Articles Posted in Property

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houseIn a recent Texas divorce case, a couple was divorced in 2006. The wife initiated divorce proceedings, and the couple went to mediation. They agreed on a divorce decree and split a house and lot 50-50. The order included a procedure for selling the property, which was that the property was to be listed with a realtor. The realtor would select a price that was at least $77,000. The sale price would be reduced below $77,000 only by written agreement. If there was an offer that met the $77,000 threshold, both parties still had to accept it.

The husband had the right of first refusal of a bona fide offer by paying the woman half of the offer, minus the mortgage amount and 6% realtor fee. Either of the spouses could ask the court to appoint a receiver. The agreement also stated that if the husband failed to pay his wife half of the equity in the house within 30 days of an offer being made, the house would be sold for the offer made, with the couple splitting the funds remaining equally after the costs of the sale were paid.

When the ex-husband died in 2016, the ex-wife sued to enforce the divorce decree. She alleged that the husband had died, and the executrix of his estate had deeded the property to herself as an individual. The independent executrix of the ex-husband’s estate responded. She argued that the ex-wife wasn’t entitled to the relief she sought because the trial court didn’t have jurisdiction, and the claim was barred totally or partially by the statute of limitations or laches.

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briefcaseIn a recent Texas divorce case, the court examined a divorce decree that named a husband as constructive trustee of property decreed to the wife. The property at issue was a 50% undivided interest in the shares of an LLC. The dispute in the case was whether the constructive trustee had to give the wife documentation showing the status of the shares and the LLC’s tax returns and financial statements.

The case arose when the couple divorced and a mediated settlement agreement was incorporated into their divorce decree. The couple had agreed that any shares of the LLC that had been awarded to the wife would still be managed by the husband, who also had the exclusive right to control, manage, possess, and exercise the rights associated with shares of the LLC held in his name. The decree also stated that the husband was the constructive trustee for the wife’s benefit with regard to any of the LLC’s shares to the extent he was obligated to pay her under that provision of the agreement. It also ordered him to pay her 1/2 of the sum of all of the monies he received due to selling shares of the LLC.

The wife wanted assurance that the husband was properly maintaining the values of the LLC shares when he didn’t answer her questions. She sued him and moved for the appointment of a Rule 172 auditor. Through several procedural mechanisms, she asked for an accounting of the LLC’s finances from 2011 to the present. She also wanted him to produce the tax returns and K-1 forms that were related to her ownership interest. To support her claims, she claimed that the husband owed her statutory and common law duties, including a duty to give her an accounting, as a constructive trustee.

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wedding ringA recent Texas appellate decision arose from the appeal of a divorce. The husband argued that the evidence was not enough to support the jury’s finding of an informal marriage and that it was improper for the trial court to admit hearsay evidence, as well as that an “Agreement in Contemplation of Marriage” should be enforced as a post-marital agreement.

The couple had been married in 2003 and had triplets. The husband sued for divorce in 2010. He claimed that the couple had married in a 2003 ceremony and asked that an Agreement in Contemplation of Marriage entered into in July, before the ceremony, be enforced. The agreement stated that the couple wouldn’t have community property during their marriage. The husband also argued it wasn’t in the kids’ best interests for them to be joint managing conservators of them, and he should be appointed as the sole managing conservator.

The wife counter-sued for divorce, claiming that the agreement in question had been executed after the couple had informally married and couldn’t be construed as a prenuptial agreement that prevented a community estate from being created. The wife asked that she be appointed as the sole managing conservator.

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coupleIn a recent Texas appellate case, the court considered a divorce arising from a common law marriage. The husband argued that the lower court had made a mistake in mischaracterizing parcels of real property as community property and failing to reimburse him.

The couple started their common law marriage during the spring of 2013. No children came of the marriage, and there were differences about the precise beginning. Two pieces of real property were acquired that spring. The husband claimed he got one parcel, including the main house, by himself as a single person.

Two days later, the couple acquired an adjacent parcel as a married couple. There were five or six houses on it. According to the wife, both properties were gotten during the marriage and thus should be considered community property. The husband claimed both were separate property because their marriage didn’t start until after the first property was purchased. He claimed that the second property should still be characterized as separate property because title was taken by tracing back to an earnest money contract predating the marriage.

