Characterizing work income – Based on what you know thus far about characterization of property, would you say income – whether it be that of your spouse or your own – is separate property or community property?
Don’t jump to an answer too fast. Think about it, because not all answers for this topic are clear cut.
The answer depends on when the income was “earned”, not paid. Here is what the Texas Family Code says.
Current Wages – A spouse’s current wages are only considered separate if the income was earned before the marriage, even if those same wages were paid during the marriage. With that said, wages earned during marriage are considered community property even if that income is paid after the marriage dissolves.
Future Wages – Future wages are expectant; they are not guaranteed and could be impacted depending on a spouse’s post-marital efforts. Therefore, future wages cannot be deemed as community property even if the future wages are earned in part during the marriage. A caveat is if future wages are earned during marriage and they are not contingent on the performance of additional post-marital service, then it is community property.
Child’s Wages – Wages from minors who still live at home, as well as any property that was purchased with proceeds from that income, is community property. When parents get divorced, the child’s wages will be allocated between the parents (or managing conservator, if necessary) by agreement or court order.
To sum up, it is important to remember that when you get married, you agree to share everything, and that includes income. Just because you both have a job independent of the other does not mean income derived from those jobs is yours and yours alone if the marriage were to dissolve.
Just like any other property, it is only separate if you can prove it was earned before the marriage began. If a spouse cannot clearly trace separate property through all of its mutations (commingling), then there is no choice but to consider it community property.
This goes back to our blogs in inception of title and tracing. Here is a link to one of them.
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