Real estate investments can lead to complex issues for property division in a Texas divorce, especially if there are co-owners or business entities involved.  A former husband recently challenged the property division in his divorce, which characterized certain property as his wife’s separate property and awarded his father-in-law a 50% interest in a piece of real estate.

The parties moved to Texas from the U.K., intending to purchase real estate in Austin.  In 2018, the wife’s parents gave her about £250,000, documented as a gift in a letter.  The wife put £214,000, which totaled a little over $248,000, into a joint account.  The funds were used for 97.19% of the purchase price of a property identified by the court as “the Webberville property.”  The purchase and deed were in only the husband’s name based on advice from an immigration attorney.

The parties purchased “the Gunter property” with the wife’s father in late 2019.  They did not have a written contract regarding the co-ownership, but the wife’s father testified they agreed he would put 50% down and own 50% of the property.  He had signed a letter in November of that year, however, stating the funds he put toward the purchase were a gift with no expectation of repayment. The husband told him having only the couple on the title would facilitate the purchase, but he would amend it to add the wife’s father.  The father was not added, but the husband did give him property and loss statements for the property and pay him $14,000 as his share of the rental income.

Texas spouses may agree in writing to partition or exchange some or all of their community property between themselves such that the property becomes the separate property of one spouse.  A former wife recently challenged her divorce decree, arguing the trial court erred in awarding a reimbursement claim against her, reducing the spousal maintenance below the amount stated in the parties’ agreement, and including contingencies on the spousal maintenance that were not in the agreement.

According to the appeals court’s opinion, the parties married in 2006. They signed a Marital Property Partition and Exchange Agreement in 2020 that made two pieces of property the wife’s sole and separate property.  She agreed to be responsible for the debt associated with them.  The husband, however, made some of those payments from his community property income until the date of divorce.

The couple stopped living together in 2022 and the husband petitioned for divorce. The court enforced the agreement, but divided the other property according to the husband’s proposed division.

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Large inheritances, trusts, and gifts can complicate the property division in a Texas divorce. A spouse’s separate property includes the property they received during the marriage through gift, descent, or devise. Tex. Fam. Code § 3.001.  In a recent case, a former husband challenged his divorce decree that characterized mineral rights he obtained from his mother’s trust as community property.

According to the opinion, when the husband’s mother died, she left a trust for the benefit of the husband’s father during his lifetime.  The trust included mineral rights to certain property, which the husband’s father transferred to the husband and his siblings on November 1, 2009.  The deed stated the grantor transferred the mineral rights to the husband and his five siblings “[f]or an adequate consideration paid and received.”

The husband testified his father gifted each sibling $12,000 from their mother’s estate to purchase the mineral rights.  He presented a carbon copy check for $12,000 dated November 19, 2009, but it did not have an account number, payor name, or signature. A bank statement for the parties’ joint account reflected a $12,171 deposit on November 23 and a check for $11,130.50 on December 3.  Those records did not indicate the source of the funds or who deposited them.  They also did not show who wrote the check or who received it.

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Property division in a Texas divorce can be complicated when there is a business involved.  In a recent case, a former husband challenged a property division that divided assets belonging to his business entities.

According to the appeals court, the husband formed two businesses before the marriage.  He said he purchased property, including rental houses in Florida and vacant lots in Texas, to be used by the businesses with money he brought when he moved from Puerto Rico. The wife worked at one or more of the husband’s businesses during the marriage.

The husband and both businesses bought and sold multiple commercial vehicles and trailers while the parties were married.

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Certain assets, especially stocks or assets related to a business, may be held in the name of just one spouse, even if they are community property. In a Texas divorce, a court may impose a constructive trust requiring the spouse to transfer property to the other spouse. Tex. Fam Code 9.011 provides that receipt by one spouse of certain installment or lump-sum payments that were awarded to the other spouse in a divorce decree gives rise to a fiduciary obligation and imposes a constructive trust on the property.

In a recent case, a former husband challenged the divorce decree that imposed a constructive trust on future payments to him as stockholder in a corporation, arguing that part of the payments should be considered his separate property.

The husband was an oncologist who was involved in the development of a drug to treat breast cancer. A corporation owned the patent rights for the drug and the husband acquired stocks equaling 30.33% ownership of the corporation with community funds.

