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Are Inheritances Split in a Texas Divorce?

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Texas is a “community property” state. Most people have a general understanding of what that means–spouses split their property when they divorce. The specifics, however, can be a bit more nuanced, and there are exceptions to the general rule. Where does inheritance fall? Is your spouse entitled to half the value of your childhood home if you inherited the property during your marriage? Continue reading to learn about how inheritances are treated in a Texas divorce.

The General Rule: Everything Acquired During Divorce is Community Property, With Exceptions

Texas follows a “community property” model when it comes to dividing property upon divorce. In Texas, any property acquired during the marriage is considered community property, with limited exceptions. Community property is subject to a 50/50 split upon divorce. “Property” includes everything from income to real estate, retirement accounts, stocks, and all other assets and debts. It does not matter whether the property is held in the name of one spouse; if it was acquired during the marriage, it belongs to both spouses equally.

Property acquired before marriage is considered “separate” property, not subject to division upon divorce. Property acquired after the complaint for divorce is filed but before the final judgment is issued may be treated as separate, although the issue is more complex.

The Principal Exceptions: Inheritance and Gifts

There are certain, notable exceptions to the general rule. In particular, property acquired “by gift, devise, or descent” is considered separate property. If someone gives a gift to one spouse, specifying that the gift is meant for that person and not for the family, then that gift becomes separate property. Likewise, if a spouse obtains property by way of inheritance–either because they are named in a will or because they inherited the property by way of intestate succession (transfer of property when someone dies without a will)–that inheritance is considered to be separate property.

The Exception to the Exception: When Is Inheritance Treated as Community Property?

The law is rarely clear-cut and simple. Although inheritance is the main exception to the community property rule, there are limitations to that exception as well.

If a will specifies that the property is bequeathed to both spouses or their entire nuclear family, then the property would not be treated as a separate asset. The fact that the decedent was the relative of only one spouse does not change the analysis. It’s only separate property if it was acquired through intestate succession or the spouse was specifically identified in the will.

Additionally, separate property can be converted into community property. The parties can explicitly agree to convert separate property to community property by written agreement–e.g., the parties write a contract dictating that a house inherited by one spouse will be converted to community property of the parties’ marriage. Separate property can also become community property when the separate property is “commingled” with marital assets.

If one party inherits cash, for example, that money would be separate property. If the cash is deposited into a joint bank account held by both spouses, however, or the money is used to pay off a marital debt, then the inheritance may become a community property asset. Similarly, if one spouse inherits a house and the married couple uses significant marital funds to fix or improve upon the house, the house may be treated as community property. To keep inheritance separate, it must be kept separate and apart from marital assets.

Call an Experienced Texas Divorce and Property Division Lawyer

If you are dealing with property division issues during or after divorce, you need assistance from a seasoned Texas property division attorney. Call an experienced divorce and equitable division attorney at the Law Office of Maria Lowry to discuss your Texas divorce and property division matter.

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