Title of Property: Community or Separate

Title of PropertyIn Texas we have a legal doctrine called “the Inception of Title.”  This is a really important concept for probate cases.

As background, Texas is a community property state. We share that distinction with 8 other states:  Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Washington and Wisconsin.  Alaska is an opt-in state for community property, but that is a topic for a whole ‘nother column.

In a community property state, a married person’s property is characterized as either “separate” or “community.”  If it is separate, then that person holds sole ownership to it.  If it is community, then that person holds an undivided ownership interest with his or her spouse.

When a person dies, ownership of his property (100% of his separate property and 50% interest in the community property) passes by Will or by law. At this point it becomes really important to know what property was community and what property was separate.

Enter the Inception of Title Doctrine, which holds that the characterization of property as community or separate is determined at the time the title is taken.

Here is a fairly common example:   Husband purchases the family home, in his name, before marriage.  Husband and wife get married, have children and live happily in the home for 20 years.  Husband then dies without a Will.

Guess what?  Wife doesn’t inherit the house, doesn’t own the house, and can’t refinance or sell the house.  According to the Inception of Title Doctrine, the house was husband’s separate property.  Wife inherits only a 1/3 life estate in the house.

The Inception of Title Doctrine doesn’t just apply to houses.  It applies to bank accounts, stocks and bonds, cars,  boats, helicopters, and that private Lear Jet parked in the backyard hangar.

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