Property

Property Owned by Business Entity in Texas Divorce

Published on: August 12, 2022 | by Kelly McClure

iStock-483613578-300x204 Business entities and business property can complicate the property division in a Texas divorce. Property owned by a business entity is not considered either separate or community property of the spouses, but instead belongs to the entity. In a recent case, a husband challenged the trial court’s denial of his request for reimbursement for mortgage payments he made.

Wife Enforces Property Division

The wife petitioned for enforcement of the property division several months after the final decree was signed. The husband filed a counter-petition also seeking enforcement of the property division, alleging each party owned an undivided 50% share in property identified as “The Terraces.” The husband alleged he had paid $10,000 on the property’s delinquent mortgage. He requested an accounting to determine each party’s obligation and actual payments related to the property and a money judgment for what the wife had not paid. Additionally, he sought an order requiring the wife to pay her share of future mortgage payments and costs.

The court entered an enforcement order in November 2018 that determined the husband’s claims with regard to The Terrace were not ripe because the property had not been sold. After the approved sale in January 2020, the husband filed an amended motion for reimbursement and enforcement of property division. The trial court denied his requests and the husband ultimately appealed.

Invited Error in Texas Divorce Case

Published on: August 8, 2022 | by Francesca Blackard

iStock-1270267953-300x200 Even when parties seem to agree on issues related to Texas property division, disputes may still arise. In a recent case, a husband challenged a trial court’s treatment of certain property after seemingly agreeing to that treatment during the hearing.

The husband petitioned for divorce in May 2019. The husband and wife stipulated that a particular parcel of land was the husband’s separate property, but the mobile home on that property was the wife’s separate property.

The husband testified he wanted to purchase the mobile home or sell the parcel and mobile home together and equally divide the proceeds. He expressed a preference to buy the mobile home himself but also said there were buyers interested in purchasing them as a single asset. The wife testified she wanted to sell the mobile home to the husband for $15,000 or alternatively to sell both together and divide the proceeds equally. The husband responded “Yes” when asked if he agreed to sell the parcel and the mobile home together and split the proceeds. When he was asked about division of another piece of property, he said he thought the parties had reached agreement on the five-acre parcel and mobile home and thought they could also reach agreement on the larger parcel. The trial court specifically told the husband that he was “not going to have the five acres and the mobile home. . .”

Discrepancies Between Texas Divorce Decree and Property-Division Agreement

Published on: June 13, 2022 | by Francesca Blackard

iStock-1125625723-300x200 When parties to a Texas divorce agree to a property division, the final judgment based on the agreement must strictly comply with it. The trial court cannot add, change, or leave out material terms. A final judgment based on a property division agreement must be set aside if it is not in strict compliance with the agreement, unless the discrepancy is a clerical error. An appeals court may modify a judgment to correct a clerical error. A former husband recently challenged the property division in his divorce due to a number of alleged discrepancies.

Husband and Wife Submitted Proposed Property Division

According to the appeals court’s opinion, the parties agreed to a proposed property division, identified as “Exhibit A.” The wife testified the division was fair and just. She agreed to split funds in the husband’s IRA equally after he was credited $90,000 as separate property and to split the funds in his “Edge” and “Smart” retirement plans equally.

The husband initially disagreed with the property division in Exhibit A, but later asked the court to approve it. The trial court admitted the document into evidence, asked the parties to draft and sign an agreed final decree.

Life Insurance and Texas Divorce

Published on: May 8, 2022 | by Kelly McClure

2018_10_agreement-300x165 People commonly obtain life-insurance policies and name their spouse as the beneficiary. They do not always remember to update the beneficiary designation when they get divorced. Under Texas law, designation of a spouse as beneficiary before a divorce will only remain effective after the divorce in certain circumstances. Generally, either the court or the insured must designate the former spouse as beneficiary, or the former spouse must be designated to receive the proceeds in trust for a child or dependent’s benefit. In a recent case, an ex-wife challenged a court awarding a life-insurance policy on the ex-husband to the ex-husband many years after the original divorce.

