Articles Posted in Property

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

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.

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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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A Texas property division must be “just and right,” but that does not necessarily mean equal. A court may consider a party’s fault in the division when determining how to divide the property, but it may not use the property division to punish the at-fault spouse.  A former husband recently challenged his divorce decree, arguing in part that the court abused its discretion by not considering the wife’s adultery in its property division.

According to the appeals court, both parties were from India, but the husband was working in Texas prior to the marriage.  The parties got married in India in 2004 and wife moved to Texas with the husband.  They had two children together.

The husband petitioned for divorce on the grounds of adultery in October 2018. He asked the court to award him the marital residence.  In her counterpetition, the wife alleged the husband had committed acts of cruelty. Both parties alleged fraud on the community by the other spouse.

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Reimbursement is an equitable right arises in a Texas divorce when the property of one marital estate is used to the benefit of another marital estate, resulting in unjust enrichment to the benefited estate if not repaid.  Tex. Fam. Code § 3.402.  A spouse may pursue a reimbursement claim, for example, if community property funds are used to pay the debt for or make improvements to the other spouse’s separate property.  The court must apply equitable principles to determine if it will recognize a claim for reimbursement, considering the relative circumstances of both parties and, if the court determines the reimbursement claim is appropriate, it must order a just and right division of the claim for reimbursement, with regard for the rights of the parties and children.  Tex. Fam. Code § 7.007.  The spouse seeking reimbursement has the burden of proving that the property of one marital estate was used by one or both spouses to benefit another marital estate, the value of that benefit, and that the benefited estate will be unjustly enriched if reimbursement is not required. Tex. Fam. Code § 3.402(b).  The trial court has broad discretion in determining reimbursement claims.

In a recent case, a former husband appealed the divorce decree that did not award him reimbursement.  The wife petitioned for divorce in 2022, after nearly 50 years of marriage.  In his counterpetition, the husband made a claim for reimbursement, but the court did not award him reimbursement in the final divorce decree.

The Husband’s Appeal

The husband appealed, arguing the trial court did not properly apply the law regarding reimbursement of the community estate.  The judge stated, “whatever she took with her [in 2016] the marriage was still ongoing . . . . I cannot go back in time and fix that.” The husband argued the court misstated the law.

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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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The court in a Texas divorce case may appoint a receiver to protect and preserve the property of the parties. TEX. FAM. CODE § 6.502(a)(5).  The receiver only has the powers authorized by the court. The receiver’s role is to receive and preserve the property for all interested parties’ benefit.  The receiver must exercise ordinary care in performing their duties. Receivers may be appropriate in high net worth divorces with complex assets or where there are concerns a party may hide or misuse assets.  In a recent case, a former husband appealed a trial court order terminating receivership, discharging the receiver, and granting turnover relief to the wife.

Appointment of Receiver

The husband petitioned for divorce in 2009.  The court appointed a receiver in 2011 and ordered that he was to take necessary actions to secure payments and manage, control and dispose of the husband’s property. He was also authorized to pay the husband’s living expenses, legal fees and expenses, and court-ordered obligations.

The receiver was subsequently ordered to take possession and control of certain of the husband’s assets, including property in his bankruptcy estate and any exempt retirement accounts. The court instructed the receiver to pay the husband’s living expenses of $5,000 per month, obligations to the wife and minor children, court-ordered obligations to third parties, and up to $1,500 in unexpected expenses of either party, but not more than $6,000 in any four-month period without a court order.

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Pensions and retirement accounts can complicate property division, especially in a high net worth Texas divorce.  Retirement accounts often include both separate and community property.  In a recent case, a former husband challenged the court’s valuation of the wife’s pension and the resulting property division.

According to the appeals court’s opinion, the parties had been married nearly 30 years when the wife left and filed for divorce.  The trial court found the husband had committed fraud on the community and awarded the wife a disproportionate division of the community estate.

The trial court found the assets of the reconstituted community estate were worth more than $1.8 million.  The court also found the community had debts totaling more than $87,000. The court allocated a net estate of over $920,000, or 50.96% of the reconstituted community estate, to the wife and over $888,000, or 49.04%, to the husband.

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The conflict in a Texas divorce does not always end when the divorce is finalized, especially a high net worth divorce or one that involves complex assets.  A Texas appeals court recently considered an appeal of a denial of a petition to enforce certain property division provisions from a divorce decree from 1993. The ex-husband was deceased when the petition for enforcement was filed, so his widow, as heir to the property, was the real party in interest in the proceedings.

Divorce Decree

The divorce decree incorporated and adopted a “Property Statement and Settlement,” an agreement between the ex-husband and ex-wife addressing the division of assets and liabilities. The decree awarded the ex-husband a particular property in Williamson Count as his sole and separate property. It provided that the ex-wife was divested of any right and title in the homestead.  The ex-husband would be solely responsible for all liabilities and benefits associated with the dwelling.  The decree further provided that if the husband failed to make the monthly mortgage payments, the house and/or property would be sold. “In the event of sale of said dwelling and/or acreage,” the wife would be entitled to ½ of the net profit. The ex-wife was not to be held liable for any mortgage payments, taxes, or other expenses related to the property.

The decree awarded the ex-wife 100% of the proceeds from the sale of a different property, as well as all benefits associated with it. The decree also awarded her a vehicle, jewelry, a savings account, and a checking account. All debt was awarded to the ex-husband.

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In a property division of a complex estate in a Texas divorce, one party may be given the option to purchase the other spouse’s interest in real property or a business.  The divorce decree may include terms regarding the purchase option, including deadlines, contingencies, and requirements that the other spouse cooperate by signing documents.  In a recent case, a former wife sought a bill of review after she did not complete the purchase of the marital residence from the former husband by the deadline stated in the decree.

The trial court signed a Final Decree of Divorce Nunc Pro Tunc in March 2020.  Both parties “approved and consented to” the form and substance of the decree.  The decree gave the wife the right to purchase the marital residence, which was in the husband’s name.  However, if she failed to purchase the property and close by September 1, 2020, she would waive any interest in the property and it would remain the husband’s sole and separate property.

On August 27, 2020, she sent a letter and real estate contract with a September 24 closing date to the husband.  He did not respond and the wife failed to buy the property and close by the deadline.

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