Property

Court Can Disproportionately Distribute Assets Due to Fraud in Texas Divorce

Published on: August 7, 2018 | by Francesca Blackard

A spouse who improperly spends large amounts of community assets without the other spouse’s knowledge or consent may receive a smaller share of the remaining community estate during a Texas divorce. A Texas appeals court recently considered whether a property division was just and right after the trial court found the husband had committed fraud on the estate by spending money on other women.The wife filed for divorce after learning her husband had been unfaithful. The husband testified to having affairs for the past 30 years. He took the other women on trips and shopping sprees, paid their rent and car payments, and hired some of them and gave some of them money for their own start-ups. He paid for these things through his business accounts, company credit cards, and petty cash from his pharmacy.

The wife hired a CPA to provide an accounting of the husband’s businesses. The CPA rendered an opinion that more than $7 million was either missing or spent in transactions that did not benefit the community estate.

The husband rejected the amount identified by the wife’s CPA, claiming a large portion of the amount identified did not exist. His expert opined that the wife’s accountant had made conclusions based on insufficient data. The husband’s employee testified the husband never took petty cash. She also stated some of the transactions identified by the plaintiff’s accountant were not fraudulent because they benefited either the business or the community estate. The trial court found the husband was not a credible witness, spoliated evidence, and committed a fraud on the community of nearly $4 million.

Court Must Have Evidence of Property Value to Distribute Property in Texas Divorce

Published on: August 1, 2018 | by McClure Law Group

The court in a Texas divorce case must divide property in a just and right way. This does not necessarily mean that property is divided equally between the parties, but the division must be just. What happens, though, when only one party participates in the divorce proceedings? A Texas appeals court recently found that the trial court had to have sufficient evidence of the property values to divide the property justly.

The husband petitioned for divorce, but the wife did not answer or appear at the hearing. The husband testified that there were two vehicles and a mobile home in the community estate. He asked the court to award all of the property to him, but allow the wife to keep the property in her possession. He did not testify or provide evidence of the value of the property. The court granted the divorce and awarded the husband the vehicles, the mobile home, furnishing, and other goods and cash in his possession and control. The court did not award any property to the wife.

The wife filed notice of a restricted appeal. To succeed on a restricted appeal, she had to show that she filed the notice within six months of the decree, she was part to the lawsuit, she did not participate in the hearing or file post-judgment motions or requests for findings of fact and conclusions of law, and error is apparent on the face of the record. She clearly met the first three requirements, so the appeals court had to determine if there was error.

Texas Court Finds Distribution of “Net Payment” in Texas Divorce Did Not Address Pre-Tax Deductions

Published on: July 20, 2018 | by Francesca Blackard

In Texas divorces, it is common for the parties to agree to a property division and ask the court to approve the agreement and include it in the decree. Once the court does so, it generally may not modify or alter the property division included in the agreement. It may, however, still divide property that was not divided in the agreement and decree. It is therefore important for the parties to be sure the agreement to clearly divide everything, or they may have to go back to court to address something that was omitted. This can be difficult in some cases, however. What happens, for example, when the agreement and decree divide the net amount of a bonus, but do not address pre-tax deductions that go to one of the parties? A recent case addressed this issue.

The divorce decree incorporated the agreement between the parties, which included a detailed division of the marital estate based on the informal agreement the parties executed at a settlement conference. The agreement stated the husband would receive 47% of the net amount of his 2013 year-end bonus and wife would get a 53% portion of the “net amount after taxes and deductions.” The agreement also stated the wedding and engagement ring were the wife’s separate property.

The husband’s pay stub showed he received $460,000 for his 2013 bonus, but reflected two pre-tax deductions totaling $81,000. The deductions included $75,000 for deferred annual bonus and $6,000 for personal savings account contribution. Taxes totaled $108,711.10 and the pay stub listed $270,228.90 as the “net pay” for the bonus. The husband paid the wife 53% of the net pay amount.

