Articles Posted in Divorce

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witness testimonyThe Fifth Amendment to the U.S. Constitution prevents anyone from being “compelled in any criminal case to be a witness against himself.” A party in a Texas civil case can “plead the Fifth” during discovery to avoid answering questions in a deposition if the party reasonably believes the answer might incriminate him in a criminal case. A plaintiff cannot, however, use the Fifth Amendment to prevent the other party from obtaining information they need to prepare a defense.  A trial court can impose sanctions when a party uses the Fifth Amendment privilege offensively, but the court must consider whether remedial steps could solve the issue.  The court may also impose sanctions when a party wrongfully invokes the Fifth Amendment.

In a recent Texas divorce case, the husband faced serious sanctions after raising the Fifth Amendment during his deposition.  In June 2015, the wife filed for divorce and the husband filed a counterpetition.  The wife alleged the husband had assaulted her and committed adultery.  She also alleged he hid community assets, wrote fraudulent checks to third parties and cashed them himself, and conveyed community property to his sister.  The husband alleged the wife also secreted assets and filed false charges against him for family violence assault.

When the wife’s attorney sent notice of the date of the husband’s deposition, his attorney responded it would be “futile” because the husband’s criminal attorney was likely to advise him to “plead the fifth” due to the pending criminal charges.  During deposition, the husband refused to answer many questions on the grounds his answer might incriminate him in the pending criminal case, including some that would not be covered by the Fifth Amendment privilege.  He repeatedly asserted his Fifth Amendment privilege regarding “anything that has to do with financials…”  He refused to answer questions regarding his income, assets, and a list of property.  He also refused to identify documents.  There was no record of either the wife’s or the husband’s attorney explaining to him why he could not invoke his Fifth Amendment privilege in response to many of the questions asked.

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divorceTexas recognizes common law marriages. To have a common law marriage, the parties must have agreed to be married, must have lived together as spouses after that agreement, and presented themselves as married.  When most people think of common law marriages, they consider couples who were never formally married.  However, in a recent case, a man sought a Texas divorce from his ex-wife, alleging there was a common law marriage after their original divorce.

The parties married in 2000 and divorced in 2005.  They lived together until at least 2006 and had children together in 2006 and 2007. They worked together.  Although they agreed that the relationship changed in 2012, they did not agree as to what happened later.  The husband claimed they moved back in together by the end of 2013 and continued their relationship until late 2014.

The husband filed for divorce in 2015. The wife moved for summary judgment on the grounds that they were not married.  She argued they did not meet the requirements of a common law marriage. She offered affidavits the parties signed in 2013 indicating they were not married, did not live together, and had not held themselves out as married.  In her deposition, she had denied living with the husband.  She also pointed out the husband was unable identify the exact date of an agreement to be married.  She also relied on documents in which the husband indicated he was divorced and not married, including a bankruptcy petition filed under oath.

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empty walletProperty possessed by either party at the time of a Texas divorce is presumed to be community property.  To show that property was instead separate, the presumption must be rebutted by clear and convincing evidence.  If the assets were not maintained separately from community assets, they must be traced back to separate property by showing the origin of the property.  Income earned during the marriage is also community property.

A wife recently challenged a court’s finding that a down payment made from her savings account was made with community funds.  After six years of marriage, the parties filed for divorce.  In the wife’s counter petition, she sought reimbursement to her separate estate for assets she alleged were spent for the benefit of the community estate.

At the hearing, the husband sought half the equity in the marital home and community funds he alleged the wife had deposited into her checking account and given to her adult child. The parties agreed on the value of the home and the amount of the down payment.  The husband admitted the down payment had come from the wife’s savings account, but argued that it came from community property funds that had been commingled into the wife’s savings account.  He testified that she deposited her paychecks into her checking account and transferred funds to the savings account.   He testified the savings account had $162,168.61 at the time of the marriage.  The bank records showed $282,847.69 was in the account before the withdrawal for the down payment.   The husband also testified he had given his wife cash to pay the utilities and half of the mortgage payment.

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cohabitationIn Texas, an informal or common law marriage can occur if the couple executed an informal marriage agreement pursuant to Texas law or agreed to be married and subsequently lived together as married in Texas and represented to others that they were married.

A Texas court recently found that a couple did not have an informal marriage, despite filing their taxes as “married filing jointly.” The couple began dating in 2003 or 2004.  The man proposed in 2005, and the woman accepted.  They moved to Texas together in 2006.  They wanted to build a horse clinic where the man would practice veterinary medicine and the woman would train horses.  They purchased property together and built the clinic.  They had joint bank accounts, but the bookkeeping for each business was kept separate.

They filed joint tax returns indicating they were “married filing jointly” from 2006 to 2013.  They co-habitated until 2013.  The woman filed for divorce in 2015.  After a bench trial, the trial court found the couple did not have an informal marriage and dismissed the divorce case.  The woman appealed.

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A spouse who improperly spends large amounts of community assets without the other spouse’s knowledge or consent may receive a smaller share of the remaining community estate during a Texas divorce.  A Texas appeals court recently considered whether a property division was just and right after the trial court found the husband had committed fraud on the estate by spending money on other women.money

The wife filed for divorce after learning her husband had been unfaithful.  The husband testified to having affairs for the past 30 years.  He took the other women on trips and shopping sprees, paid their rent and car payments, and hired some of them and gave some of them money for their own start-ups.  He paid for these things through his business accounts, company credit cards, and petty cash from his pharmacy.

The wife hired a CPA to provide an accounting of the husband’s businesses.  The CPA rendered an opinion that more than $7 million was either missing or spent in transactions that did not benefit the community estate.

