Articles Posted in Property

What is a Partition or Exchange Agreement?

In Texas, spouses can enter into agreements (often referred to as “partition or exchange agreements“) during marriage, partitioning community property between themselves. A partition or exchange agreement must satisfy several requirements to be valid and enforceable, including being signed by both spouses. However, when the stakes are high, some unscrupulous spouses may trick their unknowing partner into signing the partition or exchange agreement under false pretenses or, even worse, forge their partner’s signature. Recently, one husband did both.

Ninth District of Texas Court of Appeals

Sometimes, couples’ lives remain intertwined even after divorce.  If the parties continue to mingle finances, own property together, or keep or take out loans together after the divorce is final, the divorce may not finally resolve all of their issues.

In a recent case, an ex-husband sued his ex-wife regarding property she had been awarded in the divorce years earlier.  The parties purchased a vacation home during their marriage.  The ex-wife was awarded the vacation home in the divorce decree, but a geographical restriction on where the children could live prevented her from living in it.

The ex-wife put the house up for sale after the divorce, but did not sell it after the husband offered to pay the mortgage.  The ex-husband received the statements and made the payments.  The ex-wife testified she was aware her ex-husband was paying the mortgage.

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Divorce is usually fraught with emotion, but in some cases, a party may be pressured to the point of duress.  Duress exists when there have been threats that prevent a person from exercising their own free will.  Although it is not duress when a person threatens something they have a legal right to do, duress may exist if they exhort or make improper demands of another person.  An agreement signed under duress may be void.  In a recent Texas divorce case, a husband alleged he was under duress when he signed the marital home over to the wife.

The parties married in 1994.  During the marriage, they purchased the home.  They separated in March 2017.  They agreed the wife would take the home and the husband would not have to pay child support, but they never memorialized the agreement.  The husband testified he changed his mind after finding out his wife was unfaithful.

The husband moved out in March 2017.  The wife also filed her divorce petition that month.  She testified that the husband came to the house in April, kicked in the door, and threatened to kill her, her boyfriend, and her grandmother.  She reported the incident to the police.

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In Texas divorce cases, property is presumed to be community property if either spouse possesses it during the marriage or at the time of the divorce.  Tex. Fam. Code Ann. § 3.003.  To rebut the presumption, a spouse must trace the property and clearly identify it as separate by clear and convincing evidence.  How a property is characterized is generally determined based on the character it has at inception, or when the party’s title has vested.

In a recent case, a husband challenged the trial court’s characterization of property received as a gift from the wife’s parents.  When he petitioned for divorce, the husband requested a disproportionate share of the marital estate, due in part to “fault in the breakup…”  He also asked for reimbursement to his separate estate for funds he had expended for the community estate’s benefit.

He testified that the property where the couple lived had been gifted to them by the wife’s parents.  The “Gift Certification” signed by the wife’s parents stated they “intend to give to [husband and wife] a gift . . .” of the lot.  It also listed the relationship as “son in law to be and daughter.” Both the husband and wife signed in acknowledgement of receiving the gift.

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In some Texas divorce cases, the parties are able to reach an agreement on property division.  Such an agreement is treated as a contract, even when it is incorporated into a final agreed divorce decree.  If there is an ambiguity, the agreement may be reformed to correct a mutual mistake or reflect the parties’ intent.  An ambiguity exists if the meaning is uncertain or could reasonably be interpreted in more than one way.  To show there was a mutual mistake, a party must prove there was a definite agreement that was misstated in the contract due to a mistake of both parties.

In a recent case, a wife moved for clarification to correct the trial court’s omission of the amount of her portion of the husband’s military retirement. The couple divorced in 2000.  The agreed final divorce decree awarded the wife an amount of the husband’s Navy disposable retired pay, and 50% of all increases.  The amount was supposed to be “determined under the formula set forth below,” but the decree did not contain a provision setting forth a specific portion or calculation.  The decree awarded` the portion of the retirement pay “not awarded to [the wife]” to the husband.

The husband started receiving his military retirement benefits in 2015.  When the wife contacted the Defense Finance and Accounting Service to get her share of the benefits, she was told she could not be paid because the decree did not include a formula awarding her a portion of the retirement.

