USA – TEXAS Law and Practice Contributed by: Perrin Clark and Meredith McIver, Ytterberg Deery Knull LLP
Similarly, Texas has no forced heirship laws. See 2.4 Marital Property .
parents to children and from parents to grandchildren, outright or in trust, than has ever been transferred in the country’s history. This is creating unprecedented opportunities for wealth and estate planning for indi - viduals and families. In Texas, this same trend is occurring, and it is occur - ring against the backdrop of a successful state econ - omy, cultural diversity, and a growing population. For many years, Texas has benefited from a strong energy sector. In addition, the medical services and financial services industries have shown significant strength in Texas. These industries have brought numerous persons to Texas from across the country and from across the world, adding to the diversity in the major metropolitan areas and across the state. Many of these new arrivals have remained in Texas, helping to fuel population growth. 2.2 International Planning Individuals have become increasingly mobile in recent decades, and this trend has been even more pro - nounced with respect to wealthy individuals and fami - lies. As a result, there has been a dramatic increase in the frequency with which multinational individuals and families have sought advice and estate plans. This requires particular attention to the interplay of laws and regulations between various jurisdictions in which persons and assets are located and, when appropri - ate, the inclusion of counsel with jurisdiction-specific knowledge. Texas has been at the forefront of this trend due to the international reach of the energy sector, as well as the international reach of the medical services and financial services industries. These bring clients to Texas from all over the world. Texas has also been, and continues to be, a gateway to Central America and South America, with many Latin American clients coming to Texas and developing deep ties to the state and the United States as a whole, while maintaining meaningful ties to their countries of origin. 2.3 Forced Heirship Laws Forced heirship laws generally do not exist in the United States. Individuals generally have testamen - tary freedom to dispose of their assets as they wish.
2.4 Marital Property Community Property
Texas is a community property jurisdiction, meaning that a community estate arises during marriage, in which each spouse generally has an equal interest. The Texas community property regime was estab - lished by the Texas Constitution, which provides “[a]ll property, both real and personal, of a spouse owned or claimed before marriage, and that acquired after - ward by gift, devise or descent, shall be the separate property of that spouse...” The Texas Family Code also characterises recoveries from personal injury as a spouse’s separate property. The Texas Family Code defines community property by exclusion, providing that “[c]ommunity property consists of the proper - ty, other than separate property, acquired by either spouse during marriage”. Importantly, income earned during marriage, includ - ing income arising from a spouse’s separate prop - erty, is characterised as community property. Interest, dividends and rentals are also typically considered income and therefore community property. Capital gains are typically considered return on principal and therefore separate property. However, distributions from partnerships, other than liquidating distributions, are considered to be income and therefore community property. Separate Property The separate or community character of property is generally maintained as property changes form, for example, when property is sold, the resulting pro - ceeds maintain the same character as the former property. In order to determine the character of prop - erty, it may be necessary to trace the property back through subsequent mutations to its origin. Separate property that is commingled with community prop - erty is presumed to be community property unless the source of the separate property can be traced. If the source is traceable to separate property, the separate property portion of the commingled funds is separate property and the remainder is commu - nity property. Such tracing is often necessary where a separate property account earns income that is then
835 CHAMBERS.COM
Powered by FlippingBook