Valuation and Separate Property in Texas Divorce

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.

Evidence at Trial

The husband testified he received monthly Social-Security benefits and rental income. He testified he owned nine properties before the marriage and bought three more after.  He said his monthly rental income decreased significantly when most of the houses were damaged in a flooded. He estimated the values, but did not provide supporting evidence. He testified he purchased one of the properties with funds he “had accumulated over the years.” He had maintained a checking account before and during the marriage.  He said he had deposited his social security benefits and rental income and acknowledged commingling funds in the account.

Both parties testified the wife did not work while they were married.  The wife testified she moved into a women’s shelter with the children for a while when the parties separated due to the husband’s abuse and lack of financial support. The husband admitted he had not offered to repair a house for her and the children to live in.

The wife requested at least half of the checking account balance.  She submitted an inventory and appraisement of the three properties bought during the marriage. She requested two of them, one to live in and one to sell. The husband did not submit an inventory and appraisement.

The court awarded to the wife $104,812 and two of the properties bought during the marriage.  Each party was awarded property in their own possession.  The court did not state a finding for the total value of the community estate or the properties.  The parties did not request findings of fact and conclusions of law.

The husband appealed, arguing the trial court divested him of his separate property by awarding the wife the real property and the monetary award.

The trial court did not issue findings of fact.  If a party to a divorce case requests them, the court must file written findings of fact, including characterization and value of the assets.  Tex. Fam. Code § 6.711(a).  Without those findings, the appeals court does not have the information on how the court divided the property and if it intended to effect an equal or disproportionate division.

Arguments on Appeal

The husband argued there was insufficient evidence to support the monetary award.  The wife argued the husband had not met the burden of showing the account was his separate property.  He had not traced and identified it. She also argued that list of transactions had been admitted into evidence and the husband had not submitted any other evidence to rebut it.

The appeals court noted the cash was presumed to be community property, because the husband had it in a bank account during and on dissolution of the marriage.  The husband had the burden to show it was his separate property by clear and convincing evidence, which would require tracing and identifying it.  The husband testified the funds were his, but did not offer other evidence tracing and identifying them. Even if the trial court believed his testimony, it was not sufficient to rebut the presumption.

The husband had testified he deposited rental income into the account.  The appeals court noted that rental income is generally community property, even if it is generated from separate property. The husband also admitted he had commingled funds.

The appeals court found the husband failed to show the account was separate property, so the trial court did not err in its characterization of the funds.

The husband further argued there was insufficient evidence to support the monetary award.  The appeals court found, however, that the evidence of the account’s most recent balance, constituted “some evidence of a substantive and probative character. . .” The trial court therefore did not abuse its discretion in awarding part of the funds in the account to the wife.

The husband also argued the court abused its discretion in awarding the real property to the wife by divesting him of separate property and dividing the property in a manner that was not just and right.  He argued the record was “woefully inadequate” to allow the court to determine the community estate.

The wife argued the court awarded her two of the three properties bought while the parties were married.  According to her inventory and appraisement, the third property was more valuable than the two awarded to her.  Furthermore, the husband had not filed an inventory and appraisement and did not submit evidence showing the funds used to buy the properties were separate.

The appeals court found the husband had not shown the properties were separate, so the court had not divested him of his separate property.

Without findings of fact, the husband could not show the wife had been awarded a disproportionate share of the estate. The wife’s inventory and appraisement listed the combined values of the properties awarded to her as roughly the same as the one awarded to the husband. The appeals court found no abuse of discretion in the property division because there was some evidence of a substantive and probative character supporting the award of the two properties to the wife.

The appeals court affirmed the trial court’s judgment.

Valuation and Characterization of Assets in a Divorce are Crucial – Call the Experienced Attorneys at McClure Law Group Today

This case shows the importance of strong evidence regarding the value and characterization of assets. If you have significant separate assets, you need a skilled Texas divorce attorney working to protect them in your divorce.  Call McClure Law Group at 214.692.8200 to set up a consultation.

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