Generally, a trial court in a Texas divorce case has the discretion to divide marital assets. A trial court can, however, abuse its discretion if it divides property without reference to guiding rules or principles and without evidence to support the ruling. An appeals court recently found that a trial court abused its discretion by mischaracterizing separate property as community property and improperly divesting the husband of his separate property.
Both parties had been married previously, and both asserted throughout the trial that they had separate property. They each pled and testified that they had separate property and submitted documentation showing they had separate property. Additionally, each submitted sworn inventories and filed proposed property divisions admitting the other party had separate property. Neither party ever disputed or contested the other’s claims. There were only two disputed issues before the court at the time of the trial: how to divide the wife’s retirement account and whether there were any reimbursement claims against the separate property.
The trial court, however, issued a letter ruling dividing all of the assets as though they were community property, despite the various agreements, stipulations, and uncontested submissions. The husband moved for reconsideration, and the wife filed a short response in opposition. The appeals court noted she had received the majority of the husband’s separate property under the letter ruling.
Following a hearing, the trial court denied the motion, stating that neither party proved their separate property by clear and convincing evidence. The court entered its final divorce decree in accordance with the letter ruling.
The husband appealed, citing three issues. He argued the court erred in failing to confirm separate property to which the parties had stipulated, that the trial court improperly divested him of his own separate property, and finally, that the court failed to make a just and right property division.
The wife argued the appeals court should uphold the final decree because the parties had not rebutted the presumption of community property by clear and convincing evidence.
There is a rebuttable presumption that property owned at the time of a Texas divorce is community property. If a party claims assets are separate property, he or she has the burden to prove they are separate property by clear and convincing evidence. The evidence does not have to be undisputed or unequivocal, but it must be sufficient to give the trier of fact a firm belief that the property is separate.
Texas law identifies certain property as separate, including property that was owned prior to the marriage or property that was received by one spouse by gift, devise, or descent. In Texas, the marital estate only includes the community property, and the trial court does not have the authority to divest a party of his or her separate property in the divorce decree.
Parties may stipulate certain issues. Stipulations are agreements, concessions, or admissions made by the parties in a court case. If issues are excluded by stipulation, those issues are excluded from the court’s consideration. There is no need for proof on an issue that is stipulated. A stipulation of fact is conclusive as to the issue it addresses and is binding on the court.
Both parties stipulated that they did not dispute the other’s claims for separate property. They filed sworn inventories. They each submitted proposed property divisions or final decrees requesting the other’s separate property be confirmed as separate property. The appeals court found that the trial court did not have the discretion to issue a ruling contrary to the stipulations, admissions, and undisputed evidence.
The appeals court found the trial court had unjustly divided the marital estate. The trial court had mischaracterized separate property as community property, and then it had awarded the wife a large percentage of that community estate.
The appeals court found the trial court abused its discretion in divesting the husband of his separate property. The appeals court affirmed the divorce but reversed the rest of the judgment and remanded for the trial court to confirm the separate estates in accordance with the stipulations, admissions, and undisputed evidence and to divide the marital estate in a just and right manner.
This case shows that courts sometimes act beyond the scope of their discretion. If you are facing a high-asset divorce, a skilled Texas divorce attorney can help protect your rights and your assets. Call McClure Law Group at 214.692.8200 to schedule a consultation.