Kelly McClure, Author at Texas Divorce Attorney Blog

Characterization of Gifted Property in a Texas Divorce

Published on: November 30, 2024 | by Kelly McClure

When individuals with a high net worth marry, they often bring significant separate assets to the marriage. When marriages with complex estates end, there may be disputes over whether property is community property or the separate property of one of the spouses. The trial court in a divorce must divide the community estate of the parties in a just and right manner. The trial court generally may not divest a spouse of their separate property by awarding it in whole or in part to the other spouse. Community property is the property, other than separate property, acquired by either spouse during the marriage. Tex. Fam. Code § 3.002. Separate property includes property the spouse owned before the marriage and property gifted, devised, or descended to the spouse during the marriage. Tex. Fam. Code § 3.001. Texas law has a rebuttable presumption that property possessed by either spouse at the time of the divorce is community property. Tex. Fam. Code § 3.003. The spouse claiming property is separate has the burden of proving the property’s character by clear and convincing evidence. In a recent case, a husband appealed a property division he claimed improperly divested him of his separate property.

The Property

The parties got married in 2008. The wife petitioned for divorce in 2021 and subsequently amended her complaint to allege adultery. The primary issue at trial was the characterization of a particular piece of real property.

According to the appeals court’s opinion, the husband’s parents gave him a tract of land in 1995. The wife testified it was her understanding the husband’s parents had given the property to him as a gift in 1995. The husband testified that he had a house moved onto the land the same year.

Texas Appeals Court Affirms Confirmation of Arbitration Award in High Asset Divorce

Published on: November 21, 2024 | by Kelly McClure

Parties to a high net worth Texas divorce may choose to arbitrate disputes because arbitration can be less expensive, less contentious, and more private than litigation. An arbitration award can be difficult to challenge, however. Under the Texas Arbitration Act, a trial court may only vacate an arbitration award based on one of the grounds listed, including the arbitrator exceeding his authority. Tex. Civ. Prac. & Rem. Code Ann. § 171.088. The arbitrator’s power is based on the arbitration agreement between the parties. In Texas, arbitration awards are presumed to be valid. When a party seeks to vacate an arbitration award, they have the burden of establishing the grounds based on the complete record. An appeals court presumes there was sufficient evidence to support the arbitration award if there is not a transcript of the arbitration hearing. A Texas appeals court recently considered a wife’s challenge to an arbitration award addressing the division of certain disputed personal property after the parties reached a mediated settlement agreement as to the property division.

The parties entered into a mediated settlement agreement (“MSA”) and memorialized it in an agreement incident to divorce (“AID”). Pursuant to the AID, the wife would receive $17 million in cash, in addition to multiple pieces of real property, vehicles, and multiple accounts. The parties were to agree in writing to the division of personal property from two of their homes and submit any items they could not agree on to arbitration. The court incorporated the AID into the final divorce decree.

Arbitration Proceedings

They later signed a binding arbitration agreement to address the disputed personal property from the two homes. Pursuant to the arbitration agreement, each party would be allowed to present a position statement orally in writing. The wife submitted a list of disputed personal property she sought to be awarded to her, including some items that were to go to her pursuant to the AID.

Financial Consequences for Engaging in Prohibited Behaviors

Published on: November 6, 2024 | by Kelly McClure

Parties in a high profile divorce might want to enter an agreement that goes beyond dividing the property. Celebrities, business owners, or CEOs might seek an agreement that prohibits their former spouse from disclosing private information, disparaging them or their business, or engaging in other behaviors that might damage their reputation or their business. The agreement can include liquidated damages for violations. In a recent case, a former wife, her former husband, and his business all appealed a judgment confirming an arbitration award relating to an agreement incident to divorce.

The Agreement

At the time of the divorce, the parties entered into an agreement incident to divorce providing for arbitration if a party engaged in certain conduct prohibited by the agreement. The agreement provided for an award of the greater of $500,000 or actual damages. Additionally, the wife would forfeit interest in a trust as liquidated damages if she engaged in certain behaviors. The parties agreed to arbitrate any issue of whether a party committed a prohibited behavior, whether the wife violated specified provisions in the agreement, and whether the wife’s interest in the trust would be forfeited as a result of violating provisions of the agreement. Binding arbitration was to occur within 90 days of notice of a violation. Pursuant to the Agreement, the losing party would pay the arbitration costs and the other parties’ costs and fees. The husband’s company was a third party to the divorce and to the agreement. The decree incorporated the agreement.

