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Understanding Texas' community property law (Part 1)

Pop music star Gwen Stefani's recent split from grunge rocker Gavin Rossdale was notable, among other reasons, for the absence of a prenuptial agreement. Without one, the couple's assets will be subject to the laws of the state where they live. Texas is one of nine states that has similar laws on the books, called community property laws, governing property division in the event of a divorce.

What sets these nine community property states apart from the rest of the country? Essentially, in the rest of the country, a divorcing couple's property is divided according to what a judge determines to be fair, or equitable. They will take into consideration claims to ownership of assets that the nine "community property" states will not.

Unlike these "equitable distribution" states, Texas and other "community property" states will seek to split assets down the middle. The legal theory here is that all marital property is shared equally between spouses and should be divided accordingly. Marital property means anything acquired during the marriage, and typically includes income earned by either or both partners; property purchased with said income; and interest resulting from investments or business interests.

There is, however, an important classification of "separate property," meaning property owned or acquired before the marriage. A separate bank account which predated the marriage and was never commingled with marital funds could be considered separate property, as could a gift directly to one spouse or compensation from a personal injury suit. Separate property is, crucially, not subject to property division -- it stays separate with its owner.

Community property law becomes a fundamental aspect of a divorce in Texas (again, assuming the couple did not have a prenuptial agreement). We'll look in a follow-up post at some details that spouses should understand, noting that the information is intended as general in nature only and not specific legal advice.

Source: Findlaw.com, "Community Property Overview," accessed on Aug. 21, 2015

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