Texas Divorce Attorney Blog
Property characterization can be a significant area of contention in Texas divorces, particularly in high net worth divorces or those in which one party entered the marriage with significantly more assets. Texas law presumes that property possessed by either spouse during or on dissolution is community property. That presumption may be rebutted by clear and convincing evidence the property is separate. Tex. Fam. Code § 3.003. Property conveyed by one spouse to the other is generally presumed to be a gift. Clear and convincing evidence the conveying spouse did not intend to gift the property is needed to rebut the gift presumption. A former husband recently challenged characterization of the marital residence as the wife’s separate property despite execution of a general warranty deed granting him an undivided one-half interest.
The parties got married in 2001 and the wife petitioned for divorce in 2021. The trial court found the marital home was the wife’s separate property. According to the appeals court’s opinion, she bought it two years before the marriage and refinanced it in 2003. She also signed a general warranty deed that granted the husband an undivided half interest. The court found the wife did not intend to gift the property to the husband and provided an alternate reason for executing the warranty deed. The court also found refinancing had not changed the property’s character. The trial court awarded the wife conditional appellate attorney’s fees if the husband appealed to the Court of Appeals or the Supreme Court of Texas and the wife “substantially prevail[ed].]”
The husband appealed the home’s characterization and the conditional appellate attorney’s fees award.
Gift Presumption
The appeals court noted there are several circumstances under which Texas courts have recognized a “gift presumption.” The gift presumption may arise if one spouse bought the home where the married couple live prior to the marriage and executes a deed conveying an undivided one-half interest to their spouse. It may also arise when a marital home acquired before the marriage is refinanced during the marriage with a new deed naming both spouses as grantees.
It was undisputed that the wife bought the property before the marriage and conveyed an undivided half interest in it to the husband in connection with refinancing. She testified, however, that the lender required her to add the husband “as a cosigner.” She testified he hated the house. She denied intending to make a gift of any portion of the property or discussing such a gift with him.
The husband argued the court could not consider the wife’s evidence of intent unless she alleged fraud, accident, or mistake.
The appeals court noted, however, that a party must show fraud, accident, or mistake to introduce extrinsic evidence of intent to contradict “an express separate-property recital.” In the absence of an express separate-property recital, a party does not need to show fraud, accident, or mistake to introduce parol of intent to rebut the gift presumption.
There was sufficient evidence to support a reasonable conclusion by the trial court that the wife had successfully rebutted the gift presumption with her testimony. The appeals court found no abuse of discretion in the court’s characterization of the property.
The appeals court affirmed the judgment.
Seek Experienced Divorce Counsel
In this case, the court seems to have credited the wife’s testimony that she did not intent to make a gift of the property. If you are facing a high net worth divorce or have a complex estate and are concerned about disputes over property characterization, a skilled Dallas divorce attorney can help. Set up a consultation with McClure Law Group at 214.692.8200.