The holidays are a time for gift-giving. For those going through a divorce at this time of year, the consideration of gifts is especially important.
That’s because, in Texas, all property owned at the time of divorce, including any gifts, must be classified as either separate or community property.
Community property is jointly owned by the married couple and divisible by the judge at the time of divorce. Separate property, however, is not. The court cannot take away separate property in a divorce.
- Gifts do not fall under the community presumption.
The general rule is that all property received during a marriage is community property. Gifts, however, are one of the few exceptions. Unlike most property received, gifts are classified as separate property.
- The community estate cannot receive a gift.
A gift cannot be given to the community. If the gift is to one spouse or the other, it is the separate property of that spouse. If the gift is made to a married couple, the property is one-half the separate property of each spouse.
- Income from a gift belongs to the community estate – usually.
If a gift is received that generates income, even though the gift is separate property, the income generated from the gift is community property. So although a divorce court cannot take away the gift, it can divide and take away some or all of the income. Income includes interest, dividends, and rental income.
- A gift from one spouse to the other includes the income – probably
The rule stated above in #3 does change a little bit when it is one spouse giving something to the other. According to the Texas Family Code, Section 3.005, “If one spouse makes a gift of property to the other spouse, the gift is presumed to include all the income and property that may arise from that property.” The presumption can be challenged, however, so if you are giving something to your spouse that you want to not follow the presumption, you need to make sure that you have some written evidence of your actual intent.