Articles Posted in separate property

property-division-300x110The court in a Texas divorce must make a just and right division of the parties’ estate.  This does not necessarily require the court to award  the parties equal shares of the property.  Property acquired during a marriage is generally community property, but property acquired before the marriage or by gift, devise, or descent is separate property. A party claiming separate property must show that it is separate by clear and convincing evidence.  A husband recently challenged a court’s characterization of certain property as the wife’s separate property.

The parties got married in 1997 and the husband filed for divorce in 2019.  Each party sought a disproportionate share of the marital estate.

Wife Asserts Separate-Property Claim

According to the appeals court’s opinion, a significant issue in the divorce was property purchased by the wife in 1997 after the marriage.  She leased the building in 1990 and renewed the lease in 1995. After the marriage, she bought it.  She testified the written lease she signed in 1995 gave her an option to purchase, but she had lost the document.

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iStock-483613578-300x204Some people may assume that property held in only one spouse’s name is that spouse’s separate property, but that is not necessarily the case.  In Texas, property’s character is determined based on when and how it is acquired.  Additionally, in a Texas divorce, property acquired during the marriage is presumed to be community property.

In a recent case, a husband challenged a court’s characterization of certain property held in his name as community property and awarding it to the wife.

According to the appeals court’s opinion, the parties acquired multiple pieces of real estate, some in both their names and some in only the name of the husband, while they were married. When they divorced, the three properties that were the subject of the appeal, referred to by the court as the “Three Properties,” were held by the husband, but the wife alleged they were the community property.

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iStock-1125625723-300x200When 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.

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Divorce-property-fraud-300x273Property in the possession of either spouse at the time of dissolution of marriage is presumed to be community property under Texas family law.  A spouse may rebut this presumption by tracing and clearly identifying the separate property. That spouse must present evidence of the time and means of acquisition of the property. The property remains separate if the spouse can trace the assets back to separate property.  Testimony is generally not enough to overcome the community-property presumption. The spouse must have clear and convincing evidence the property is separate. Tex. Fam. Code § 3.003.

An appeals court recently considered tort claims within a divorce case arising from the purchase of a business. When the parties married in 2014, the wife owned a 49% interest in her optometry practice.  She offered to buy the remaining interest in 2015.  Her husband and another attorney in his firm helped negotiate the deal.

Wife Brings Tort Claims in Divorce Suit

The wife petitioned for divorce in September 2018.  She added claims of fraud, theft, and breach of fiduciary duty to her petition, arguing husband failed to structure that purchase as separate property and allowed her separate property to be converted to community property.

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iStock-1132277483-300x200Property 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.

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2018_10_agreement-300x165In 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.

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property-division-300x110Courts must divide community property in a “just and right” manner in Texas divorce cases.  The property division does not have to be mathematically equal, but should be equitable to both parties.  To achieve a just and right division, the court needs evidence of the value of the assets before it.  In a recent case, a husband challenged a property division, arguing the court had divested him of his separate property and did not have sufficient evidence to fairly divide the community estate.

The husband petitioned for divorce in 2017. His petition stated there was no community property to be divided.

The wife asked for a disproportionate share of the community estate, her own separate property, and reimbursement for community funds she alleged the husband used for the benefit of his separate property.

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iStock-545456068-300x184A 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.

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iStock-1214358087-300x169Texas law presumes that property possessed by a spouse during or on dissolution of the marriage is community property.  Tex. Fam. Code § 3.003.  The presumption can only be rebutted by clear-and-convincing evidence the property is separate. In a recent case, a husband challenged the characterization and distribution of property in his divorce.

The parties got married in 2008 and separated in 2018.  The wife moved into her own apartment and filed for divorce in March 2018.

The wife submitted an inventory and appraisement, a copy of her student-loan activity, and a proposed property division.  The husband also submitted an inventory and appraisement, as well as account statements and receipts.

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imagesIn a Texas divorce case, property acquired during the marriage is presumed to be community property. A spouse claiming property is their separate property must show that it is separate by clear and convincing evidence.  Separate property is generally property that is owned before the marriage, property that the spouse acquired as a gift or inheritance, or property recovered as damages in a personal injury case.  Community property is generally property acquired after the marriage that is not characterized as separate property.

In a recent case, a wife challenged the court’s characterization of certain property as the husband’s separate property.  The wife filed for divorce. The parties agreed they had married in India in 1976, but disagreed on the date they stopped living together as husband and wife.

Husband and Wife Enter into Settlement – But Leave One Issue for Trial

The case went to trial, but, before trial, the parties entered into a Mediated Settlement Agreement (“MSA”).  In the MSA, the parties agreed their community property located in India would be divided by Indian courts.  The parties agreed to the characterization and division of everything except two pieces of land in India, referred to as the “Fifteen-Cent” property and the “One-and-a-half-Acres” property. The MSA stated they would “defer to characterization and confirmation of separate property” of those two parcels to the trial court.

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