Various laws can create unique rules for married couples and how they handle their property. However, one of the most important legal issues that married couples in Forney need to know when creating or revising wills includes Texas’s community property laws. As a result, couples who undertake estate planning need to know how community property can affect their options in their wills.
What Is Community Property Under Texas Law?
In Texas, “community property” refers to all assets that married spouses acquire during their marriage. Community property differs from separate property, which includes assets that each spouse acquired before their marriage, along with other property like inheritances and separate gifts. Although each spouse may acquire property during the marriage using money they separately earn and may title assets solely in their name, Texas community property laws may treat those assets as community property.
The community property system treats qualifying assets as owned by the couple (no matter how titled or acquired), with each spouse owning a one-half interest in the couple’s community property.
How Community Property Affects Wills
Because each spouse only owns a one-half interest in the couple’s community property, a spouse may only bequeath that one-half interest in their will. As a result, a spouse who purports to bequeath the entirety of an asset that qualifies as community property can only leave a one-half interest in that asset, with the beneficiary co-owning it with the surviving spouse. Community property laws can affect how assets like real estate, brokerage or retirement accounts, pension benefits, and business interests pass via a will. Failing to account for the effect of community property laws on a married spouse’s will can potentially lead to confusion and unnecessary legal process when a will seeks to pass everything a deceased spouse owned to their surviving spouse.
Community Property Survivorship Agreements
Texas’s community property laws provide unique legal mechanisms for spouses to pass their one-half interest to their spouse after death. When couples own property as community property with rights of survivorship, a deceased spouse’s one-half interest automatically passes to the surviving spouse outside the probate process. Survivorship agreements allow spouses to ensure the surviving spouse gains full ownership of certain assets, such as the marital home, without the time and expense of passing a spouse’s one-half interest through a will. Community property survivorship agreements can work alongside a will by more efficiently passing property intended for the surviving spouse, while a will can distribute separate property.
Common Mistakes That Forney Couples Make
Some of the most frequent mistakes that married couples in Forney make when estate planning when it comes to community property include:
- Couples who move to Forney from another state and do not investigate how Texas community property laws may affect wills they wrote in their previous home state.
- Failing to retitle jointly owned assets after moving to Forney from a non-community property state
- Commingling separate and community property, such as using an inheritance to help pay for jointly-owned property
- Failing to keep proper documentation of separate and community property
- Writing or updating a will without considering the effect of Texas community property laws
Contact Our Forney Estate Planning Law Firm Today
If you and your spouse have wills, you need to know how community property rules may restrict your estate planning options to ensure you have an effective plan that achieves your goals. Contact Guest & Gray today for a free consultation with an experienced estate planning lawyer to learn more about how Texas’s community property laws may affect aspects of your will and other estate planning documents.
