Community Property

Whether you are newly engaged or you’ve been married for years, estate planning is a topic every couple should discuss. Since there are many elements involved in estate planning, it can quickly become an overwhelming topic to discuss. To help you and your spouse, our team at Crain & Wooley has put together five key topics every married couple should talk about to get their estate planning in place.

If you need guidance on estate planning, contact our Dallas-Fort Worth estate planning attorneys today at (972) 945-1610 to schedule a consultation!

#1: Community Property

Texas is a community property state, so this is something you and your spouse should discuss when estate planning. A community property state is when each spouse owns half of all assets and income acquired during the marriage. What this means is that each spouse can designate what will be done with “their half” of the estate after their death. Therefore, you and your spouse should both consider how you would like your half to be distributed and plan accordingly.

For example, suppose each spouse wants to leave their half to each of their children. If one spouse were to pass away before the other, the surviving spouse would have to pay out half of the house to the beneficiary child or sell the house to distribute the assets. This is something you and your spouse should consider.

#2: Bypass Trust

You and your spouse should also discuss a bypass trust. A bypass trust is a common way for married couples to prevent double taxation of their assets. Although it has become less effective in tax reduction in recent years, it can help married couples ensure that their assets are transferred straight to their beneficiaries instead of the surviving spouse.

#3: Establishing Child Guardianship

If you and your spouse are both parents to minor children, you should discuss choosing a guardian for your children in the event that both parents pass away. When choosing a guardian, you may want to consider the person’s religious background, household and geographic location, and financial security. You should also talk to the person you choose to determine if they would be up for the responsibility in the event that they were needed.

Although you could choose a guardian for your children using your will, setting it up in a trust is much easier. In a trust, you can choose who would manage money that would be used to provide for them financially and who would be responsible for the child(ren).

#4: Taxes & Trusts

Reducing taxes is an important step during the estate planning process. A trust is a common legal document that can help family members avoid the probate process, obtain assets faster, and reduce estate taxes. Therefore, you and your spouse should learn more about the various types of trusts and how they can help ensure your assets are designated for your loved ones.

#5: Estate Planning Attorneys

Couples should also discuss the importance of obtaining an estate planning attorney. Especially for couples living in community property states, like Texas, each couple will have a different estate planning objective. An experienced estate planning lawyer can help you create a comprehensive estate plan that will give you peace of mind knowing that it will achieve your goals. Our team at Crain & Wooley has helped couples throughout Texas achieve their desired estate planning goals. We are here to guide you through every step of the way.

If you need guidance with your estate planning, our team at Crain & Wooley is here to help you. Contact our Dallas-Fort Worth estate planning lawyers today at (972) 945-1610 to schedule a consultation!

To create a comprehensive estate plan, you must be familiar with all the laws and regulations in your state. For example, Texas is one of nine states that follows community property laws. What this means is that all assets acquired by spouses during the marriage while living in one of the nine states will be labeled as “community property,” regardless of which spouse purchased it. Our Dallas Fort Worth estate planning attorneys explain what community property is and how it may affect your estate planning process.

What Is Community Property?

When a spouse purchases assets in Texas during their marriage, the property is owned by both spouses 50/50. Therefore, when one spouse passes away, they can leave their share of the assets or property to whomever they wish. However – this can be a bit complicated when it comes to estate distribution.

For example, suppose Jack purchased a house in Texas a year after he married his wife Jen. Although Jack purchased the property, both Jack and Jen own 50 percent of the house since they bought it in a community property state. Each of spouse must plan, IN ADVANCE, for what to do with their 50 percent of the property. There is NO law in Texas that says a spouse automatically inherits the deceased spouse’s share of joint assets. To start planning, get in touch with out team at Crain & Wooley to protect your share.

Community Property Misconceptions

Many have the misconception that when one spouse passes away, the property will automatically transfer to the surviving spouse. However, this is an incorrect assumption. In reality, when one partner dies, the surviving spouse will only be able to keep their half of the assets. The deceased spouse’s half will be transferred according to legal documents, such as wills, trusts, and contracts. When a spouse passes away without legal documents that state their wishes, the court will then decide how their assets will be distributed.

Learn more about the misconceptions on community property in our blog post.

Have questions about how community property might affect your estate plan? Contact our Dallas Fort Worth estate planning attorneys today at (972) 945-1610 to schedule a consultation!

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.