Click here to download this article in PDF format: Injury Settlements Are Usually Community Property INJURY SETTLEMENTS ARE USUALLY COMMUNITY PROPERTY IN A TEXAS DIVORCE by Greg Enos February 2014 A spouse’s recovery for an injury claim is usually community property because most settlements mix all of the damage elements together in a single payment. General Principles Recoveries in injury claims are treated like other property in a divorce and the usual presumptions and burdens of proof apply. When a spouse receives a settlement from a lawsuit during the marriage, some of which could be separate property and some of which could be community property the burden of proof is on the spouse claiming the funds as separate property. Kyles v. Kyles, 832 S.W.2d 194,198 (Tex. App. - Beaumont 1992, no pet). All property is presumed to be community property and “clear and convincing evidence” must be presented to establish that property is separate property. Tex ... Read More >
When an agreement incident to divorce is approved by the court and incorporated into the divorce decree, the agreement constitutes part of a valid and binding final judgment and is enforceable as part of the decree.
The agreement in this case included very large alimony payments to the wife and an agreement for the husband to pay the children’s college expenses. The trial court awarded a judgment of $1,128,000 against the ex-husband and awarded $102,475 in attorney’s fees. The few adjustments made to the judgment by the court of appeals did not reduce the ex-husband’s judgment and he almost certainly considers it a total loss. One lesson: an agreement incident to divorce that is incorporated into the divorce decree is enforceable as part of the decree. Castro v. Castro, No. 14-11-01087-CV (Tex. App. - Houston [14th Dist.] 5/9/2013). ... Read More >
Divorce court cannot award reimbursement to a spouse’s separate estate if the spouse did not trace her separate property.
Here, the wife’s separate estate was awarded a $41,000 reimbursement claim against the community estate which the trial court used to reach a 60/40 property split. The court of appeals held that the wife failed to prove $32,000 of that amount was her separate property and this required a reversal of the entire property division since the $32,000 represented about 20% of the entire net community estate. Roberts v. Roberts, No. 04-11-00554-CV (Tex. App. - San Antonio 5/1/2013). ... Read More >
Mystery payment to husband from his business can be considered an asset in calculating community property division.
This lengthy case addresses many diverse issues, including divorce jurisdiction over Mexican citizens who own a home in San Antonio and whose son attends school there and includes numerous examples of how not to object or preserve error regarding jury questions or evidence. However, this case also provides another example of a trial court pretending a spouse has a phantom asset when a large cash payment cannot be explained. The husband owned a business along with a friend. The friend invested $195,737.23 and the husband soon thereafter withdrew $195,000 and even the company’s accountant could not explain the transaction. The trial court valued the husband’s interest in the business as if the unexplained withdrawal had not happened and included the $195,000 as a separate asset for the husband. The court of appeals held that the trial court did not abuse its discretion in doing so. Nieto v. Nieto, No. 04-11-00807-Cv (Tex. App. - San Antonio 5/1/2013). ... Read More >
Interesting example of how a court can divide assets that were not awarded in the original divorce.
The parties were divorced in 2002 and the court’s property division then was 63% to the wife. Eight years later, the wife filed a petition seeking post-divorce division of two pieces of land and some mineral rights that had not been awarded in the divorce decree. This time, the trial court made an overall 50-50 division of the property including what was originally awarded and the undivided assets. The wife on appeal complained that she should have been awarded 63% of the newly discovered assets. The court of appeals held that the trial court was not bound by the property division ratio it used in the original divorce and the trial court did not err in using the 2002 values for the land instead of the 2011 values. Harton v. Wade, No. 12-12-00158-CV (Tex. App. - Tyler 5/22/2013). ... Read More >
Land acquired with wife’s separate property but deeded to husband and wife was not a gift of a 50% interest to the husband.