Spouse May Be Required to Reimburse Community Estate in Texas Divorce

Published on: June 12, 2018 | by McClure Law Group

When one spouse controls the finances, he or she has the opportunity to use community assets to the benefit of separate property. The other spouse may challenge the disposition of those funds during a Texas divorce. The spouse in control of the finances has a fiduciary duty to the other spouse during the course of the marriage.

A Texas appeals court recently considered whether a husband was required to reimburse the community estate for certain expenditures. The trial court awarded the wife the majority of the community estate and ordered the husband to reimburse it for certain expenditures. The husband appealed, arguing the evidence did not support the disproportionate division and some of the amounts he was ordered to reimburse.

The husband had entered the marriage a wealthy man with several businesses. The wife alleged he allowed his separate companies to keep funds he should have received. Since his businesses were S corps, he was personally responsible for paying taxes on the funds, even if they were not distributed. The wife sought reimbursement for the undistributed funds and for the income taxes paid from the community estate. Each party presented expert testimony. The wife’s expert calculated that the estate had paid $1,000,742 in taxes for the separate companies and was entitled to reimbursement. The husband’s expert said he did not agree the wife had a valid claim for reimbursement and presented his own calculations, showing $841,108 was paid. The jury found the community estate had paid $841,108 in income taxes for the husband’s separate businesses. The trial court included that amount in the valuation of the reconstituted community estate.

Reimbursement for Loans Made to Separate Property in Texas Divorce

Published on: May 24, 2018 | by Francesca Blackard

When a business is struggling, the owner often wants to put money into it to try to save it. This can be a simple matter when both spouses have ownership in the business. Texas divorce attorneys understand, however, that it can be complicated when the business is one spouse’s separate property. A Texas appeals court recently addressed this issue.The wife filed for divorce nearly 14 years after the marriage. At the time of the divorce, the wife was employed full-time. The husband was unemployed and not seeking employment. He stated he spent significant time dealing with a lawsuit involving his separate business.

The husband stated the business existed before the parties were married. It ran independent businesses inside amusement parks. Under the original arrangement, it paid the amusement park about 30% of the earnings of each location. The wife stated that the business had done well and was profitable at that time.

Former Spouses Are Generally Not Fiduciaries in Texas

Published on: May 24, 2018 | by McClure Law Group

Divorcing parties sometimes agree to hang on to property for some time following the divorce. Sometimes, they want to allow the children to remain in the home. Sometimes, they want to make repairs to increase the property’s value. Texas divorce attorneys know that there can be a lot of conflict prior to the sale of the property. In a recent case, a Texas appeals court considered whether a former husband had a fiduciary duty to protect his former wife’s interest in the property they owned together.

The divorce decree ordered the parties to list the property for sale and to split the proceeds equally. The wife moved to enforce the decree nearly 12 years later. She claimed the husband failed to comply with the decree and failed to cooperate with selling the property. She asked for clarification of any part of the decree the court found was not specific enough to enforce by contempt. She also brought a breach-of-fiduciary-duty claim against him.

The wife argued the parties had agreed not to sell the property until the children graduated from high school. She alleged her husband had willfully withheld the proceeds of an insurance claim for damage to the house. She also claimed he had forged her name on an insurance check that was made payable to both of them and that she had to sue him to get half of the proceeds. She claimed she was unable to pay for repairs to the property because the husband had withheld the proceeds. The wife was ultimately charged for demolition of the house after the city condemned the property.

Characterizing Gifts in Texas Divorces

Published on: May 17, 2018 | by Francesca Blackard

Dividing property is an important aspect of the divorce process. Only community property is divided by the court, however. Although property acquired during the marriage is presumed to be community property, Texas divorce attorneys know there are some exceptions. A gift made to one spouse during the marriage is separate property.

A Texas appeals court recently reviewed whether property conveyed by the husband’s mother was properly characterized as community property. The husband appealed the final divorce decree. He challenged the characterization of about five acres as community property. The court had found it was community property and awarded half of it to the wife.

