Articles Tagged with characterization

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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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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Understanding separate property laws is crucial for divorcing spouses. If a spouse can prove certain property as his or her separate property, then the Constitution of State of Texas prohibits that spouse from being divested of his or her separate property. As such, separate property is “off the table,” so to speak, when it comes to division of the estate either by a court or through a settlement agreement. Therefore, if a spouse is able to prove certain property as his or her separate property, then such characterization can dramatically influence the framework for settlement negotiations and/or relief sought from the Court. Continue Reading ›

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