Articles Posted in Property

Once its plenary power has expired, a trial court cannot change the substantive property division stated in a final Texas divorce decree.  It does, however, retain the power to clarify or enforce that property division.  A Qualified Domestic Relations Order (“QDRO”) is a post-divorce enforcement order and therefore cannot change the property division.  A QDRO can, however, specify how the property division can be carried out, without altering the substantive property division. If the QDRO substantively alters the property division, then it is void and may be amended to comport with the division in the decree.  A wife recently challenged a clarification order addressing the division of the husband’s 401(k).

According to the appeals court’s opinion, the parties executed a mediated settlement agreement (“MSA”) that incorporated a spreadsheet dividing the marital estate.  That spreadsheet indicated the parties would each receive half of $92,916.50 from the 401(k).

The final decree incorporated the MSA by reference and ordered the parties “to do all things necessary to effectuate” it.  The decree awarded the husband the entire balance of the 401(k) “as reflected on [the spreadsheet]” except for the part awarded to the wife by the decree.

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There is a presumption that property possessed by a spouse during or on Texas marital dissolution is community property. A party claiming separate property must prove its separate character by clear and convincing evidence.  Tex. Fam. Code § 3.003.  In a recent case a wife appealed the trial court’s characterization of stock shares granted to the husband by his employer.

Stock Shares

According to the appeals court’s opinion, the parties got married in December 2006.  The husband started a new job in February 2015 and the next year received a million shares of the company’s stock.  The husband stated he had entered into an agreement with the company when he received the stock, but could not find it and could not get a copy from the company. The stock certificates did not indicate why they were issued.

The husband’s employment contract provided that he would receive an annual salary of $100,000.  Additionally, he would receive a signing fee, an additional payment upon the next fundraising event, and an annual payment for four years, as compensation for “assets, access to ‘[husband’s] IP,’ and inventory” the husband provided pursuant to the employment agreement.  The company also agreed to take on certain debts and liabilities the husband owed.  The contract indicated the husband would receive “a total compensation of over $750,000” for the use of the husband’s assets and intellectual property, without referencing the stock shares.

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The characterization of funds received for personal injuries can be a complex issue in a Texas divorce.  Texas family law presumes that property possessed by a spouse during or on dissolution of the marriage is community property.  When a spouse claims certain property is separate, that spouse must prove by clear and convincing evidence that the property is separate.  Tex. Fam. Code § 3.003.  Pursuant to Tex. Fam. Code 3.001, recovery for personal injuries sustained during the marriage is separate property.  There is an exception, however, for recovery for lost earning capacity during the marriage.  Because a spouse claiming separate property has the burden of proof, that spouse must show by clear and convincing evidence what part of a personal injury settlement is separate property.  Recently, a husband appealed the trial court’s ruling which characterized his personal injury recovery as community property.

Personal Injury Settlement

According to the appeals court, the husband and wife married in 1994 and lived separately at various times during the marriage. In December 2014, husband was injured as the result of an automobile accident in the scope of his employment.  The parties were separated when the accident occurred, but subsequently reconciled.

The husband settled for the other driver’s policy limits of $30,000.  He also received net proceeds of $710,724.25 from a settlement with his employer’s under-insured motorist coverage.  Thereafter, his attorneys transferred those funds into the parties’ joint checking account on October 8, 2019.  The parties then separated that month and the wife filed a divorce petition on November 1.

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Businesses can be difficult to accurately value in a Texas divorce.  A wife recently challenged a property division involving two businesses, arguing the court had insufficient evidence to make the just and right division.

When the husband filed for divorce, each party pleaded the marriage was insupportable.  The wife also pleaded the husband had committed adultery.

According to the appeals court’s opinion, the significant assets were a business operated by the wife, an interest in a pool-installation business operated by the husband, the houses each party lived in, two rental properties, a house in Mexico, an interest in two lots where the pool installation business was located, several vehicles, and several bank accounts and a CD.

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When parties to a Texas divorce can reach an agreement on property division or other issues, they may be able to resolve their case more efficiently and with less hostility than can occur with prolonged litigation.  In some cases, however, a party may learn information after initially agreeing to a division that that changes their position.  When parties consent to an agreed judgment, their consent must exist when the court renders the judgment.  They are able to revoke consent until the judgment is rendered.  An agreed judgment cannot be rendered if a party has withdrawn consent.  In a recent case, a husband appealed an “agreed” judgment, arguing he had withdrawn his consent before the court rendered the judgment.

According to the opinion of the appeals court, the parties got married in 2005.  The wife filed for divorce in early August 2022.  She expressed a belief the parties would reach an agreement on the property division, but asked for a just and right division if they did not do so. A couple of months later, she filed an affidavit stating she and the husband had entered an agreement for division of the debts and property.  She further stated she had submitted an agreed decree that had been signed by both parties and contained the agreement.  She asked the court to approve the agreement.

