Property

Texas Divorce Court May Base Property Valuation on the Evidence Before It

Published on: April 1, 2020 | by Kelly McClure

Texas family law requires a just and right division of community property by a divorce court. The court must, however, have the relevant information before it to identify and appraise the assets. A party who refuses to disclose assets or information about their value generally may not complain about the court’s valuation of those assets. A former husband recently challenged the court’s division of property.

Prior to the marriage in 1994, the parties signed an “Agreement in Contemplation of Marriage.” The wife filed for divorce in 2005, and the husband counter-sued. The divorce decree was issued in July 2009.

Issues related to the case had already been before the appeals court five times. The appeals court had previously remanded certain issues related to the property division back to the trial court. The husband appealed the “Judgment on New Trial for Property Division.” He argued the trial court erred by not enforcing the prenuptial agreement regarding a bank account and a legal settlement. He argued the agreement required property held in the name of either party to be presumed to be that party’s separate property.

Texas Divorce Court May Award Damages to Wife Where Husband Improperly Withdrew Retirement Funds During Divorce

Published on: March 30, 2020 | by McClure Law Group

Under Texas family law, if a party in a divorce case fails to comply with the divorce decree and delivery of the awarded property would no longer be an adequate remedy, the court may render a money judgment for the damages. Tex. Fam. Code Ann. § 9.010. A husband recently challenged an enforcement order awarding the wife damages after the husband withdrew and spent all the funds from two retirement accounts while the divorce was pending.

The inventories submitted by the husband in the divorce proceedings included two retirement accounts in his name, but did not specify an amount. Both parties were ordered to preserve assets until the divorce was concluded, but the husband closed the accounts and transferred the funds to his personal account. The trial court awarded 50% of each account to the wife in the final divorce decree.

The wife sued to enforce the property division in the divorce decree, also alleging fraud on the community. The husband testified he had withdrawn about $75,000 from the accounts and admitted he had done so without notifying the wife or the court. He testified he spent the funds on living expenses because he was unemployed.

Texas Appeals Court Upholds Disproportionate Property Distribution

Published on: February 19, 2020 | by Kelly McClure

Property division in a Texas divorce must be just and right. In some cases, courts may determine that a disproportionate division of the community assets is just and right. In dividing the property, courts may consider a number of factors, including the ages of the parties and their relative physical conditions, their abilities, their education and business opportunites, and the size of their separate estates. The court may also consider fault, but may not punish a spouse through the property division. In a recent case, a husband challenged the disproportionate division of property awarded to the wife.

The parties separated after the husband was fired from his nursing job for failing to take a drug test. The wife testified she lived with the husband’s mother during the separation. She testified she withdrew funds from their joint checking accounts because the money was being used for drugs and gambling. According to the appeals court’s opinion, the husband was banned from his mother’s home and ordered to have no contact with the wife or their children by an Arkansas court.

The wife petitioned for divorce and asked to be awarded a disproportionate share of the community assets. The trial court ordered the husband to vacate the home. There was evidence the husband broke into the home and caused damage to the home and personal property.

Texas Appeals Court Won’t Take Piecemeal Approach to Property Division Appeal

Published on: January 8, 2020 | by Francesca Blackard

In a Texas divorce, the division of community property must be just and right. The goal is an equitable, but not necessarily equal, division. A party may not get the specific items that he or she wants, but that does not necessarily mean that the division of property is not just and right. In a recent case, the wife challenged the specifics of the property division.

According to the court’s opinion, the husband’s retirement annuity was worth $234,000 when he retired from his job. There was evidence that he withdrew funds from the account and hid them from the wife. There was evidence that he used the funds for household expenses and expenses related to the couple’s horses. The retirement account was worth approximately $50,000 at the time of trial.

The husband admitted that he did not report the withdrawals on the joint tax returns for several years, resulting in a $20,000 liability to the IRS. After the separation, the wife hired a CPA to seek innocent spouse status for her. She testified that she wanted the husband to pay the $3,000 for the CPA’s services.

Texas Divorce Court May Clarify Latent Ambiguity in Divorce Decree

Published on: November 27, 2019 | by Kelly McClure

Parties sometimes realize they have different understandings of a Texas divorce decree. The trial court may issue a clarifying order if the decree is ambiguous. In some cases, the decree may be facially unambiguous, but have a latent ambiguity when read in context of the surrounding circumstances. In a recent case, a husband challenged a clarification order.

The final divorce decree included a provision setting forth the amount of his bonuses the husband would pay to the wife. It further provided he would provide her a 1099 tax statement for each payment if allowed by his employer. If he could not provide the 1099, “then the payments made to [the wife would] be the amounts above net of taxes paid in [his] tax bracket.”

