Marital Property Outline
I. Texas Martial Property System
A. Overview
1. Separate Property- is property owned or claimed before marriage or that is acquired after marriage by gift, devise, or descent
a. Spouse’s separate property consists of (1) property owned or claimed by spouse before marriage; (2) Property acquired by the spouse during marriage by gift, devise, or descent; (3) The recovery for personal injuries sustained by spouse during marriage, except for recovery for loss of earning capacity.
b. Once something has been characterized as separate property it retains the character as if the spouse was never married, unless a written agreement changes the characterization.
c. Texas Courts have strictly adhered to the doctrine that dividends, interest, rent, and other income derived from separate property of a spouse comprises community property.
d. Increase of Value of separate property does not change the character of separate property; if the increase of value is by the time, toil, talent, and effort of the community estate it gives rise to EC or Equitable Reimbursement.
2. Community Property- is property that is acquired by the joint efforts of the husband and wife.
a. Property that does not fit the constitutional definition of separate property under the constitution is characterized as community property utilizing the doctrine of implied exclusion.
b. Community Property Presumption- property possessed by either spouse during or on dissolution of the marriage is presumed to be community property.
i. The Community Property Presumption can only be rebutted by clear and convincing evidence that the property in question is separate of the spouse trying to rebut the presumption.
ii. The characterization of property in Texas is constitutionally driven; the constitution defines the rules of characterization.
B. Constitution as Amended in 1948- allows spouses to take community property and change it to separate property by agreements; essentially turn it into a joint tenancy, partition a piece of community property between the spouses.
C. Graham v. Franco- Personal Injury recovery is separate property except for recovery for lost earning capacity or medical expenses properly chargeable to the community estate.
D. The Texas State Constitution
a. Clause 1- contains the separate property definition of all property before and acquired afterwards from gift, devise, or descent
b. Clause 2- Partition and Exchange agreements- spouses may partition and exchange their property that exists or will be acquired in the future; the property exchanged will become the separate property of the spouses.
i. Prenuptial agreements cannot use the words agree you must use the words of partition and exchange; some courts will look to the intent others require specific language.
c. Clause 3-provides that spouses may by written instrument agree between themselves that the
ent must be in writing and signed by both parties
b. TFC § 4.102- at any time spouses may P&E all or part of their property then existing or to be acquired. Property transferred to a spouse by P&E becomes that spouses separate property. May also provide that future earnings or income arising from transferred property shall be the separate property of the owning spouse.
c. TFC § 4.103- spouses may agree that the income of property arising from the separate property that is then owned or then acquired shall be the separate property of the owner.
d. TFC § 4.105- A P&E agreement is not enforceable if the party against whom the enforcement proves:
i. The party did not sign voluntarily; or
ii. The agreement was unconscionable when it was signed and before the signing he/she:
(1) Was not provided a fair and reasonable disclosure of property or financial obligations of the other party;
(2) Did not voluntarily and expressly waive any right to disclosure; and
(3) Did not have, or reasonably could not have had, adequate knowledge of the property or financial obligations.
iii. The remedies and defenses are the exclusive remedies or defenses