The husband filed a counterpetition, alleging the wife had breached her fiduciary duty and committed constructive fraud, waste, and conversion.  He alleged she conveyed more than her own share of the community estate to enrich herself and defraud him.  He alleged damages of about $100,000.  He asked the court to set aside the transfer and award him damages.

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When one spouse transfers property to the other spouse by deed, there is a rebuttable presumption the property was gifted to the other spouse as separate property.  A deed must contain a sufficient description of the property.  In some cases, there may be mistakes or conflicting information in the deed.  When a court interprets a deed, it must determine the parties’ intent as expressed in the deed.  A wife recently challenged a court’s interpretation of a quitclaim deed and the resulting characterization of the property based on a deed that stated the address for one tract of land but the legal description of another.

The husband bought a house and 23 acres and paid off the mortgage before the marriage.  He also sold two of those acres and a mobile home before the marriage. The parties lived in the house on the 21-acre lot after the marriage.  They subsequently bought back the two-acre tract and the mobile home.

Quitclaim Deed

Before he petitioned for divorce, the husband signed a quitclaim deed that stated the address of the 21-acre tract, but the legal description of the two-acre tract.  The quitclaim deed described the property as 2 acres and identified the make, model, and serial number of the mobile home.  The wife asked the court to characterize the 21 acres and house as her separate property based on the quitclaim deed.  She argued the deed conveyed the house and 21 acres to her, but the husband contended that it referred to the two-acre tract and mobile home.

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A court’s division of property in a Texas divorce must be just and right.  A just and right division does not have to be equal and may be disproportionate in some circumstances, including fault such as adultery or cruelty.  A wife recently challenged a property division in which the trial court did not award her a disproportionate share of the community estate in light of her allegations of adultery and cruelty.

Alleged Cruelty and Infidelity

The wife testified the husband had multiple affairs during the marriage, according to the appeals court’s opinion.  She also testified he had physically abused her.  She said he had beaten her after she had surgery, resulting in her stitches breaking open.  She further testified that he started hitting her again when she came home from the doctor and she got a kitchen knife to defend herself.  She said she held the knife in front of her and “just the point of the knife” cut the husband when he got in her face, but she did not deliberately stab him.  She testified the injury only needed a bandage, but the husband went to the doctor so he could later use it against her.

She testified she did not have any documentation of the husband’s alleged affairs.  She also did not offer any documentation of her alleged injuries.

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In a Texas divorce, there is a presumption that property possessed by either party during or on dissolution is community property.  Tex. Fam. Code Ann. § 3.003(a).  Property’s characterization is determined by inception of its title.  In a recent case, a husband challenged a trial court’s characterization of property conveyed by his parents.

Conveyance of the Property

According to the appeals court’s opinion, the husband acquired the property from his parents during the marriage.  The deed was labeled a warranty deed.  It identified the parents as the grantors and the husband, “A MARRIED PERSON,” as the grantee.  It stated consideration of $10 and “other good and valuable consideration.”  It also stated the grantor “grants, sells, and conveys to Grantee the property.”  A corrected deed was filed in 2015 changing the legal description.

The wife testified the husband’s parents were paid $1,750 for the property from a joint bank account.  The husband and his father each testified that just $10 was paid as consideration for the property.  Both spouses were listed on the construction loan application for building the home on the property.  That application indicated the title would be held “Jointly with Spouse.”

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A Texas divorce case can become more complicated for spouses with a child with complex medical needs.  In addition to addressing issues related to custody and decision-making, the divorce may also have to address spousal maintenance for the child’s primary caregiver.  In a recent case, a husband appealed an unequal property division and a spousal maintenance award in favor of the wife, who acted as primary caregiver for the children.

According to the appeals court’s opinion, the parties had preterm triplets, one of whom was a “medically fragile child,” “Andy.”  The wife stopped working outside the home and became their primary caregiver.

The husband filed for divorce in 2019.  The wife subsequently negotiated a job with the non-profit she co-founded.

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Atlanta-Property-Division-Attorneys-2-300x198Pursuant to the Inception of Title doctrine, a property’s character is determined when the party acquires their interest in it. This means that property acquired before the marriage will generally be characterized as that spouse’s separate property in a Texas divorce.  In a recent case, however, the court determined that a house purchased solely in the name of the husband before the marriage was the separate property of both spouses.

According to the appeals court’s opinion, the parties started dating in late 1999.  The wife moved in with the husband and his grandfather in 2003 or 2004.  The husband bought a house from the wife’s parents in 2004 as “a single man,” according to the Deed of Trust and Note and both parties moved into it.  They deposited their paychecks into a joint account from which the mortgage and property taxes were paid.  They got married in July 2005 and lived together in the house until 2020.

Divorce Trial

The wife petitioned for divorce and ultimately requested reimbursement to the community estate. She asked for 50% of the community estate and 50% of the husband’s separate property. She argued the house was both parties’ separate property because they had lived together and both paid for it.  The husband argued it should be his separate property.

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