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family lawThe court in a Texas divorce case must divide property in a just and right way.  This does not necessarily mean that property is divided equally between the parties, but the division must be just.  What happens, though, when only one party participates in the divorce proceedings?  A Texas appeals court recently found that the trial court had to have sufficient evidence of the property values to divide the property justly.

The husband petitioned for divorce, but the wife did not answer or appear at the hearing.  The husband testified that there were two vehicles and a mobile home in the community estate.  He asked the court to award all of the property to him, but allow the wife to keep the property in her possession.  He did not testify or provide evidence of the value of the property.  The court granted the divorce and awarded the husband the vehicles, the mobile home, furnishing, and other goods and cash in his possession and control.  The court did not award any property to the wife.

The wife filed notice of a restricted appeal.  To succeed on a restricted appeal, she had to show that she filed the notice within six months of the decree, she was part to the lawsuit, she did not participate in the hearing or file post-judgment motions or requests for findings of fact and conclusions of law, and error is apparent on the face of the record. She clearly met the first three requirements, so the appeals court had to determine if there was error.

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divorceIn Texas divorces, it is common for the parties to agree to a property division and ask the court to approve the agreement and include it in the decree.  Once the court does so, it generally may not modify or alter the property division included in the agreement.  It may, however, still divide property that was not divided in the agreement and decree.  It is therefore important for the parties to be sure the agreement to clearly divide everything, or they may have to go back to court to address something that was omitted.  This can be difficult in some cases, however. What happens, for example, when the agreement and decree divide the net amount of a bonus, but do not address pre-tax deductions that go to one of the parties?  A recent case addressed this issue.

The divorce decree incorporated the agreement between the parties, which included a detailed division of the marital estate based on the informal agreement the parties executed at a settlement conference.  The agreement stated the husband would receive 47% of the net amount of his 2013 year-end bonus and wife would get a 53% portion of the “net amount after taxes and deductions.”    The agreement also stated the wedding and engagement ring were the wife’s separate property.

The husband’s pay stub showed he received $460,000 for his 2013 bonus, but reflected two pre-tax deductions totaling $81,000.  The deductions included $75,000 for deferred annual bonus and $6,000 for personal savings account contribution. Taxes totaled $108,711.10 and the pay stub listed $270,228.90 as the “net pay” for the bonus.  The husband paid the wife 53% of the net pay amount.

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Premarital agreementIn a Texas divorce, a premarital agreement is generally enforceable.  Although they are presumptively valid, they may not be enforceable if they are unconscionable or were not voluntarily signed.  There is no definition of “voluntary” in the Family Code, so courts have looked to the law governing enforcement of commercial contracts.  In determining if a premarital agreement was voluntarily signed, the court considers whether the party had advice of counsel, misrepresentations made in procuring the agreement, the amount of information provided, and whether any information was withheld.  Additionally, the court may consider evidence of duress or fraud in determining if the agreement was voluntary, but duress and fraud alone are not defenses to a premarital agreement.  A court recently considered whether a Texas premarital agreement was voluntary.

The couple signed a premarital agreement the day before they got married in Las Vegas.  The agreement set out the separate property of each of them and stated community property could not be acquired during the marriage.

The wife filed for divorce after ten years.  The trial court granted a partial summary judgment in favor of the husband on the wife’s claims for a Separate Property Agreement, including reimbursement, maintenance, and her challenge of the premarital agreement.  Following a trial, the court found the only community property accumulated during the marriage was a travel trailer.  It awarded the trailer to the wife.  The wife appealed, arguing the court had erred in granting the partial motion for summary judgment because there was a genuine issue of material fact as to whether she had voluntarily signed the agreement.

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Legal News GavelTexas is a community property state, and property acquired during a marriage is generally distributed equitably at the time of a Texas divorce.  However, couples may enter into premarital agreements, also known as prenuptial agreements, that alter the way property will be identified and distributed if a divorce should occur.

A premarital agreement played a significant role in one recent case.  Before marriage, the couple executed a premarital agreement that identified the separate property belonging to each party and precluded the acquisition of community property during the marriage.  They had two children together.  The wife filed for divorce after seven years.

The parties agreed to a joint managing conservatorship.  They stipulated there was a premarital agreement, and neither challenged its enforceability.  The trial court ultimately entered a final decree.    The court also confirmed certain real property was the wife’s separate property.  It also found the husband had breached the premarital agreement by raising a claim against that property and awarded attorney’s fees to the wife.  The court modified the standard possession order by not allowing overnight visits with the father on Thursdays and Sundays. The husband ultimately appealed.

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Legal News GavelWhen one spouse controls the finances, he or she has the opportunity to use community assets to the benefit of separate property.  The other spouse may challenge the disposition of those funds during a Texas divorce.  The spouse in control of the finances has a fiduciary duty to the other spouse during the course of the marriage.

A Texas appeals court recently considered whether a husband was required to reimburse the community estate for certain expenditures.  The trial court awarded the wife the majority of the community estate and ordered the husband to reimburse it for certain expenditures.  The husband appealed, arguing the evidence did not support the disproportionate division and some of the amounts he was ordered to reimburse.

The husband had entered the marriage a wealthy man with several businesses.  The wife alleged he allowed his separate companies to keep funds he should have received.  Since his businesses were S corps, he was personally responsible for paying taxes on the funds, even if they were not distributed.  The wife sought reimbursement for the undistributed funds and for the income taxes paid from the community estate.  Each party presented expert testimony.  The wife’s expert calculated that the estate had paid $1,000,742 in taxes for the separate companies and was entitled to reimbursement.  The husband’s expert said he did not agree the wife had a valid claim for reimbursement and presented his own calculations, showing $841,108 was paid.  The jury found the community estate had paid $841,108 in income taxes for the husband’s separate businesses.  The trial court included that amount in the valuation of the reconstituted community estate.

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