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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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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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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Ideally, after a Texas divorce, the parties will cooperate and take any actions needed to sell or transfer property and resolve outstanding issues, but that does not always happen. A Texas appeals court recently considered a case in which a former wife alleged the former husband was preventing the sale of jointly-owned property.

Divorce Case

The parties divorced in March 2020. According to the appeals court’s opinion, the final divorce decree found that a particular piece of real property was community property and awarded each party 50% as their separate property, leaving them tenants in common.  The decree did not address sale or partition of the property.

Second Lawsuit

A couple of months after the decree was signed, the former wife filed suit against the former husband, seeking an order for the sale of the property and partition of the proceeds. She also requested attorney’s fees, expenses, and interest. This lawsuit was ultimately consolidated into the divorce case. The court held a bench trial and signed an order finding the parties were co-tenants and that the property was not subject to partition in kind. The order required the property be listed by June 1, 2022 and that the parties to take all necessary steps and execute any necessary documents to facilitate the sale.  The court also ordered that any proceeds after payment of any encumbrances on the property be split equally between the parties. It did not address the wife’s request for fees, expenses, and interest.

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International marriages can lead to complex divorces, especially in regards to child custody.  In a recent Texas divorce case, a mother appealed a decree that awarded the father the exclusive right to designate the child’s primary residence.

According to the appeals court, the parties married while the father was stationed in Germany with the U.S. Army. The child was born in Germany after the father was sent to San Antonio.  A few months later, the mother and baby joined him in Texas.

The mother and child visited Germany.   The father told the mother the marriage was over, and she decided to stay there. She did not bring the child back when he asked her to do so. He sued her for child abduction and went to Germany for Hague Convention proceedings. They ultimately reached an agreement and the mother and child returned to Texas.

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Tex. Fam. Code § 6.001 allows a court to “grant divorce without regard to fault” if it finds the marriage has become insupportable without “any reasonable expectation of reconciliation.  A court may also grant a divorce in favor of one spouse if it finds cruel treatment or adultery by the other spouse. Tex. Fam. Code §§ 6.002 – 6.003. In a recent case, a former wife appealed the divorce decree granting divorce based on insupportability when she argued she had presented sufficient evidence of her husband’s cruel treatment of her.  She also challenged the court’s denial of her request for spousal maintenance.

According to the appeals court’s opinion, the parties got married in March 2019 and separated about a year later.  The wife accused the husband of choking her and he was arrested.  An emergency order of protection prohibited him from going within 200 yards of the parties’ home.  A district court ultimately entered a final protective order and found the husband had “committed family violence.” Due to that order, the wife had exclusive use of the home and the husband was ordered to pay the expenses for the home in addition to paying the wife monthly support.

The wife petitioned for divorce.  She asserted insupportability and cruelty as alternative grounds for the divorce.

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Spouses can agree to change their rights and obligations with regard to property by signing a Texas pre-marital agreement. Premarital agreements, also known as prenuptial agreements, are often used in circumstances involving a high net worth or where one spouse enters the marriage with significantly more assets than the other.  While prenuptial agreements can be valuable tools to protect a spouse’s assets, they can also be contentious in the event of a divorce.

A husband recently challenged the property division in his divorce decree, arguing the trial court had not followed the premarital agreement in dividing the parties’ property.

Before the marriage, the parties executed a premarital agreement the husband bought online.

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A Texas marriage may end by either death of a spouse or a court order. Generally, it is clear how a marriage ended, but in some cases, there can be a dispute.  In a recent case, the Texas Supreme Court considered whether a divorce filed by the husband’s guardian resulted in a valid divorce decree before the husband’s death.

The husband had significant assets. He and his fourth wife signed a pre-marital agreement before the marriage in September 2011 and a post-marital agreement, agreeing no community property would be created and each spouse would keep their separate property unless they transferred it to the other in writing or by a will.

The husband petitioned for divorce after about seven months, but was diagnosed with dementia.  He failed to prosecute the case and it was dismissed. His daughter claimed he still wanted the divorce, while the wife alleged he changed his mind.

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In Texas, a court may grant a “no-fault” divorce if the marriage has become insupportable due to “discord or conflict of personalities. . .” Tex. Fam. Code  § 6.001. The court may also grant divorce in favor of a spouse, if the other spouse committed adultery. Tex. Fam. Code § 6.003.  In a recent case, a former wife appealed her Texas divorce decree, which was granted on the ground of insupportability instead of adultery.

According to the appeals court, the parties got married in 2014 and the wife petitioned for divorce in 2022.  She alleged insupportability and adultery by the husband as grounds for the divorce and sought a disproportionate share of the community estate.  In his counterpetition, the husband alleged insupportability and sought an equal division of the community estate.

Trial

At trial, the wife testified she made more than $100,000 per year in the military but was now receiving about $88,000 from retirement and disability benefits.  She said that the parties generally maintained separate finances and separate bank accounts during the marriage, but she primarily paid the bills out of her own account and was reimbursed by the husband for his share. They also had a joint account for bills.

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