At trial, the husband argued the property had been a gift from his mother and was therefore his separate property. The wife argued the couple had begun the process of obtaining an equity loan for repairs to the property in 2013. In November 2018, the husband’s mother signed a quitclaim deed transferring the property to her son. The wife testified the deed had been printed from the internet, and the intent was for the husband to get the property so that they could obtain the loan and repair it. The bank did not recognize the quitclaim deed, due to a lack of legal description of the property. The husband’s mother then executed a general warranty deed conveying the property to both the husband and the wife. The wife stated the warranty deed and a subsequent correction affidavit were intended to make both of them the property owners.

Attempted Compliance with a Texas Divorce Decree

Published on: April 26, 2018 | by Kelly McClure

Parties to a divorce often have to cooperate to complete the property division. Texas divorce attorneys know, however, that parties are not always willing to cooperate. A Texas appeals court recently considered whether a husband sufficiently complied with an order that he make a payment to the wife when he contacted the wife to make payment arrangements.

The parties came to a mediated settlement agreement and signed off on the proposed agreed final divorce decree. The final decree ordered the husband to pay the wife $10,000 for the marital residence within 90 days of May 13, 2014. Another section, under a subheading titled “Division After Full Payment of $10,000…,” provided that after the husband paid the $10,000 in full, he would be awarded the marital home.

Another section stated if the payment was not made in full within two years of May 13, 2014, the marital residence would be awarded to the wife, and the husband would be divested of all right, title, interest, and claim in the marital residence.

Property Division in Texas Divorce Must Be Equitable But Not Equal

Published on: April 26, 2018 | by Francesca Blackard

In a Texas divorce, the court is required to divide the property in a “just and right” manner. The court is not required to divide the property equally but must divide it equitably. It may order a disproportionate division if it has a reasonable basis to do so. There are a number of factors a trial court may consider in dividing the community estate. Those factors include the nature of the property, income disparity, business opportunities, relative financial conditions and obligations, education, physical condition, age, fault in the break-up, the benefit the innocent spouse would have received if the marriage continued, the size of the separate estates, and a probable need for future support.

The husband in a recent case challenged the disproportionate division of property in favor of the wife. The wife filed for divorce after finding escort and dating websites on her husband’s phone and home computer. She ultimately requested a disproportionate division of the property, arguing the husband was at fault in the breakup, wasted community assets, gifted community assets, and committed actual or constructive fraud.

The parties had a variety of financial and investment accounts. The wife said her husband managed her separate property investment accounts, and she did not have information about them. She also testified that he provided her with a statement purportedly identifying all of the accounts. That statement included $60,000 in company stock of his former employer. A 1099 indicated the husband sold 6,000 shares of the stock for $1,200 in September 2015. He testified he was “given” 6,000 shares when he started working there, but he had to pay $1,200. He further testified that the company required him to sell the stock back for the purchase price when he left the company. He said he did not update the information on the statement after selling the stock.

Waiver of Appeal in Texas Divorce Cases

Published on: April 19, 2018 | by McClure Law Group

Texas divorce attorneys know that even when a divorcing couple reaches a settlement agreement, there still may be issues that are in dispute. Settlement agreements sometimes include provisions that the parties waive the right to appeal. In a recent case, a husband attempted to appeal a final divorce decree despite a waiver of appeals in the settlement agreement.

When the couple filed for divorce, they owned several piece of property. They had two parcels of the wife’s family ranch, one that she owned as separate property. They purchased the second parcel from the wife’s brother and financed it through a loan secured by her separate property parcel. They also took out a second loan on the wife’s property to pay for divorce attorney’s fees.

The parties eventually entered into an “Informal Settlement Agreement.” Pursuant to this agreement, the husband would receive the family homestead and the wife would receive both parcels of her family ranch, with the husband paying the two loans. As part of the agreement, the parties waived their right to appeal or move for a new trial. The parties also agreed to submit any disputes regarding the language for the final decree to the trial court.