Community property is defined as anything acquired during the marriage. Separate property, however, is anything acquired before marriage and anything acquired during the marriage by gift, devise, or descent. Your separate property is just that–yours. If you are married and you divorce your spouse, your separate property remains yours. In fact, Texas courts are prevented from dividing separate property between spouses. If you are married with separate property and you love and trust your spouse to the point that you would like for them to also share in the interest of your separate property, to ensure that this is a legal interest, you must convert the separate property into community property. If you fail to do so, then the spouse you love and trust is out of luck when it comes to the separate property that has not been properly converted. This is demonstrated by the Dallas 5th District Court of Appeals in In Re the Estate of Olen F. Cunningham, Deceased. There, the husband had entered into an “Agreement to Establish Right of Survivorship in Community Property” with his wife. The problem was, as the Court held, the agreement did not meet the requirements of Texas Family Code Sections 4.203 and 4.205. Per Texas Family Code Section 4.203, if you want to convert your separate property into community property, the agreement must “be in writing and be signed by the spouses; identify the property being converted; and specify that the property is being converted to the spouse’s community property; AND it is enforceable without consideration.” You may think (as well as several other unknowing persons) “I have put the home that I brought into the marriage in both of our names so surely that means it is our community property.” However, according to the statute and only caselaw on the subject, you are wrong. That is, the statute goes on further in subsection (b) and states “the mere transfer of a spouse’s separate property to the name of the other spouse or to the name of both spouses is not sufficient to convert the property to community property under this subchapter.” Furthermore, even with this agreement, a court must then determine if it is enforceable. The enforceability of such agreements is determined in Texas Family Code Section 4.205. In particular, the statute states that the agreement is not enforceable if the converting spouse “did not execute the agreement voluntarily; or did not receive a fair and reasonable disclosure of the legal effect of converting the property to community property.” In subsection (b) the legislature sets out a verbatim disclosure that can be included in agreements that would satisfy the issue of fair and reasonable disclosure of the legal effects of the conversion. Therefore, if you want to voluntarily and legally make “what is mine is ours”, then you must follow the statute. Otherwise, for now according to the Dallas 5th District Court of Appeals, your agreement will be just a piece of paper without any legal effect.
December 27, 2012
Updated: December 27, 2012 9:38 am
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