Community Property in Texas Probate: What Executors Need to Know

Texas Is a Community Property State

Texas is one of nine community property states in the United States, and its community property rules shape nearly every aspect of how a married person's estate is administered at death. As an executor, understanding these rules is not optional — they determine what property is actually part of the probate estate, who already owns what before probate begins, and how you characterize assets on the required inventory.

The foundational rule under the Texas Family Code is simple: all property acquired by either spouse during the marriage — other than by gift or inheritance — is community property, owned equally (50/50) by both spouses. This is true regardless of whose name is on the title, whose paycheck funded the purchase, or who managed the asset. If it was acquired during the marriage with marital earnings, it is presumed to be community property.

The practical implication at death: when one spouse dies, the surviving spouse already owns half of all community property outright. That half does not pass through probate at all. Only the deceased spouse's half — their 50% community interest — is a probate asset subject to the will or to intestacy laws.

What Counts as Community Property vs. Separate Property

Not all property owned by a married person is community property. Texas law recognizes a distinct category called separate property, and the distinction matters enormously for probate purposes.

Community Property

• Wages, salaries, and income earned by either spouse during the marriage;
• Real estate purchased during the marriage with marital funds;
• Vehicles, investment accounts, retirement contributions, and bank accounts funded from marital earnings;
• Business interests acquired or built during the marriage using marital efforts or funds;
• Any other property acquired during the marriage that is not clearly separate property.

Separate Property

• Property owned by either spouse before the marriage;
• Property received during the marriage as a gift (including gifts from the other spouse);
• Property received during the marriage as an inheritance;
• Personal injury recoveries — except the portion representing lost wages during the marriage, which is community property;
• Property purchased entirely with separate property funds (though commingling can convert separate to community property over time).

Texas law presumes that all property owned by either spouse during a marriage is community property. The burden is on the person claiming separate property to prove its separate character — typically through tracing funds, deeds, gift records, or inheritance documentation. When records are incomplete or assets have been commingled, separate property can be difficult to establish.

What This Means for the Size of the Probate Estate

The community property framework directly reduces the size of the probate estate for married decedents. Consider a straightforward example: a married couple with $600,000 in total assets, all acquired during the marriage — a home worth $350,000, investment accounts worth $200,000, and vehicles worth $50,000. Every asset is community property.

At the death of one spouse, the surviving spouse already owns half of all of it: $300,000. Only the deceased spouse's half — $300,000 — is a probate asset. The will (or intestacy law) governs who receives that $300,000 share. The surviving spouse's $300,000 is untouched by the probate proceeding.

This has real consequences for how you plan and administer the estate. It means that an estate that sounds large — "$600,000 in assets" — may actually be a $300,000 probate estate. It may affect whether the estate qualifies for a simplified small estate affidavit. It affects the creditor exposure of the estate. And it is a critical factor if the estate is near the federal estate tax threshold (currently $13.61 million per person in 2024).

The Stepped-Up Basis: The Tax Benefit Most Families Miss

Here is where community property law intersects with federal tax law in a way that can be worth tens or hundreds of thousands of dollars — and that most surviving spouses and executors do not fully understand.

Under Internal Revenue Code §1014, assets inherited from a decedent receive a "stepped-up basis" — their cost basis for capital gains tax purposes is reset to the fair market value on the date of death. This eliminates any unrealized capital gain that accrued during the decedent's lifetime.

In most states (common-law property states), only the deceased spouse's half of jointly owned property gets the stepped-up basis. The surviving spouse's half retains its original cost basis.

In Texas and the other community property states, the rule is more generous: under IRC §1014(b)(6), both halves of community property receive a stepped-up basis at the first spouse's death — not just the deceased spouse's share.

What This Looks Like in Practice

Suppose a Texas couple bought their home in 1998 for $100,000. At the time of one spouse's death, the home is worth $500,000. The couple has $400,000 in unrealized capital gain.

• In a common-law state: only the deceased spouse's half ($50,000 original basis, now worth $250,000) gets stepped up to $250,000. The surviving spouse's half retains the original $50,000 basis. If the surviving spouse sells for $500,000, they have a $200,000 gain on their half — potentially subject to capital gains tax.
• In Texas (community property): both halves get stepped up to $250,000 each — a total new basis of $500,000. If the surviving spouse sells the home for $500,000 shortly after death, they owe zero capital gains tax on $400,000 in appreciation that accrued over 25 years.

The same principle applies to investment accounts, stock portfolios, rental properties, and business interests held as community property. The tax savings can be enormous — particularly for long-held appreciated assets.

Inventory Requirements and Documenting Date-of-Death Values

Texas Estates Code §309.051 requires the executor to file a verified Inventory, Appraisement, and List of Claims within 90 days of the executor's qualification (issuance of Letters Testamentary). The inventory must:

• List all property belonging to the estate at fair market value as of the date of death;
• Identify whether each asset is community property or separate property;
• For community property, show the value of the decedent's half-interest specifically.

The date-of-death values on the inventory are not just a legal formality — they are the foundation for the stepped-up basis. The IRS uses these values (or values from an estate tax return, if one is required) to establish the new cost basis for inherited assets. Accurate, well-documented date-of-death values protect beneficiaries from future tax disputes and ensure they can prove their basis when they eventually sell.

For real estate, get a formal appraisal or at minimum a comparative market analysis from a licensed real estate agent dated as close to the date of death as possible. For publicly traded securities, use the average of the high and low trading prices on the date of death (or the mean of the date before and date after if the date of death falls on a weekend or holiday). For closely held business interests, a formal valuation may be necessary.

The Affidavit of Heirship: An Alternative for Surviving Spouses

For some estates — particularly where the primary asset is real estate passing to a surviving spouse and there is either no will or a straightforward will — an Affidavit of Heirship recorded in the county deed records can establish ownership without full probate.

An Affidavit of Heirship is a sworn statement by two disinterested witnesses (people with no financial interest in the estate) who have personal knowledge of the decedent's family history, marital status, and the nature of the property. When recorded, it creates a record that title companies can rely on to insure the property as belonging to the surviving spouse or other heirs.

Affidavits of Heirship are not available for all situations and do not provide the same legal certainty as a court order. They are generally most useful when: (1) the estate has no will and the property passes entirely to the surviving spouse under Texas intestacy law; (2) there are no debts or creditors who might contest the transfer; and (3) the title company involved in any subsequent sale is willing to rely on the affidavit.

More Texas Probate Guides

• Texas Independent Administration: Why It Makes DIY Probate Possible
• Texas Muniment of Title: The Fastest Way to Transfer Real Estate After Death