Arbitration Demand

The husband and his company subsequently demanded arbitration, alleging the wife violated the agreement. The wife objected and argued the forfeiture and liquidated provisions were unenforceable and that the arbitration clause was therefore also unenforceable.

Husband’s Inherited Home Confirmed as Separate Property Not Subject to Division in Divorce

Published on: October 27, 2024 | by Kelly McClure

The court in a Texas divorce case must divide the parties’ estate in a just and right manner. Tex. Fam. Code § 7.001. Complex estates may include both community and separate property, acquired from various sources. The court can only divide community property, which is any property acquired by a spouse during the marriage except separate property. Separate property includes property owned by the spouse before the marriage and property acquired by a spouse during the marriage through gift, devise, or descent. Tex. Fam. Code § 3.001(2). There is a presumption property either spouse possesses during or on dissolution of the marriage is community property and a spouse claiming property is separate has the burden of proof to a clear and convincing standard. Tex. Fam. Code § 3.003.

In a recent case, a former wife appealed the court’s property division in the final divorce decree. The parties got married in 1999 and had one child. The husband petitioned for divorce in 2017. He asked the court to confirm two pieces of real property were his separate property. The wife sought reimbursement to and reconstitution of the community estate and spousal maintenance. The court filed the final divorce decree in January 2024 and the wife appealed.

Separate Property

On appeal, the wife challenged the trial court’s characterization of the “69^th Street property” as the husband’s separate property. She argued the husband had not presented sufficient evidence to support his testimony that he had inherited it.

Court of Appeals Finds No Harm In Trial Court Failing to Submit Mother’s Request for Primary Residence of the Children to Jury

Published on: October 20, 2024 | by Kelly McClure

When a parent petitions for modification of a Texas custody order, the parties may raise multiple issues. In a recent case, a mother challenged a modification order, arguing the trial court had erred in not submitting one of her proposed questions to the jury.

Original Modification Proceedings

The parties had two children together. The trial court initially appointed them both joint managing conservators with neither having the exclusive right to designate the children’s primary residence, pursuant to the parties’ Mediated Settlement Agreement.

The father subsequently petitioned for modification, alleging both parents being joint managing conservators was not in the children’s best interest. He sought sole managing conservatorship, or, alternatively, the exclusive right to designate the children’s primary residence.

Texas Appeals Court Upholds Custody Order Treating Children Differently

Published on: October 6, 2024 | by Kelly McClure

Texas custody cases involving multiple children can be complex, because the children may not have the same needs. In a recent case, a father challenged a modification that gave the mother rights with regard to the youngest child that he was awarded for the older two children.

The parents got married in 2006 and divorced in 2017. They had three children. In the agreed divorce decree, both parents were named joint managing conservators with shared possession of the children. In November 2020, the father petitioned for modification, alleging a material and substantial change in circumstances related to one child’s emotional health and welfare. He subsequently amended the petition to alleged the same regarding another of the children, and ultimately filed an amended petition seeking relief for all three of the children.

The court held a bench trial and signed a partially handwritten memorandum, with a note that the mother’s attorney would draft the final order. Although the memorandum was entered in early November 2022, the parties did not receive it until April 2023.

Texas Appeals Court Reverses Default Divorce Based on Errors in Service

Published on: September 26, 2024 | by Kelly McClure

A party who does not participate in a Texas divorce hearing may have a default judgment entered against them. If they meet certain criteria, however, they may be eligible for a restricted appeal. Those criteria are: filing notice of the restricted appeal within six months of the judgment being signed; having been a party to the lawsuit; not participating in the hearing, filing any timely motions after the judgment, or requesting findings of fact and conclusions of law; and an error that is apparent on the face of the record. Pike-Grant v. Grant. In determining if there was an error on the face of the record, the appeals court may only consider the evidence that was before the trial court.

In a recent case, a former husband challenged a default divorce decree based on an error on the face of the record.

Omitted Language in the Citation

If the defendant was not served in strict compliance with the Texas Rules of Civil Procedure, rendition of a no-answer default judgment is reversible error. The husband argued that the citation did not include all of the language required by Rule 99(c). Specifically, it had omitted language stating that the party may be required to make initial disclosures within 30 days after filing a written answer and directing the party to TexasLawHelp.org for more information. An amendment to the rule added this language at the beginning of 2021. The citation was issued more than three years after the effective date of the amendment, so the language was required.

