Community v. Separate Property in Texas Probate & Estate Planning

When a Spouse Dies in TX, Here’s What Happens to Community v. Separate Property

Widows and widowers in Texas don’t necessarily inherit everything when their spouse passes away. In fact, surviving spouses may — or may not — be legally entitled to various assets, depending on the nature of the community versus separate property, whether the deceased spouse left behind a valid will, and other factors. 

While that can raise some complex and challenging issues in and outside of Texas probate, it doesn’t have to be confusing, especially for those who understand the following:

 

What Is Community Property v. Separate Property in Texas Probate & Estate Planning?

To understand how Texas law treats community v. separate property after a spouse’s death, it’s crucial to understand the distinction between this property, which can include assets and debts. Generally: 

1. Community property describes the assets and debts married couples share or co-own. Consequently, the property acquired during a marriage tends to be considered community property, unless it’s specifically designated or inherently defined as separate property.
   
2. Separate property refers to the assets and liabilities that each individual spouse owns independently, without their marital partner sharing ownership of that property. While separate property can be items acquired before the marriage, it can also include specific property, like gifts or inheritance, obtained during marriage.

With death (and divorce) in Texas, this distinction is crucial because surviving spouses may have more or less claim to certain assets, depending on whether those items are: 

• Characterized as community or separate property
• Associated with payable on death (POD) or transfer upon death (TOD) designations 
• Part of a will or trust that a decedent left behind

As clear-cut as that may seem on paper, it can be far murkier in real life when community and separate property are co-mingled. That can occur when, for example, separate property is used to buy, maintain, or renovate community property.  

When there are questions about what constitutes the community versus separate property after the death of a spouse in Texas: 

• The “rule of implied exclusion” generally comes into play: With this rule, anything that doesn’t fit the constitutional definition of separate property will automatically become part of the community property.
  
• Any co-mingled property will generally be assumed to be community property: With this, any party asserting that some asset is separate property will have the burden of proof, needing to provide “clear and convincing evidence” to establish that property as separate.

Keep in mind that determining community versus separate property in Texas can clarify questions about surviving spouses’ inheritance rights under Texas law. This will not, however, affect the need for probate, as that hinges on whether specific assets are subject to probate, not whether those assets are defined as community or separate property. 

What Happens to Community v. Separate Property When One Spouse Dies in Texas?

The disposition of community and separate property after the death of a spouse in the Lone Star state will depend on whether: 

1. The decedent left behind a will: The existence of a valid will can dictate how the decedent’s share of any community property should be distributed and who may be entitled to it. For example, one spouse may decide to leave part of a home or a business to a child from a previous relationship in his or her will. If, however, no will is left behind and a married individual dies intestate, Texas Estate Codes (Sec. 201.001) details inheritance rights for both community and separate property.
   
2. The decedent had any surviving children: If a spouse dies intestate and (s)he had children, those kids, along with the surviving spouse, will have some inheritance claims under Texas law. This can apply to both biological and adopted children.
   
3. The decedent has surviving parents or siblings: If a married individual dies intestate with no children, their surviving parents and/or sibling(s) may have a right to a share of the community and/or separate property under Texas intestacy laws.
   
4. The spouses have a premarital or post–nuptial agreement: These contracts, when legally valid, can dictate what property remains separate versus community upon the termination of the marriage through not only divorce but also death. In these cases, there can be clear-cut terms on how any community property is to be distributed upon the death of a spouse. Some prenuptial and postnuptial agreements may even designate all property as separate, leaving no community property to handle if one spouse passes away (or the marriage is legally dissolved via divorce).

With these factors in play, community and separate property may be subject to: 

• The terms and conditions married couples set up and agree to in premarital or post-nuptial agreements.
• Any will or estate plan the decedent has established and that’s proven to be legally valid in a Texas probate court.
• Texas intestacy laws detailing inheritance rights when a spouse dies without leaving behind a will.

How Texas Intestacy Laws Address Community v. Separate Property

When married individuals pass away without a valid will, their community and separate property will typically be distributed according to Texas intestacy laws, which are detailed in Texas Estate Codes (Sec. 201.001). These laws expound on various situations, explaining who inherits what after one spouse dies, leaving behind the other spouse and possibly other relatives.

The table below highlights how Texas intestacy laws generally apply to community v. separate property, what surviving spouses can be entitled to, and what other relatives may inherit, based on their relationship to the decedent.

Other Relatives	Surviving Spouse
No Children, Parents, or Siblings	The surviving spouse inherits the entire estate.
Only Shared Children (Decedent + Surviving Spouse)	The surviving spouse retains her ½ interest but inherits none of the decedent’s community property, ⅓ of the decedent’s separate property, and ⅓ life estate in the decedent’s separate real property. The children will inherit the remaining property, including  ½ of the community property (previously owned by the decedent).
Any Children from a Previous Relationship	The surviving spouse retains her ½ interest but inherits none of the decedent’s community property, ⅓ of the decedent’s separate property, and ⅓ life estate in the decedent’s separate real property. The children will inherit the remaining property, including  ½ of the community property (previously owned by the decedent).
Surviving Parent(s)	The surviving spouse inherits all community and separate property and ½ of all real estate the decedent owned as separate property.  The parents inherit the remaining property.
Surviving Sibling(s)	The surviving spouse inherits all community and separate property and ½ of all real estate the decedent owned as separate property.  The siblings inherit the remaining property.

Notably, there is not always a spouse or other close relatives that survive a decedent. Consequently, if a widow or widower passes away, leaving behind no surviving spouse: 

• Any surviving children, parents, and/or siblings may stand to inherit more (or all) of the estate.
  
