What better time than the holiday season to talk about how gifts are treated under Texas' marital property system? This article will review who actually owns a gift given to a married person or couple.
Texas is a community property state, which means a married person's property is either separate property or community property. Basically, separate property is any property owned or claimed before marriage. Separate property also includes property inherited or received as a gift during marriage. Finally, separate property also includes any recovery for personal injuries sustained during marriage, excluding recovery for loss of earning capacity. Community property is any property acquired during marriage that is not separate property. All property is presumed to be community property unless proven otherwise. Regardless of which spouse purchased a community property asset, the community property asset belongs to both spouses. During a divorce, courts can divide a couple's community property in any manner the court deems just and right. However, courts generally cannot divide a married person's separate property during divorce. Therefore, the distinction between separate property and community is hugely important in a Texas divorce.
As we stated earlier, gifts received during marriage are the separate property of the spouse receiving the gift. So if a gift is given to one spouse, then it is the separate property of that spouse. If a gift is given to both spouses, then both spouses have an equal separate property interest in the gift.
A major consideration when dealing with gifts is the community presumption. Because all property is presumed to be community property unless proven otherwise, you'll have to be able to prove in court that a gift was actually a gift. How do you prove something was a gift? For things like jewelry and other expensive personal property, it usually comes down to witness testimony. Sometimes, if a person is lucky, they may still have a dated card that came with the gift signed by the gift giver and naming the gift. They may even have a gift receipt. For land, if someone is receiving real property as a gift, the deed usually states that the consideration provided for the land was the love and affection of the person receiving the land. In practical terms, if someone is nice enough to give a gift, most people won't ask for documentation proving a gift was made.
There is one other major consideration when dealing with gifts. Under Texas law, the income from separate property is considered community property. For example, if your parents give you a house as a Christmas gift and then you went and rented out that house, the rent money you collect would be community property. In other words, the rent money would belong to both you and your spouse. There is an exception to this rule. If a spouse receives a gift from their spouse, then even the income from that gift is considered the receiving spouse's separate property. For example, if your spouse gives you a forklift for Christmas and then you let other people rent the forklift, the rent you collect is your separate property. So really, the best gifts are from your spouse.
If you have questions about gifts you received during or before marriage, contact Sugar Land divorce attorney Chikeersha Puvvada at 832-317-6705 or online today to schedule a free 30 minute consultation.