Community property and the homestead.

Community property vs. separate property.

Property that either spouse acquires during marriage is presumed to be community property, owned equally by both spouses regardless of whose name is on the title or paycheck. Separate property is what you owned before marriage, plus gifts and inheritances you received individually, and certain personal injury recoveries for pain and suffering. The line between the two can be blurred by mixing funds, which is why records matter.

What happens at death.

When one spouse dies, the survivor keeps their own half of the community property. The deceased spouse can leave their half (and their separate property) by will. If there is no will, Texas intestacy rules apply:

• Community property: if all of the decedent's children are also children of the surviving spouse, the spouse inherits all of it. If the decedent had a child from another relationship, that child inherits the decedent's half of the community property.
• Separate property: a surviving spouse receives a share of personal property and a life estate in part of the real property, with the rest going to the children, rather than everything outright.

In a blended family, that default can leave a surviving spouse sharing the home and accounts with stepchildren. A will or trust is how you choose a different result.

The Texas homestead.

The Texas Constitution gives homesteads strong protection from most creditors, and a surviving spouse generally keeps the right to live in the homestead. Those protections can affect how and when a home can be sold or transferred after a death. How the home is titled, whether it is community or separate property, and whether children come from another relationship all change the answer, so talk to a lawyer before assuming.

Tools that work with community property.

• Community property with right of survivorship: spouses can sign a written agreement that the survivor receives the community property automatically, without probate
• Wills and trusts: to direct each spouse's half and to protect children from a prior relationship
• Transfer on death deeds: see our guide on Texas TOD deeds
• Beneficiary designations: retirement accounts and life insurance follow the form on file, not the will

A tax advantage worth knowing.

Under federal tax law, both halves of community property generally receive a new income-tax basis equal to fair market value when the first spouse dies. That can substantially reduce capital gains tax if the survivor later sells appreciated property. It is one reason many married Texas couples hold property as community property rather than splitting it into separate shares.