iStock-178756342-300x199Under Texas family law, property acquired by a spouse during the marriage is community property, unless it meets the requirements of separate property.  Pursuant to Tex. Fam. Code § 3.001, personal injury recoveries are the separate property of the injured spouse, but recovery for lost earning capacity is community property.  Property possessed by a spouse during or on dissolution is presumed to be community property, so a spouse claiming a personal injury recovery is their separate property must prove by clear and convincing evidence what portion is separate.  A wife recently challenged the property division in her Texas divorce after the court concluded monthly payments from a personal injury settlement were the husband’s separate property.

According to the appeals court’s opinion, the wife had primarily been a homemaker during the marriage, but she sometimes worked part-time.

The husband was seriously injured at work in 2006.  He was found to be incapacitated and the wife acted as his guardian in the resulting lawsuit.  In the personal injury settlement agreement, the wife agreed, on behalf of her husband and herself, to release all claims against the defendants.  The defendants’ insurance companies agreed to immediate cash payments and monthly payments for the rest of the husband’s life.  The settlement provided that $1,150,000 of the cash payments was for the husband’s benefit and $50,000 would go to the wife. The settlement agreement also stated the monthly payments were for the husband’s benefit.  The monthly payments were secured through the purchase of an annuity pursuant to the settlement agreement. The agreement also stated that funds were “damages on account of personal physical injuries or sickness” pursuant to the Internal Revenue Code. It also provided that the husband and wife were responsible for paying their attorney’s fees, court costs and case expenses, and any medical bills and liens.

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BSgavelx1200-768x432-1-300x169In dividing property in a Texas divorce, the court must effect a just and right division.  If the marital residence is part of the community estate and one party will keep it, the court must address the other spouse’s share of the equity.  The court may do this by placing an owelty lien on the property.  An owelty lien creates an encumbrance on the property that follows it upon a sale.  The lien must be paid before the net proceeds of the sale are distributed to the spouse. In a recent case, a mother challenged a divorce decree that did not include a payment mechanism or schedule for her owelty lien, while the father challenged the specifics of the geographic restriction imposed on the primary residence of the child.

The father asked the trial court to appoint both parents joint managing conservators of their child. He asked neither parent be given the exclusive right to determine the child’s primary residence and that the court impose a geographic restriction.  He requested the trial court to divide the estate in a just and right manner. He asked that the mother receive a lien on the marital estate for half of the net equity of the home.

The mother asked for the right to designate the child’s primary residence.  She also asked the trial court to award her half the market value of the home.

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iStock-483613578-300x204The characterization of property in a Texas divorce is generally determined by the property’s character when the spouse acquired it.  Separate property is property a spouse owned before the marriage or acquired during the marriage through gift, devise, or decent.  Improvements made to separate property are generally also separate property because they are not divisible from the land. Community property is property acquired by either spouse during the marriage that is not separate property.  In a recent case, a wife challenged a court’s characterization of the marital home as community property.

Home Built During Marriage

According to the opinion of the appeals court, the parties got married in 1995.  In 2000, the husband’s mother transferred two lots to both of the parties by a gift deed.  They built the marital home on those two lots during the marriage.  The wife moved out of the home when the parties separated in 2015.  The husband had stayed there and paid the household bills and property taxes.

The trial court ordered the home to be sold.  It awarded 75% of the net proceeds from the sale of the home to the husband and the other 25% of the net proceeds to the wife.

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In some situations, a Texas premarital agreement can be used to protect the parties’ assets.  To be valid, a premarital agreement must be signed by both parties.  A wife recently challenged a trial court’s finding there was no enforceable agreement when neither party was able to produce a signed copy of the agreement.

Premarital Agreement

The appeals court’s opinion stated parties started their relationship around six months before the marriage.  The wife raised the issue of premarital agreement a month or two before the wedding.  The wife signed in front of the notary, but the notary refused to notarize the husband’s copy because he signed it before he arrived at the store and did not have his ID with him.

The wife testified she forgot what she did with the signed copies.  She said she thought she had an electronic copy on the husband’s computer, but he had taken the computer.

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iStock-182358076-300x200When a party in a Texas custody case fails to respond or appear, the court may find they defaulted and enter a judgment in favor of the other party.  For a court to enter a post-answer default judgment against a party, however, the pleadings must give the party fair notice of the claim.  A mother recently challenged a custody modification, arguing that the father’s pleadings did not specifically request the rights awarded to him by the court.

The trial court originally appointed both parents joint managing conservators with the mother having the right to determine the child’s primary residence without a geographic restriction in 2007.  The court also granted the father visitation and ordered him to pay child support.

The Office of the Attorney General (“OAG”) filed a petition in 2020, alleging the father’s financial circumstances had changed and seeking an increase in child support.  The father requested a hearing, which was set for March 10.

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2018_10_agreement-300x165Property possessed by either spouse at the time of a Texas divorce is generally presumed to be community property, but that presumption can be rebutted by clear and convincing evidence.  A number of other rules and presumptions may affect the characterization of property during the property division.  A husband recently appealed characterization of property purchased by the wife before the marriage as her separate property.


The wife bought a residential property before her relationship with the husband.  After the parties got married, the husband and his children moved in with the wife. Both parties testified they frequently argued about money and finances.  When they argued, the wife would say the house was hers.

