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Reimbursement in Texas Divorce

houseIn a recent Texas appellate decision, a wife appealed a judgment dividing a community estate between her and her husband. She argued that the trial court should have ordered the husband to reimburse her for certain expenses.

The couple had married in 2004 and divorced in 2013. The lower court awarded the wife a community residence as separate property. The appellate court court held that this residence was improperly included in the community estate, and it sent the matter back down for a new property division trial.

After that, the wife asked the court to reimburse her for money she’d spent on a house in Fort Worth, as well as what she’d paid to satisfy the husband’s premarital debts and premiums she’d paid on his insurance policies. She asked to be named the beneficiary of the husband’s life insurance policy if she weren’t awarded reimbursement for premiums she’d already paid. The lower court held a hearing on the reimbursement issue.

It awarded the husband the Fort Worth house as separate property and awarded money, property, effects, and cars that were in the parties’ possession as separate property. It awarded the life insurance policies to the named insured as separate property. The debt on their credit cards was divided 50-50. The wife’s reimbursement requests were denied.

The wife moved for a new trial on reimbursement and the other items for which she’d previously requested reimbursement. The motion was denied. The wife ultimately appealed from the property division judgment and argued that the trial court should have made certain findings and conclusions. She raised six issues on appeal.

As to the reimbursement issue, the wife argued that she was entitled to reimbursement for the money she’d spent on premarital debts, child support, bankruptcy, mortgage payments, property liens, and homeowners’ association past due fees. She also argued she should be reimbursed for money paid for premiums and insurance and association fees. Claims for reimbursement arise when a marriage is dissolved when funds from marital property are used to benefit another marital estate. The spouse asking for reimbursement must show that the contribution was made from one marital estate to another, that the contribution could be reimbursed, and how much the contribution was.

The appellate court explained that in this case, the wife’s requests for reimbursement as to child support payments were specifically non-reimbursable under Tex. Fam. Code Ann. § 3.409(1), as were her claims for reimbursement of homeowners’ insurance, health insurance premiums, and homeowners’ association fees. The appellate court explained that debts incurred during marriage were presumed to be community obligations, absent clear and convincing evidence a creditor agreed it would look only at the separate estate of one spouse.

The wife’s other reimbursement requests were not supported by enough evidence to show that the trial court had abused its discretion. She’d submitted bank and credit card statements, but the entries weren’t attached to a particular payment for a particular debt. She hadn’t traced the funds she spent to community property or her own separate property. Additionally, she’d sold a house during the marriage to her nephew but still lived there alone, which the court could have used to determine she shouldn’t be granted reimbursement.

The wife also argued it was improper for the trial court to deny her the right to stay the beneficiary on a $10,000 life insurance policy. The appellate court found that the wife had failed to meet her burden of proof to show an abuse of discretion by the lower court in deciding she and her husband should each have their own life insurance policies. The lower court’s judgment was affirmed.

If your divorce involves matters related to property distribution, contact the Texas attorneys at the McClure Law Group at 214.692.8200.

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