Voluntary Underemployment in Dallas Custody Dispute

Published on: September 21, 2024 | by Kelly McClure

Parents are obligated to support their minor children and cannot avoid their obligation through voluntary unemployment or underemployment. If a parent’s actual income is significantly less than what they could earn due to intentional unemployment or underemployment, the court may apply the Texas support guidelines to their earning potential. Once the obligor has provided proof of his current wages, the obligee has the burden of showing intentional unemployment or underemployment. If they do so, the burden then shifts back to the obligor for rebuttal. A father recently challenged a court’s findings that he was underemployed and that it was in the child’s best interest to apply the child support guidelines to his earning potential.

The father registered a New York child support order in Texas and moved to modify the parent-child relationship. The order required the father to pay child support of $1,437.44 and medical support of $107.03 each month. He requested a reduction to $377, retroactive to the date he petitioned to reduce his arrearages.

The mother filed a motion to enforce, seeking contempt against the father for failure to pay the support and the arrearages. The court held a hearing and confirmed $85,858.87 in child support arrearages and $8,621.66 in medical support arrearages, with offsets, resulting in a total of $89,247.93. The trial court awarded the mother attorney’s fees and costs.

Texas Appeals Court Affirms Termination of Spousal Maintenance in Lieu of Child Support

Published on: September 6, 2024 | by Kelly McClure

Texas spousal maintenance is generally intended to provide temporary rehabilitative support to spouses who are unable to support themselves. The appeals court recently reviewed a case in which spousal maintenance was ordered “in lieu of child support” for the parties’ now adult daughter, who is disabled.

The parties divorced in 1998. The trial court issued a modification order in 2014 that, “upon agreement of the parties,” the father would pay $1,096.55 per month in spousal maintenance in lieu of child support, purportedly to allow the daughter to qualify for more disability benefits. Additionally, any payments received for the benefit of the child, including from the Social Security Administration, were to be credited against the spousal maintenance.

Enforcement and Modification Proceedings

Each of the parents remarried. The mother’s husband passed away in 2020. She petitioned for enforcement of the spousal maintenance in early 2022, alleging the father had not made payments from June to December of 2021. The father filed a counter-petition, seeking to terminate the maintenance based on his retirement and the daughter getting half his Social Security Old Age Benefits (“SSOAB”), totaling $1,466 monthly plus increases for cost-of-living.

Property Division Pursuant to Texas Premarital Agreement Turns on Interpretation of “Their”

Published on: August 28, 2024 | by Kelly McClure

Property’s characterization as either separate or community property in a Texas divorce is generally determined by its character at inception. The Texas Family Code includes a presumption that property either spouse possesses during or on dissolution is community property. Tex. Fam. Code § 3.003(a). The Code defines “community property” as the property acquired during the marriage by either spouse, except separate property. § 3.002. Personal income and income produced by separate property is generally community property. Spouses may, however, enter contracts changing their rights and obligations with regard to property. Although premarital agreements are contracts and generally interpretated according to the rules of contract interpretation, they are narrowly construed in favor of the community estate. A former husband recently appealed the property division in his divorce, argued the court had failed to apply the terms of the premarital agreement.

Premarital Agreement

The parties had signed a premarital agreement two days before their wedding. The husband drafted the agreement based on a form from the internet. The agreement was partially typed and partially handwritten. The agreement included a Separate Property Provision that provided that the separate property each party brought to the marriage would stay their separate property. It also included an Acquired Property Provision that provided, “All property acquired by each during the marriage shall be deemed [th]eir property.” The agreement also stated that the husband’s 401(k), along with “income profits, Deferred Retirement Option (D.R.O.P.) or any benefits of any kind accruing from it” would remain his separate property. The agreement further provided that the wife’s “personal income or retirement will remain her separate property.”

The dispute was over the meaning of the Acquired Property Provision, specifically related to the marital home and a vehicle. The husband bought the house four years into the marriage with funds received from the sale of a house in Hurst, Texas, he had purchased with his separate property in 2006. The parties had lived in the home in Hurst from 2006 until 2014. The wife said she paid for improvements to both.