This case shows how to overcome the presumption that when a spouse uses separate property to acquire land during the marriage and takes title to the land in the names of both the husband and wife, it is presumed that the interest given the non-purchasing spouse is a gift. Here, a trust was established in favor of three sisters, one of whom was the wife in the divorce case. The 23 acres was conveyed from the trust to the wife and husband and the husband claimed he owned a one half separate interest in the land. Each sister was deeded land from the trust and each deed recited that the sisters were giving up their separate interests in those properties. The trial court awarded it all to wife as her separate property. The court of appeals affirmed the trial court’s ruling and held: (1) the husband had the burden to prove he owned one half of the land as his separate property [it is not clear why the wife did not have the burden to prove it was all her separate property]; (2) the ... Read More >
Important New Case on Waste in Divorce Cases is a Game Changer
A recent decision from the First Court of Appeals out of Judge Hellums' court (won by Michael Childs) provides a new twist to claims of waste or constructive fraud. In Puntarelli v. Peterson, No. 01-11-01120-CV (Tex. App. - Houston [1st Dist.] Feb. 14, 2013), the wife asked the age old question "where did all of the money he earned go?" The wife was awarded a $196,000 judgment for wasting community funds because the husband could not account for how he spent his significant income during the five years this informal marriage/divorce case was pending. The important message from this case that should prompt almost all non-monied spouses to allege constructive fraud is this - the wife did not have to prove any specific improper transfers of community funds. The wife merely had to show that the husband's expenses were much less than his income and then the burden shifted to the husband to show where the money went. Proving how one spent money years ago is often not easy, but failure to ... Read More >
Student Loans Incurred Before Marriage Are Separate Debt
A trial court cannot order one spouse to pay the student loans of the other spouse which were incurred before the marriage. The Houston First Court of Appeals has ruled: The obligation to pay the loans arose before marriage and should be treated as Sophia's separate debt-separate debt that could not be assigned to the non-incurring spouse. Accordingly, we conclude the trial court erred in assigning Sophia's premarital student loan debt to Albert because that student loan debt constituted Sophia's separate debt. Love v. Love, 217 S.W.3d 33, 35 (Tex. App. - Houston [1st Dist.] 2006, no pet.). ... Read More >
Gifts to Family Members Are Not Always Constructive Fraud or Waste
Marshall v. Marshall, 735 S.W.2d 587 (Tex. App. - Dallas 1987, writ ref'd n.r.e.), involved a two and a half year marriage and a husband who, during the marriage, earned $542,315.72 and gave $63,375.58 (11.7%) to his daughter and grandson. The trial court's ruling that these gifts were not constructive fraud and was upheld by the court of appeals, which said: The courts consider three primary factors in determining whether the wife's claim of constructive fraud exists: the size of the gift in relation to the total size of the community estate, the adequacy of the estate remaining to support the wife in spite of the gift, and the relationship of the donor to the donee. We conclude that the evidence supports the trial court's finding of no constructive fraud. The community received $542,315.72 during the marriage as Woody's special community property. The contested gifts of $63,375.58 are only 11.7 percent of this amount. The remaining $478,940.14 in community funds from the ... Read More >
The Ultimate Property Division Spreadsheet
Click here to download my Inventory comparison chart. Two years ago I put on a half day seminar for about 300 lawyers called the "Ultimate Property Division Seminar." I talked to a lot of judges about what they wanted and did not want to hear in a property division trial. Here is the one thing they all wanted -- a unified spreadsheet which shows both parties' values and proposed divisions and which provides space for the judge's ruling. This ideal spreadsheet can only be prepared after you have both spouse's proposed values and divisions. The spreadsheet has to be printed on very wide ledger size paper (or two letter size pages taped together) and has columns for: -- Asset/Debt -- Husband's Proposed Value -- Wife's Proposed Value -- Court's Value (blank - for judge to fill in) -- Husband's Proposed Division -- Wife's Proposed Division -- Court's Division (blank) The spreadsheet also shows the differences between the parties on what is separate property. I color ... Read More >