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iStock-1331374129-300x200Texas spousal maintenance is intended to give temporary support to a spouse whose ability to support themselves has diminished and whose assets are insufficient to support them.  After 10 years of marriage, a spouse who shows they lack sufficient property or the ability to earn sufficient income to provide for their “minimum reasonable needs” may be entitled to spousal maintenance.  Tex. Fam. Code § 8.051(2)(B).  They must, however, overcome the rebuttable presumption that maintenance is not warranted by showing they have exercised diligence in earning sufficient income to provide for their reasonable needs or developing the necessary skills to do so during separation and the pendency of the divorce case.  Tex. Fam. Code 8.053. In a recent case, a wife appealed a trial court’s denial of her request for spousal maintenance.

The appeals court’s opinion stated the parties got married in 2009 and separated in 2018.  The husband lived in Texas and the wife lived in a vacation condominium they bought in Illinois in 2018.  The husband petitioned for divorce in 2019 and the final hearing occurred in February 2021.

The husband requested an equal property division and no spousal maintenance.

The wife asked for a 60/40 split of the assets and $5,000 per month in spousal maintenance for five years. She had not worked during the marriage or during the divorce case.  Her mother testified she loaned her $37,500 during the separation.  The husband had also transferred about $50,000 worth of assets to the wife during the case.  The wife testified her monthly living expenses were about $12,000.  She had last worked as a medication aide in 2008.  She testified she previously worked as a certified nursing assistant but did not want to do so again.  She testified her dental assistance certification did not transfer to Illinois. She also testified she had photography certifications but had not tried to earn income from them.  She started a real estate course in 2019, but had not passed part of the test.  She also admitted she had “not done anything” to become employed since the divorce case commenced.  She said businesses were closed due to the pandemic and she did not have time to seek employment due to the divorce case.

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For many business owners and entrepreneurs, their business is not only imperative to their financial well-being but is also a large part of their identity. This can raise obvious concerns when divorce is on the horizon. And when a couple owns a large business or corporation, or the business assets are complex in nature, the thought of dividing business assets can be overwhelming. Nonetheless, dividing complex business assets is often required, and, therefore, it is imperative that spouses understand how Texas law handles these situations.


Complex business assets are assets that belong to or are associated with a business that do not necessarily lend themselves to simple valuation or division. For example, the monetary value of a business’s goodwill or intellectual property rights are two common examples of complex business assets.


The short answer is it depends. Texas is a community property state. So, any assets that are acquired by either spouse during the marriage are presumed to be community property, which is subject to division upon divorce. However, determining whether complex business assets are community property is not always a straightforward endeavor. And even then, this is only the first question courts must answer when hearing a divorce involving complex business assets.

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Insurance agent checking policy documents in office.

Parties to a Texas divorce may enter into a Rule 11 agreement to resolve issues in their case.  The agreement must be made in open court and entered into the record, or be in writing, signed, and filed with the court.  A Rule 11 agreement must be complete in material details and contain all of the essential elements of the agreement.  It is an abuse of discretion for a court to enter a judgment that is not in compliance with material terms of the agreement. A mother recently appealed a final divorce decree that she claimed did not comply with the terms of the Rule 11 agreement.

Parties Enter into Rule 11 Agreement

According to the appeals court’s opinion, the parties’ Rule 11 agreement provided they would be joint managing conservators of the two minor children, with the mother being primary for determining their residence with a geographic restriction. The father would continue picking up the daughter from school.  The father would have a standard possession order for the son.  The son had the option to have dinner at the father’s on Thursday. No alcohol was to be consumed during or for four hours prior to the father’s possession. Child support would be calculated according to the guidelines based on the father’s 2019 Schedule C “unless Schedule C gross receipts are higher for 2020 as filed.”

The parties both moved to enter the final decree, with the mother indicating they had not agreed regarding child support.  At the hearing, she argued the parties intended child support to be calculated without subtracting expenses from the gross receipts if the 2020 gross receipts were higher.  The father argued different language would have been used if that was the intent. He argued the language required the child support to be calculated according to the guidelines, which require calculation of net income before determining child support.

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Texas is one of just a handful of states that follows that “community property” doctrine. Under Texas Family Code § 3.003, all property obtained by either spouse during the marriage is presumed to be community property, meaning both spouses have an equal ownership interest. And while disagreements related to how a couple’s assets are divided are common in all Texas divorces, this is especially the case in high-net-worth divorces.


While there is no official definition of what constitutes a high-net-worth divorce in Texas, the consensus among Texas divorce attorneys is that any divorce involving liquid assets of $1 million or more is considered a high-net-worth divorce.


High-net-worth divorces can involve all the typical aspects of a divorce, including child custody, child support, division of assets, and spousal support. However, due to the value and complexity of the assets, high-net-worth divorces tend to raise other issues, especially as they relate to property division. For example, a high-net-worth divorce may require the court to determine how the following classes of assets should be distributed:

  • 401(k)s, IRAs and other retirement accounts;
  • Stocks, bonds, cryptocurrency and other investment holdings;
  • Real estate and property holdings;
  • Shared ownership in a business;
  • Pensions and benefits; and
  • Artwork and other collections.

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