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As a result of his illustrious career, Dr. Dre’s net worth currently sits at a whopping $820 million – but maybe not for long. After 24 years, Dr. Dre’s wife, Nicole Young, is filing for divorce from the producer, rapper, and hip-hop icon. Reports indicate that the couple did not execute a premarital agreement prior to their 1996 marriage, which opens up Dr. Dre to significant financial exposure. In the absence of a premarital agreement, California – a community property state much like Texas – provides that property accumulated during marriage is owned by the community estate. Put simply, all of Dr. Dre’s income during the marriage, from his royalties as a solo rapper to his profits from Beats by Dre, is up for grabs. This means that Dr. Dre could see his hard-earned fortune be split in half right before his eyes in the coming months. Continue Reading ›

Texas family law requires a just and right division of community property by a divorce court.   The court must, however, have the relevant information before it to identify and appraise the assets.  A party who refuses to disclose assets or information about their value generally may not complain about the court’s valuation of those assets.  A former husband recently challenged the court’s division of property.

Prior to the marriage in 1994, the parties signed an “Agreement in Contemplation of Marriage.”  The wife filed for divorce in 2005, and the husband counter-sued.  The divorce decree was issued in July 2009.

Issues related to the case had already been before the appeals court five times.  The appeals court had previously remanded certain issues related to the property division back to the trial court.  The husband appealed the “Judgment on New Trial for Property Division.”  He argued the trial court erred by not enforcing the prenuptial agreement regarding a bank account and a legal settlement.  He argued the agreement required property held in the name of either party to be presumed to be that party’s separate property.

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Under Texas family law, if a party in a divorce case fails to comply with the divorce decree and delivery of the awarded property would no longer be an adequate remedy, the court may render a money judgment for the damages.  Tex. Fam. Code Ann. § 9.010.  A husband recently challenged an enforcement order awarding the wife damages after the husband withdrew and spent all the funds from two retirement accounts while the divorce was pending.

The inventories submitted by the husband in the divorce proceedings included two retirement accounts in his name, but did not specify an amount.  Both parties were ordered to preserve assets until the divorce was concluded, but the husband closed the accounts and transferred the funds to his personal account.   The trial court awarded 50% of each account to the wife in the final divorce decree.

The wife sued to enforce the property division in the divorce decree, also alleging fraud on the community.  The husband testified he had withdrawn about $75,000 from the accounts and admitted he had done so without notifying the wife or the court.  He testified he spent the funds on living expenses because he was unemployed.

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Property division in a Texas divorce must be just and right.  In some cases, courts may determine that a disproportionate division of the community assets is just and right.  In dividing the property, courts may consider a number of factors, including the ages of the parties and their relative physical conditions, their abilities, their education and business opportunites, and the size of their separate estates.  The court may also consider fault, but may not punish a spouse through the property division. In a recent case, a husband challenged the disproportionate division of property awarded to the wife.

The parties separated after the husband was fired from his nursing job for failing to take a drug test.  The wife testified she lived with the husband’s mother during the separation.  She testified she withdrew funds from their joint checking accounts because the money was being used for drugs and gambling.  According to the appeals court’s opinion, the husband was banned from his mother’s home and ordered to have no contact with the wife or their children by an Arkansas court.

The wife petitioned for divorce and asked to be awarded a disproportionate share of the community assets.  The trial court ordered the husband to vacate the home.  There was evidence the husband broke into the home and caused damage to the home and personal property.

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In a Texas divorce, the division of community property must be just and right.  The goal is an equitable, but not necessarily equal, division. A party may not get the specific items that he or she wants, but that does not necessarily mean that the division of property is not just and right. In a recent case, the wife challenged the specifics of the property division.

According to the court’s opinion, the husband’s retirement annuity was worth $234,000 when he retired from his job. There was evidence that he withdrew funds from the account and hid them from the wife. There was evidence that he used the funds for household expenses and expenses related to the couple’s horses.  The retirement account was worth approximately $50,000 at the time of trial.

The husband admitted that he did not report the withdrawals on the joint tax returns for several years, resulting in a $20,000 liability to the IRS. After the separation, the wife hired a CPA to seek innocent spouse status for her. She testified that she wanted the husband to pay the $3,000 for the CPA’s services.

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