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Have you noticed that life keeps getting more and more complicated? Things that we thought we knew and understood seem to not be as simple as they once were. An area of law that is often misunderstood in this manner is community property.
In Texas, community property means that each person owns a certain percentage of assets. The most common analogy is a married couple: spouse #1 owns 50% of assets acquired after marriage and spouse # 2 owns the remaining 50%. Simple enough, right? Well, that is where the simplicity ends. Complexity and misunderstanding arise when talking about distributing community property assets in cases of death (let alone with disability – which is a whole other topic).
A common misunderstanding surrounds the distribution of title assets like real estate. A normal, yet mistaken, thought process goes something like this: “I am married, and we are both residents of Texas. Since Texas is a community property state when I die all my property will automatically transfer to my spouse.” On face value, this sounds right. However, it is simply an incorrect assumption and the truth surrounding community property surprises many people – often during times of personal loss and tragedy.
Bottom line: upon the death of one partner, the surviving spouse will be able to keep his or her 50% of assets. The decedent’s 50% of assets transfer according to legal documents such as wills, trusts, and contracts. When a spouse dies without a will, trust or contract in place, he or she dies intestate (without instructions) making it difficult and expensive for the survivor to sell, refinance, or distribute title assets.
If you own a home, have CDs, mineral interests…ANYTHING WITH A TITLE, it is imperative that your assets be included in a legally binding will, trust or contract. Please, don’t let urban legends and general misunderstanding about community property stop you from creating a comprehensive estate plan.
Have questions about community property contact us today.