Insurance Policy Not Divided in Divorce

During the marriage, the parties obtained a life insurance policy on the husband with the wife named as beneficiary. The policy was not addressed in the divorce decree in 2009. The husband subsequently filed a bill of review, and the parties agreed to be co-owners of the policy. They agreed the wife would receive half of the proceeds and the rest would go into a trust for their children. The court ordered the parties to split the policy into two, but the insurance company was unable to do so.

The husband then filed for declaratory judgment, seeking to be named the sole owner of the policy. He also asked for a temporary restraining order against both the wife and the insurer. Alternatively, he sought to divide undivided property. The wife’s counter-petition also sought a declaratory judgment that the policy was her separate property and to divide undivided assets.

Texas Divorce Abated Upon Husband’s Death

Published on: March 20, 2022 | by Kelly McClure

iStock-1270267953-300x200 When a party in a Texas civil lawsuit dies, the case may proceed if the cause of action survives the death of the party. Tex.R.Civ.P. 150. Generally, when the defendant in Texas civil lawsuit dies, the plaintiff may petition for a “scire facias” to require the administrator, executor, or heir to defend the lawsuit. Tex. R. Civ. P. 152. Pursuant to case law, however, Texas divorce cases are not subject to this rule because they are personal actions that do not survive the death of a party if judgment has not yet been rendered. Generally, heirs do not take over a divorce case prior to final judgment. Instead the divorce case abates when a party dies. This means the court will dismiss the case.

Husband Dies During Divorce Suit

A wife recently challenged a trial court’s determination that her divorce petition abated upon her husband’s death. The parties had married for about seven years when they divorced in 2000. In 2018, they got married again. The parties did not have any children together, but the husband had children from a previous marriage. The wife petitioned for divorce in May of 2020. The husband filed an answer, but passed away the following January. The wife sought to have the husband’s children defend the divorce on the husband’s behalf as his heirs.

The trial court found it did not have subject-matter jurisdiction to proceed, because a divorce petition, as a personal action, abates upon the death of either party. A judgment rendered by a court without subject-matter jurisdiction is void.

Ex-Wife Entitled to 50% of Community Portion of Pension Benefits in Texas Divorce

Published on: March 16, 2022 | by Francesca Blackard

iStock-1132277483-300x200 Property division in a Texas divorce is intended to be final, and a court generally is not allowed to change the division set out in the final decree. Tex. Fam. Code Ann. § 9.007. The court may, however, issue orders to clarify or enforce the property division set out or incorporated by reference in the decree. Issues related to retirement benefits are often addressed in a Qualified Domestic Relations Order (“QDRO”) for private employees or a Court Order Acceptable for Processing (“COAP”) for employees of the federal government, which may be incorporated into the decree. Courts may therefore correct or clarify a QDRO or COAP to achieve the property division set out in the decree.

An ex-husband recently challenged an order allowing his ex-wife half of his entire monthly federal pension. The husband started working for the federal government in 1989. The parties got married in 2000 and divorced in 2011.

Language in the decree seemed to award the wife half of the community share of the husband’s federal government pension benefits, but another provision seemed to award her half of all of those benefits. The decree stated the “community portion” of the pension benefits would be identified in a COAP. The court rendered the COAP in January 2012, but it indicated the wife was awarded 50% of all of the federal pension benefits.

Texas Appeals Court Finds Wife Did Not Convert Inheritance to Community Property

Published on: March 2, 2022 | by Francesca Blackard

2018_10_agreement-300x165 In Texas, separate property can be converted to community property by a written agreement signed by both spouses that identifies the property to be convert and specified it is being converted to community property. Tex. Fam. Code § 4.203. In a recent case, a former husband challenged the property division in his divorce decree, arguing certain assets had been improperly characterized as the wife’s separate property.

The wife was beneficiary of three irrevocable trusts set up by her grandparents. The income from the trusts was to be distributed to the wife at least annually starting when she turned 21. The trustee was also authorized to distribute principal for the wife’s care, comfort, support, and education if the trustee deemed it necessary. When she turned 32, the trustee had the discretion to distribute the balance. After the wife’s thirty-second birthday, which occurred during the marriage, the trustee terminated the trusts and put the accounts in her name. They were worth about $2.3 million at the time.

