Jennifer always enjoyed visiting her uncle’s ranch in Montana. Having grown up in the city for most of her life, it was an opportunity to let life slow down for a bit. The ranch had also been in her family for generations; therefore, not once did she consider that it might not be one day. Sadly, he passed away last spring, and new questions about separate and community property threatened her family’s claim to the land—especially as she found herself involved in unrelated legal disputes and a failed marriage.

Thankfully, everything worked out for Jennifer in the end. Though she was initially unaware, her uncle had a Trust in place that clearly named her as the beneficiary and properly designated the ranch as separate property. Yet Jennifer’s story highlights an important question many individuals and families face when planning for the future: how to divide Trust assets properly. 

This decision may seem simple. After all, the goal of strategic estate planning is to protect everyone you love and everything you own. That said, no two families’ wants and needs are ever the same, and they may require careful and nuanced considerations.

First Things First—What Do We Mean by Separate Property and Community Property? 

Texas is a community property state. Without getting too technical, this means most marital assets are presumed jointly owned by both spouses and are divided in a way that the court feels is just and right upon divorce. Keep in mind that just and right does not always mean a 50-50 split, and many people end up in a battle of “what is truly yours and what is truly mine.” 

In many instances, this may require proving that certain assets are separate property.

Unlike community property, separate property is assets one person owned individually before the marriage or received through inheritances and gifts. 

Why Dividing Your Trust Assets in This Way Might Be a Wise Move

1. You can keep separate property in the family — If you are like Jennifer’s uncle and have a family ranch passed down through generations, labeling that particular Trust asset as separate property ensures that it stays with your family. For instance, if your descendants do not outlive you, keeping your separate property designated to your siblings and their children ensures that asset stays within the family circle rather than ending up outside the family tree.
2. You can protect separate property from a divorce — When a property is already classified as separate, it generally remains your personal property and is not subject to property division in a divorce. Granted, no one plans for divorce. However, the potential impact on your estate planning can be costly if you do not consider its potential impact.
3. Asset protection eliminates worries over future lawsuits — By clearly distinguishing the ranch as separate property inside his Trust, Jennifer’s uncle effectively shielded that asset from several legal threats.  

The key to any estate plan is to plan ahead and understand how dividing your Trust assets into separate property and community property may benefit you and your family. Ultimately, the decision depends on your personal circumstances, priorities, and long-term goals. Our team of estate planning attorneys can help you navigate these questions confidently and prevent unnecessary complications. The right approach can secure your family’s future, protect your assets, and minimize potential risks. 

Call Leigh Hilton PLLC Today!!

Having a competent attorney in your corner will help you and your family navigate the often overwhelming waters of protecting everything you own and everyone you love. That is our job, and we think we do it better than anyone else. Call Leigh Hilton PLLC so that we can help ensure you and your family are taken care of in the best way possible. 

Leigh Hilton PLLC wants to be your first call every time for any estate planning need. We look forward to serving you.