Texas Divorce Attorney Blog
The court in a Texas divorce case must divide the estate in a “just and right” manner. Property acquired by either spouse during the marriage, except separate property, is community property. Tex. Fam. Code § 3.002. Separate property includes property acquired by a spouse by gift. Tex. Fam. Code § 3.001. There is a rebuttable gift presumption for property conveyed by a parent to a child. The presumption can be rebutted by clear and convincing evidence that the parent lacked donative intent. A former husband recently challenged characterization of certain property the wife claimed had been gifted to her, as well as a provision stating the wife was entitled to file taxes as head of household, and a number of other issues.
The wife bought a new home in July 1999. She and her father were listed as the grantees on the deed, but the husband put $25,000 down. The parties got married that September and lived in the home. The wife’s father’s interest in the home was transferred to the husband in October 2000.
The husband worked as an engineer when they married but was laid off in 2007. At the time of the trial, he had not had full-time employment since that lay-off. He had received a severance and used it for bills and living expenses until it was depleted. The husband cared for the parties’ young child while the wife worked full time.
The husband went to law school in South Carolina in 2013. He and the child lived with his parents in South Carolina while he was in school and returned after graduation.
Divorce
The wife petitioned for divorce in 2020. The primary marital assets were the residence and retirement accounts, but characterization of certain property in North Carolina was disputed.
The wife testified the property in North Carolina was her separate property that had been gifted to her by her parents. According to the property records, it was transferred to her in November 1999.
The husband testified the property had been “provided to” the wife during the marriage and he contributed funds to it. He said he did not personally pay the property taxes, but argued they were paid from community property.
The final decree divided the marital estate, apportioned debts, confirmed separate property, and ordered that the home be sold.
The husband moved to modify, correct, or reform the judgment, challenging the characterization of the property in North Carolina as the wife’s separate property and other terms of the decree. He also moved for a new trial.
The trial court set aside the decree and granted a new trial. The court also required the wife to post security for costs and fees awarded to the husband. The court granted the wife’s motion for reconsideration of that order, determining it had correctly characterized the North Carolina property but had incorrectly ordered an unequal division of the net proceeds of the marital residence. The court also denied the husband’s motion for a new trial and modified the decree to order an equal division of the net proceeds from the house, state it intended the fees awarded to the husband to be fully chargeable to the wife’s interest in the house proceeds, specify procedures for selling the house, and order that the court intended each party to be awarded their retirement account related to their own employment.
The husband appealed.
North Carolina Property Characterization
The husband argued there was insufficient evidence supporting the court’s characterization of the North Carolina property as separate.
According to the appeals court, the evidence showed the property was transferred to the wife by her parents less than three months after the marriage. The wife testified the property was a gift, and the deed listed nominal consideration. The husband disputed that the property was a gift, but said he would “forego the community claim” to the property in North Carolina if he received half of the proceeds from the parties’ home. The trial court conclude the property had been gifted to the wife and characterized it as her separate property.
The husband argued the presumption did not apply because of the stated $10 consideration. Case law has held, however, that recitation of nominal consideration can evidence a donative intent.
The appeals court determined the gift presumption applied and the burden shifted to the husband to rebut it. The court noted there was no evidence the $10 consideration had actually been paid. The appeals court further found no evidence rebutting the gift presumption. The appeals court concluded the husband had not rebutted the gift presumption.
The husband also argued the wife had transferred the property in North Carolina to her brother and requested an equity judgment on their fair market value, a real estate lien on the residence, or another adequate remedy. He also asked the appeals court to order the wife to pay for an appraisal. The appeals court noted the only relief it could provide would be remand for a new trial, but it had determined the trial court had not abused its discretion in finding the property was the wife’s separate property.
Head of Household Designation
The husband also challenged the provision in the decree stating the wife had the right to file federal income takes for 2022 as head of household.
The appeals court noted that “head of household” designation requirements are set forth in the U.S. Tax Code and the I.R.S. has jurisdiction to determine whether a person is entitled to file taxes as head of household. The trial court did not have jurisdiction to make that determination based on federal tax law.
The appeals court concluded the trial court did not have subject-matter jurisdiction to make that ruling and it was therefore void. The appeals court declared that portion of the decree void and vacated it. The appeals court affirmed the modified decree.
Contact a Dallas Divorce Lawyer
If you have a complex estate involving gifted or inherited property, a knowledgeable Texas high net worth divorce attorney can advise you of your rights and options. Set up a consultation with McClure Law Group at 214.692.8200.