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In a Texas divorce, “special community property” is community property that is under the sole management, control, and disposition of one spouse. Tex. Fam. Code § 3.102(a).  Although special community property is under the sole management, control, and disposition of one spouse, disposition of that property must be fair to the other spouse.

When a spouse shows the other spouse disposed of community property without their consent or knowledge, there is a presumption of constructive fraud. The other spouse then has the burden of showing the disposition was fair.  The court considers the relative size of the property to the total community estate, the adequacy of the rest of the estate, and the relationship of the parties involved in the disposition.  In a recent case, a husband challenged the divorce decree that stated he had committed fraud on the community estate.

The parties had two children together.  The husband’s two children from a previous relationship were adults by the time of the divorce. Each party alleged constructive and actual fraud on the community estate by the other.

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Although not always an issue in a Texas divorce, tax matters can become a significant issue, especially in high net worth divorces or divorces involving the division of a business. A Texas appeals court recently decided a second appeal in a case involving a mediated settlement agreement (“MSA”) with potentially conflicting provisions related to the parties’ taxes.

According to the appeals court’s opinion, the parties’ MSA was divided into two parts.  Part I was what the parties referred to as the “boilerplate” section and Part II included specific provisions addressing the children and the property division.

Federal tax liabilities were addressed in two provisions, one in each part. The provision in Part I, identified by the appeals court as the “indemnity term,” provided that the parties would equally share any income tax refund or federal tax liabilities from their taxes through 2019, with each holding the other harmless from half of the tax liabilities.  The relevant section under Part II, identified by the appeals court as the “IRS regulations term,” stated, “Income Taxes due for 2018 and 2019: According to IRS rules and regulations.”

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Sometimes a party to a Texas divorce may have difficulty collecting what has been awarded to them. Pursuant to the Texas turnover statute, a judgment creditor may ask the court to assist them in reaching the judgment debtor’s non-exempt property.  The court is authorized to take a number of actions, including appointing a receiver. Tex. Civ. Prac. & Rem. Code § 31.002.  Appointment of a receiver is considered an “extraordinary remedy” and should not occur if there is a lesser remedy available. Gilbreath v. Horan.  Although a receiver may be appointed in a divorce case, the turnover statute is not limited to divorce cases.  In a recent case, a former wife requested a receiver to satisfy a judgment against her former husband following his divorce from his second wife.

According to the appeals court’s opinion, the former husband remarried after the parties’ divorce in 2011.  He and his second wife divorced in 2018.  The first wife argued the property division in the husband’s second divorce constituted a fraudulent transfer to the second wife to avoid debts he owed the first wife.

The parties divorced in Arkansas in 2011.  The husband was ordered to pay $250,223 to a business and $8,000 to the first wife for attorney’s fees.  According to the first wife, she sought garnishment against multiple banks in February 2018 and was awarded $70,000 in one of those actions, partly based on her sole ownership of the business.

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A former spouse may want to appeal their Texas divorce decree, but in some cases, actions taken after the divorce decree is entered can preclude a party from appealing.  In a recent case, a former wife was barred from challenging certain aspects of the divorce decree by the acceptance of benefits doctrine.

The wife filed for divorce in January 2018. The court rendered judgment in late December 2023 and signed the decree the following January. The wife appealed, arguing the trial court erred in admitting certain evidence, in finding that a condominium was the husband’s separate property, and in awarding the husband an equalization payment.

Acceptance-of-Benefits Doctrine

Sometimes parties to a Texas divorce can get embroiled in litigation beyond standard divorce claims.  A spouse may file a tort claim for intentional infliction of emotional distress (“IIED”) in a Texas divorce case.  To succeed on an IIED claim in Texas, a plaintiff has to show intentional or reckless conduct that was extreme and outrageous and caused emotional distress that was severe.  Hersh v. Tatum. The Supreme Court of Texas has stated that IIED is intended to allow recovery in unusual circumstances where the victim does not have another remedy.  Moser v. Roberts. In a recent case, a wife pursued an intentional infliction of emotional distress (“IIED”) claim against the husband, as well as a separate lawsuit against his alleged affair partner, who had been an employee of their business.

The parties owned a plastic recycling company.  The wife petitioned for divorce based on adultery in 2019 and made a claim for IIED against the husband.

IIED Claim

The jury awarded the wife $1.5 million for past and future physical pain and mental anguish pursuant to her IIED claim. The husband ultimately appealed.

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