, or descent?
o Yes à Separate
o No à Community
§ Arnold v. Leonard
· Legislature cannot change the character of property – but they can change the rights of control and power in an effort to protect that property.
§ Northern Texas Traction Co. v. Hill
· RULE: All property or monies received as compensation for personal injuries sustained by the W shall be her Separate Property, except such actual and necessary expenses as may have accumulated against the H for hospital fees, medical bills, and all other expenses incident to the collection of said compensation.
o Partition or Exchange (Introduced between 1948-1980)
§ Partition: H and W hold Whiteacre as Community Property, they decide to split it and one half becomes H’s Separate Property and the other half becomes W’s Separate Property.
§ Exchange: H and W holds Greenacre and Blackacre as Community Property. H exchanges his Community Property interest in Blackacre for W’s Community Property interest in Greenacre, and so then all of Greenacre is H’s Separate Property and all of Blackacre is W’s Separate Property.
§ Creditors are protected in that if the partition or exchange prejudices creditors, the partition is held invalid. (Question of FACT, not law.)
§ Cannot be done in prenuptial agreement à couple must be married.
§ Can only partition or exchange existing Community Property.
· Partitioning Bank Accounts
o Bank Accounts can be partitioned, but cannot partition the future interest earned.
o Interest earned in the account after partition will become Community Property and will have to be partitioned in a future partition.
o Interest earned on separate accounts still becomes Community Property.
§ Make exchange at end of year to avoid.
o Joint Tenancy and Right of Survivorship
§ Community Property could not be used to create a joint tenancy with right of survivorship between the spouses because such a transaction was not an interspousal gift.
· In order to create a joint tenancy with right of survivorship so that when H dies H’s Separate Property becomes W’s Separate Property and vice versa, couple must partition or exchange first.
§ PARTITIONING MUST BE DONE PRIOR TO CREATING THE JOINT TENANCY.
o Yield to Statutes
§ Rule: the court interprets the statutes, if legislature doesn’t like how court interprets it, they can amend the damn statute.
o § 3.001(3) –Personal Injury Recovery
§ The recovery for personal injuries sustained by the spouse during
ath of a spouse;
o 6 – and spouses may agree in writing that all or part of the Separate Property owned by either or both of them shall be the spouse’s Community Property.
· Pre- and Post-Marital Agreements
o Prenuptial Agreements
§ The 1980 amendments to the Constitution make it possible for persons about to marry, by written instrument to partition between themselves all or part of their property then existing or to be acquired, or to exchange between themselves the community interest of a future spouse in any property for the Community Property then existing or to be acquired.
§ CANNOT convert Separate into community
o Post-Marital Agreements
§ Spouses may enter into effective postnuptial agreements with respect to the same matter that might be subject of valid prenuptial agreements.
§ Spouses, not persons about to marry, may make valid agreements, no partition or exchange necessary, that income or earnings from Separate Property shall be Separate Property of the spouse owning the property from which the income is derived.
o Will Contracts
§ Probate Code § 59 Contracts Concerning Succession
· The execution of a joint will or reciprocal will does not by itself suffice as evidence of the existence of a contract.
§ Probate Code § 37 Passage of Title Upon Intestacy and Under a Will
· All the estate not devised shall vest immediately in the heirs of the deceased. If a person dies intestate, all of the estate vests immediately in the heirs.
§ Probate Code § 38 Persons Who Take Upon Intestacy
§ Probate Code § 45 Community Estate
o Separation Agreements
§ NOTE: There is no “legal separation” in Texas.
§ Upon filing for divorce, a court may issue orders governing all aspects of the separation which precede the divorce. (See §§ 6.501-6.506)
§ A couple may exchange ownership of their Community Property during separation by a property partition and exchange agreement. This type of agreement is subject to particular enforceability statutes.
§ A couple may also attempt to change management and control of Community Property, the requirements of and control of which are much less strict.
§ A couple may simply enter into an agreement in contemplation of divorce. This just needs to be just and right.
o Enforcement of Agreements to Convert Separate Property to Community Property
§ TEX. FAM. CODE § 4.205