The wife later petitioned for enforcement, arguing the husband was not dividing the bonuses “net of taxes paid in [his] bracket,” but was instead dividing them after the tax withholding by his employer. She requested a clarifying order if the court found the decree was not specific enough to enforce by contempt.

Texas Court May Correct Clerical Error in Final Decree

Published on: August 28, 2019 | by Francesca Blackard

In a Texas divorce case, a mediated settlement agreement (MSA) that meets the requirements set forth in the Texas Family Code is binding and cannot be revoked. Furthermore, the parties are entitled to judgment on such an MSA during the court’s plenary power.

In a recent case, a husband challenged a final decree nunc pro nunc issued by the court after the original final divorce decree failed to conform to the MSA. The parties executed a binding MSA, which awarded the husband $50,000 of the wife’s 401(k). However, when the court signed the agreed final decree, it awarded him $100,000 of the wife’s 401(k). The decree noted the agreements were reached in mediation and it was “stipulated to represent a merger of a [MSA]…” No post-trial motion was filed and the court lost plenary power.

The husband later filed a Qualified Domestic Relations Order awarding him $100,000 of the wife’s 401(k). The wife moved for a judgment nunc pro tunc on the grounds a clerical error in the final decree erroneously divided the estate in a way that was not compliant with the MSA. She asked the court to correct that error. The husband argued it was a judicial error that the court could not change. The court signed a final decree of divorce nunc pro tunc awarding the husband $50,000 of the 401(k). The husband appealed.

Court Must Assign Value to Lease in Texas Divorce

Published on: July 31, 2019 | by McClure Law Group

A trial court in a Texas divorce must divide community property in a just and right manner. Property can be somewhat broadly defined as it relates to property division in a divorce case. Many people do not realize that a lease of someone else’s property is subject to division in a divorce, unless the lease is shown to be separate property.

In a recent case, the wife challenged a property division that did not include a recreational lease held by the husband. The wife appealed the property division, arguing error in the trial court’s division of property. She argued the court failed to include a recreational lease in the community estate and that the court unfairly allocated the husband’s tax debt. The court had allocated all of the tax debt to the husband, but the wife argued the court erred in using it to offset the value of the assets awarded to the husband.

At trial, there was evidence the husband signed a written lease for a ranch during the marriage. The husband’s friend owned the property and testified the husband had helped him build or enhance some of the improvements on the property. The owner testified he would sell the ranch to the husband for a significant discount and indicated he would extend the lease to the husband indefinitely as long as he paid the rent.

Award of Retirement Increases in Texas Divorce

Published on: July 24, 2019 | by Kelly McClure

Retirement can be a complex issue in Texas divorce cases. In some cases, retirement accounts may not be fully vested. In others, retirement income may be subject to periodic increases. When retirement income is subject to increases, the spouse required to make ongoing payments should be sure he or she understands how to calculate those payments in light of the increases.

A former couple recently ended up back in court more than a decade after their divorce due to a dispute over how to calculate retirement increases. The couple married in 1976 and divorced in 1998, after the husband’s retirement from the military. The wife was awarded $754.80 per month of the husband’s retirement, and 60% of all increases “due to cost of living or other reasons…” The husband was ordered to name the wife beneficiary under the Armed Services Survivor Benefit Plan (SBP). The wife was ordered to pay 40% of the cost of the SBP, which was to offset the retirement award the wife received.

In 2012, the wife informed the husband he had underpaid her. His new attorney told him he had been calculating his payments incorrectly. He had been calculating the payment using a method that resulted in payment of 60% of all cost of living increases cumulatively. After receiving advice from counsel, he began paying his wife 60% of the increases only in the first year they were received.

Texas Court May Not Ignore Stipulations in Property Division in a Divorce Case

Published on: July 17, 2019 | by Francesca Blackard

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.

Texas Court Finds Payment of Personal Expenses By LLC Constituted Constructive Fraud in Divorce Case

Published on: May 16, 2019 | by Francesca Blackard

Property owned by a limited liability company belongs to the company and is generally not considered either separate or community property subject to distribution in a Texas divorce case. The limited liability company’s owners, known as “members,” do have an ownership, or “membership” interest in the company. That membership interest can be classified as separate or community property and distributed in a divorce. Additionally, distributions made from the company are community property, even if only one spouse is a member.

A husband recently challenged a finding of constructive fraud and order for reimbursement based on expenditures by and loans to his limited liability company (LLC). He was the LLC’s sole member before and during the marriage. The trial court granted the wife’s constructive-fraud claim and ordered reconstitution of the community estate. The court also characterized the LLC as the husband’s separate property and reimbursed the community estate for loans made to the LLC.

The husband appealed, challenging the trial court’s findings and conclusions regarding the constructive-fraud and reimbursement claims.