The name in which a piece of property, real or personal, is held does not conclusively establish the asset’s characterization. Using the Inception of Title Rule, we will need to examine the timing and method of acquisition to determine whether a piece of property should be characterized as a separate or community asset.
For example, if a married person purchases a car without the other spouse present and acquires the car with title in the buyer’s name alone, the spouse who was not party to the transaction still acquires an undivided one-half community interest in the car. According to the Inception of Title Rule, the character of a piece of property is based on the timing and method in which a person first acquired an interest in that property. Here, because the car was acquired during the marriage, it is presumed to be community property.
Upon divorce, the spouse who purchased the car during marriage would need to establish by clear and convincing evidence that the car is separate property in order to overcome the community presumption. If the buyer used separate property funds to purchase the vehicle, then he or she may be able to trace the separate property funds used to purchase the vehicle and establish that the car is separate property.
Although title alone does not conclusively establish characterization, the fact that only one spouse’s name is on the title to the car does create a presumption that the car is within the sole management and control of that spouse according to the Texas Family Code. This means that a third party who purchases the vehicle from the spouse whose name is on the title may rely on the title, and the other spouse might not recover the vehicle should it be transferred to a good faith purchaser. To ensure that your interests are protected, contact one of our attorneys at Kirker | Davis LLP.
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