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Texas Family Law Characterization Of Property

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Updated 2007-02-14 19:50

Texas Family Law Characterization Of Property

QuestionAnswer
Propertyan interest, present or future, legal or equitable, vested or contingent, in real or personal property, including income and earnings
Separate Property• Property owned or claimed before marriage;
• Property acquired by the spouse during marriage by gift, devise, or descent;
• The recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage
Community Property• Property other than separate property acquired by either spouse during marriage;
• Rents and revenues from separate property;
• In division it is just a right division with regard to kids
Characterization of property-
Need to knowWhen & How property was acquired
Separate property• Property owned or claimed by the spouse before marriage
• Property acquired during marriage by gift, devise, or descent; and
• Recovery for PI sustained by the spouse during marriage, except for any recovery for loss of earning capacity during marriage
Community PropertyConsists of the property, other than separate property, acquired by either spouse during marriage
Presumptionthat property acquired during marriage is community property
Change in characterChange in value does not affect character
Mutation - change in form - does not change character (separate cash spent on car - it is separate also)
Rules for determining character of propertyinception of title
tracing
mutation
increase or decrease in value
mixed character
commingling<rb>and more
Comminglingthe separate assets of a spouse have been so hopelessly mixed (inextricably intertwined) with the community assets that they can no longer be traced
Inception of Titlethe character is determined at the earliest moment to which the claimant can claim title. RE: real estate, this is normally the date of signing the purchase contract, not the date of the deed.
Increasesteh natural increase or decrease in the value of a separate asset. This fluctuation does not affect character.
JuryTexas allow a jury to determine the character of property; however a judge determines the division of the marital estate
MutationAn asset of a specific character, whether seperate of community, retains that character after undergoing a change in form and now exists in the form of another asset. Eg: a certificate of deposit owned by a spouse before marriage may be used to purchase an automobile or real estate during marriage. The resulting asset is separate property
Non-marital Propertya potpourri of items, including professional goodwill, certian governmental benefits (usually arising from physical disability), college education, and the specific assets of an organized business entity in which the spouse has an ownership interest
Property of mixed characteran asset is not necessarily entirely community or separate property. B/c the source of funds used to purchase an asset may come from different marital estates, the resulting asset may be owned in differing percentages by the marital estates. Eg: a down payment on a house is made with seperate funds then the payments are made with community funds. This asset has a mixed character
Reimbursementexpenditure of the funds from one estate used to benefit another estate giving rise to a claim for equitable reimbursement. Typically the spending of community funds to pay for separate real estate. This gives rise to a claim for reimbursement. May also be claimed where community time, toil, and effort or community funds are used to enhance a spouses separate estate.
Retirement BenefitsRetirement benefits aer aomng the most difficult assets to allocate between seperate and community claims. See case law.
Tracingthe documentary evidence necessary to ahow that an existing asset can be traced back to an asset in another form which was of a particular character - usually seperate property. If property os a specified character has been sold, a variety of methods to trace the funds into another asset through the process of mutation have been devloped including
1. Community First-out Method
2. Clearinghouse/Identical Sum Inference Method
3. Minimum Sum Balace Method
4. Pro Rata Method
1. Community First-out Methodif funds from different estates are deposited into a bank account, the first funds withdrawn are presumed to be community property
2. Clearinghouse/Identical Sum Inference Methodthere is a pattern of identifiable deposits and withdrawls of separate funds to and from an account
3. Minimum Sum Balace Methodthe lowest subsequent amount in an account originally containing only separate funds
4. Pro Rata Methodapportions ownership of an asset purchased with mixed funds in the ratio of the amount of separate and community funds in an account.
Transfers Between SpousesTexas has developed an extensive body of case law dealing with transfers of property between spouses and the doctrine of significant recitals. These rules are quite numerous.
Trust distributionsDepending on the terms of the trust instrument, distributions from a seperate property trust may be community or separate.
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