All property possessed by either spouse at the time of a Texas divorce is presumed to be community property, but this presumption can be rebutted with clear and convincing evidence. Property’s characterization is determined by the inception of title. Separate property retains its separate character if the spouse can rebut the community presumption by tracing the assets back to separate property. If separate and community property are commingled to an extent that would defy resegregation and identification, it will be presumed to be community property.
A former wife recently appealed the award of funds from a particular account in the divorce decree.
According to the appeals court, the trial court had awarded 60% of the funds in the account to the husband as his separate property. The court found the remainder of the funds were community property and awarded each party half of that amount as their separate property.
The wife appealed, arguing the husband had not provided sufficient evidence the funds he deposited in the account were his separate property. She also argued that a specific amount of the funds were community property. She further argued separate and community property had been commingled in the account.
Evidence
The appeals court rejected the wife’s argument the husband had only offered “mere testimony” to prove he deposited separate property funds into the account. The appeals court noted there was “ample corroborating and supporting evidence” in the record showing both the source and character of the funds. The appeals court further noted that testimony can be sufficient to overcome the community property presumption if it is not contradicted.
The husband had testified he had deposited funds from his father’s estate or accounts, and there was no indication in the record the wife had contradicted that testimony. Furthermore, the wife had testified regarding the husband’s inheritance and her inventory and appraisement identified funds in the account as the husband’s separate property.
Tax Refund
The wife argued $19,658 in the account was community property. She testified that amount was deposited from an income-tax refund. She argued the husband improperly filed as single instead of married.
The husband testified that tax refund was for taxes from his withdrawal of a distribution from his father’s account. He said he had paid the taxes with funds from his father’s account. He further testified that he had been the executor of his father’s estate.
The appeals court concluded determination of the source of the funds was a credibility issue and deferred to the trial court’s determination to accept the husband’s testimony.
The appeals court also noted the court had awarded the wife $58,408.31 from the account as her share of the community property. Thus, the court awarded her more than she had specifically identified as community property in the account. The appeals court concluded the wife did not have any complaint that she had not been awarded the amount she sought.
Commingling
The wife also argued the community property presumption applied because funds in the account had been commingled to the extent they could not be resegregated and identified.
The husband presented evidence the funds were separate property according to the “community out first” rule, which presume that community funds are withdrawn from an account before the separate funds. The husband testified regarding the deposits, interest, and withdrawals from the account. He testified more than the tax refund amount had been withdrawn from the account. This was the only amount the wife had specifically claimed as community property in the account. The appeals court concluded the record did not support the wife’s argument regarding commingled funds.
The appeals court affirmed the decree.
Contact a Dallas Family Law Attorney
If you have accounts containing commingled funds or otherwise think there may a dispute over characterization of assets in your high net worth divorce, the knowledgeable Texas divorce attorneys at McClure Law Group can advise you and help you pursue a favorable outcome. Call 214.692.8200 for a consultation.