The parties hired an estate-planning attorney. They both signed an engagement letter, stating they told the attorney they considered the current assets, specifically including the funds inherited by the wife, to be community property. The trust agreement stated that the trustors contemplated that all assets that would be transferred to the trust would be community property. However, it also included a provision allowing either party to modify, revoke, or terminate the agreement with respect to any of their own separate property held in the trust. They subsequently transferred the assets from the grandparents’ trusts to the new trust account.

Enforcement of High Net Worth Texas Divorce

Published on: February 20, 2022 | by Kelly McClure

iStock-1139699594-300x200 When a couple has complex and high-value assets, the actions required to achieve the property division may drag out long after their Texas divorce. The parties may need to refinance or liquidate certain assets. These ongoing transactions can result in additional disputes and possibly enforcement actions by one or sometimes both parties.

A husband recently challenged a court’s order in favor of the wife in dualling enforcement motions. The trial court entered an Agreed Final Decree of Divorce in March 2019. The decree awarded the wife a business, but required her to pay the husband a $770,000 equalization judgment secured by her primary residence and rental properties. She was also ordered to make monthly payments with 3% interest starting in February 2019. She defaulted in 2020, triggering an acceleration clause.

The decree also addressed the parties’ 2017 tax return and liability. The wife would pay $60,000 of the approximate $199,000 liability and any penalties and interest “arising solely out of the failure to previously make the $60,000 payment to the Internal Revenue Service.” The parties would split the remaining tax liability, penalties, and interest equally. The wife consented to filing the tax return in June of 2019, but the husband asked to review certain documents before he consented. There was evidence he received the documents in the summer of 2020 and notified the wife and accountant he had identified additional medical expenses within a week of receipt. He ultimately gave his consent to file the day before the enforcement hearing.

Ex-Wife Entitled to Ongoing Interest in Ex-Husband’s Defined Benefit Retirement Plan

Published on: January 31, 2022 | by Kelly McClure

iStock-1187184203-300x200 Retirement benefits are often subject to property division in a Texas divorce. In some cases, calculating the community interest is straight forward; however, in other cases, it can be somewhat more complex. In a recent case, a former wife challenged a trial court’s handling of the former husband’s retirement benefits after it concluded she had already received all of the benefits to which she was entitled.

The parties had been married 22 years when they divorced. The wife was awarded 50% of the husband’s Civil Service Retirement Benefits accrued as of the date of the decree’s entry. The trial court signed a Qualified Domestic Relations Order (“QDRO”) authorizing payment of an interest in the husband’s monthly annuity payments to the wife and stating that she was entitled to a survivor annuity.

Trial Court Enters Original QDRO

The parties began receiving the monthly annuity payments pursuant to the QDRO after the husband retired at the end of 2011. In March 2016, the husband moved to vacate the QDRO, arguing the wife was not entitled to a survivor’s benefit under the decree but a premium was being deducted from his monthly benefit. He asked the court to amend the QDRO to match the property division in the divorce decree.

Former Spouse Cannot File New Suit for Division of Property Disposed of in Texas Divorce

Published on: December 22, 2021 | by Francesca Blackard

iStock-545456068-300x184 A trial court may order a post-divorce division of community property that was not divided or awarded to either spouse in a Texas divorce decree. Tex. Fam. Code § 9.201. The court may not, however, order a post-divorce division of property that was already divided in the divorce. The legal doctrine of res judicata prevents a party from re-litigating issues such as categorization of assets or improper division in a new case. Parties must instead address such issues through direct appeals. In a recent case, a wife sought a post-divorce division of certain bonuses the husband received after the divorce.

The parties married in 2014, and the wife petitioned for divorce the next year. The husband included several bonuses in his asset inventory. He listed a $0 value for the bonuses that would only be payable after the divorce if he remained employed on the designated date. He testified they had no value because they were conditional on future events.

The wife argued the future bonuses were deferred compensation for work performed during the marriage and estimated their value at more than $4 million.