Fabio & Merrill

What does community property mean?

You may be aware that Texas is a community property state. This means, according to the definition from the IRS, that the state recognizes all property of married couples to belong to them as a couple and not individuals. This concept is important to understand for legal and taxation reasons. It also may affect your debts because you may be held accountable for your spouse’s debts even if he or she accrued those debts on his or her own.

Community property is an idea based on both of you contributing to the whole of your “community” or marriage. Since you both contribute, you both share equally in the benefits of those contributions, which is anything you own. All your property is split 50/50, along with your liability. You can end community property status only by moving out of Texas to a non-community property state, getting a divorce or if one of you passes away.

To fall under the community property laws of Texas, you must live in the state. If you and your spouse live in different states, then the court will look at which state is more significant. For example, if your main home and assets are all in Texas, then it would be considered your home state, and therefore, you would have to abide by community property laws.

You also have to be married. You can either have a formal, legal marriage or a common law marriage. Common law marriages in the state are recognized if you were considered by another state to have a common law marriage before moving to Texas. A common law marriage can be established in Texas if you represent yourselves as being married, live together and have an agreement that you are married for all intents and purposes. This is general information only and is not intended to provide legal advice.

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