• If there are no surviving children, parents, and/or siblings, the heir to the community and separate property could be someone even further down the line of succession, like a grandchild, a niece, a nephew, an aunt, or an uncle.
  
• If there are no surviving relatives to inherit the estate, the decedent’s estate — including his or her community and separate property — will likely be subject to escheatment, a process by which the state takes ownership of the property.

Examples of Community v. Separate Property in Texas Estate Planning & Probate

Community property can be almost anything that spouses obtain together during their marriage and that isn’t specifically defined as separate property. Still, community property tends to include certain assets, like (but not limited to):

• Homes and real estate
• Vehicles, like cars, motorcycles, and boats
• Bank accounts, cash, and valuable coins 
• Stocks, bonds, mutual funds, and other investments
• Retirement accounts
• Antiques, books, art, and other collectibles
• Household items, furniture, tools, and more

In contrast, separate property tends to include:

• Gifts 
• Inheritances 
• Personal injury compensation, including settlements and jury awards
• Property acquired before the marriage and maintained as separate (i.e., not comingled with community property)
• Property designated as separate by any agreement, like a prenuptial or post-nuptial agreement — This means that fiancés and spouses can take steps to specifically deem and maintain certain property as separate, regardless of whether it’s obtained while they are married.  

How Does Divorce Affect Spousal Inheritance Rights?

If spouses divorce before an ex-spouse passes away, the surviving ex-spouse won’t typically have the same inheritance rights and entitlements under Texas law as they would if the marriage was still intact. In fact, when spouses divorce before a husband or wife dies:

• There typically won’t be any community property to distribute: That’s because that community property would have been addressed and divided up in the divorce proceedings.
  
• Parts of the decedent’s will may be deemed invalid later: Specifically, portions of the decedent’s will that leave assets to a “spouse” after a divorce can be thrown out by Texas courts. As a result, divorcees who want to leave certain assets to an ex-spouse will likely need to update or revise their will after a divorce to ensure these wishes are later carried out (Texas Estates Code Sec. 123).

How to Address Community versus Separate Property in Texas Estate Planning: 4 Tips

Before, during, and after a marriage, there are several steps you can take to designate specific beneficiaries and memorialize your wishes so that your estate and legacy aren’t left to be diced up by Texas probate courts and intestacy laws. 

Namely, it’s typically prudent to do the following when you’re putting together or revising an estate plan: 

1. Devise or update your will: Creating a valid, comprehensive will allows you to name your heirs and specify who gets your community and separate property. With your will and estate plan, however, it may not be enough to just create these devices; you may have to revisit and revise them from time to time, especially as your life, your relationships, and your wishes evolve (and also as estate tax exemptions change too).
   
2. Use POD and TOD designations where possible: With bank accounts, certificates of deposit (CDs), vehicles, real estate, and other property, you can name beneficiaries via the “pay on death” or “transfer upon death” designations. If you do, that property can be directly transferred to your chosen beneficiary after you pass, regardless of whether you have a will in place or what Texas intestacy laws dictate. Using POD and TOD designations can also help reduce the size of a future estate, potentially simplifying future probate or letting heirs bypass it altogether.
   
3. Set up and fund trusts: Trusts can hold nearly any type of asset, managing and distributing this property however you see fit. Depending on your goals and designated beneficiaries, you could set up Spousal Lifetime Annuity Trusts (SLATs), Irrevocable Life Insurance Trusts (ILITs), Grantor Retained Annuity Trusts (GRATs), Family Limited Partnerships (FLPs), Intentionally Defective Grantor Trusts (IDGTs), and/or other types of trusts.
   
4. Consult an Austin estate planning attorney: When you reach out to an experienced estate planning lawyer in Austin, Texas, you can get answers, support, and advice that’s specific to your needs, circumstances, and objectives. That can help you see the big picture, make better plans, and make more informed decisions to preserve your legacy and your final wishes. It can also help you understand your spousal inheritance rights if you find yourself widowed at any point in the future.

Remember, it’s never too early to start thinking about an estate plan. Whenever you’re ready to make or revise these plans, it’s time to contact an Austin estate planning attorney.

Find Out More About Wills, Probate & Estate Administration 

Community v. separate property issues can arise when married couples are devising (or revising) wills and estate plans or when those plans are probated after the death of a spouse. Whether you are a fiancé, a spouse, a widow(er), or some other relative facing these issues, you can turn to an experienced Austin probate and estate lawyer for essential counsel.

The truth is that there are several factors, laws, and potential caveats to consider — and you can’t make the best decisions going forward if you don’t know the options, how Texas laws work, or what your rights are in different circumstances. With an Austin estate and probate attorney by your side, however, you can get the insight, advice, and guidance necessary to make better choices to protect your rights and interests going forward. 

At the Law Office of Todd A. Wilson, also known as TAW Law TX, our Austin probate and estate lawyers are proud to represent and serve folks from all walks of life, helping them navigate Texas laws, estate planning, and probate while striving to achieve the best possible results and resolutions. 

Discover what we can do for you and get confidential advice related to your situation in a free, no-obligation consultation with one of our top-rated Austin estate attorneys. Just contact us to get more answers today. 

Todd A. Wilson

Todd A. Wilson has been practicing law since 2007, with the aim of educating all strata of society and sharing crucial insights about the importance of estate planning, probate, and more.

The Law Office of Todd A. Wilson (also known as TAW Law TX) offers affordable estate planning and probate services.