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In a recent Texas Supreme Court case, the Court considered a mediated settlement agreement related to a discretionary employee bonus. The issue was whether the agreement partitioned a discretionary employee bonus that the husband got nine months after the divorce was granted. The husband argued that it was future income and earnings that the agreement partitioned to him, but the wife argued it was earned during the marriage and should be considered undivided community property.

The couple in question married in 1980. The husband worked at an energy and commodity trading company starting in 1992. As part of his employment, he was eligible for an annual discretionary bonus. This wasn’t guaranteed but would be awarded based on performance. While married, he got a bonus every year.

The wife sued for divorce in 2008, and the couple agreed to divide $10 million of community assets with $5 million to each spouse. However, since they couldn’t resolve other differences, they entered into mediation from which they developed a mediated settlement agreement. This agreement partitioned other property, including retirement plans and jewelry. The husband claimed that the bonus he’d gotten in 2010 before the finalizing of the mediation settlement agreement went into an account awarded to his wife.

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statueIn a recent Texas appellate decision, a wife appealed from an order that denied her petition to enforce and to clarify the divorce order. The husband and wife had divorced in 1990 and stipulated to the divorce decree. At that time, the husband had retired from the United States Army and got retirement pay on a monthly basis. The divorce decree determined that the community interest in the monthly retirement benefit was 80%, and the cost of living-related increases would be made periodically and would likely need to occur in the future.

The wife was awarded a portion of the retirement benefit. The wife was entitled to 50% of the cost-of-living increases (COLA) to which the husband would become entitled from the date of the divorce to the death of the husband. In 2000, the wife asked the court to clarify the divorce decree and enforce her part of the COLA.

The judge decided she was entitled to $774.02 as her portion of COLA benefits that hadn’t already been paid by the husband. She appealed. The referring court adopted the judge’s finding that she could get clarification of the divorce decree and that she should be given 50% of the COLA benefits. It reversed the exact amount that should be awarded. Specifically, it ordered that she would be entitled to $391 each month of the retirement pay plus half of any COLAs when they were received. She was awarded $7,628 for all of the past COLA payments that the ex-husband had not paid. Nobody appealed this award.

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wedding ringIn a recent case, a Texas appellate court considered a motion by an ex-wife to compel her former husband to produce financial records. The husband petitioned for divorce from the wife in 2008. He was employed by a limited liability company and also participated in other limited liability partnerships with his employer, from which he received income.

During the divorce, the court addressed how the husband’s interest and income derived from the limited liability partnerships would be divided. Both parties submitted their proposed divisions to the court. The court divided the marital estate in 2009 and adopted the husband’s proposed division. This gave the wife more than $3.2 million and other property, as well as 50% of the estimated income from one limited liability partnership for 2008.

The husband got the entire interest in both limited liability partnerships other than what was expressly awarded to the wife. The appellate court affirmed the divorce decree and found that the wife was estopped from challenging the division on appeal because she’d accepted the benefits of the property division. There was further litigation about the income from the partnerships, as well as other post-divorce litigation to modify various aspects of the judgment.

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One of the best ways to protect your assets during marriage is to enter into a premarital agreement (also known as a prenuptial agreement or prenup) prior to getting married that details all the assets and liabilities of both parties prior to marriage and details each party’s rights and obligations to the other’s income earned during marriage.

You might be thinking that a premarital agreement may cause strain on the marriage before it even begins so you instead plan to protect your assets by setting up separate bank accounts for your separate property and ensuring no community assets are ever commingled into the account during marriage. While this may seem like a suitable alternative, these measures may be insufficient to protect your fortune. Since interest accrued during the marriage, salary earned during the marriage, and cash dividends distributed the marriage will all be community property without a premarital agreement stating otherwise, a premarital agreement will often be necessary.

So how do you ask your fiancé to sign a premarital agreement without causing strain on the engagement? The answer lies in the actual terms of the premarital agreement. The words ‘prenuptial agreement’ are too often associated with misconceptions about one-sided deals with the non-monied spouse getting nothing. In reality, prenups are simply agreements to define the rights and obligations of couples who are about to marry. Additionally, the future spouse who is wealthier should know that the more one-sided the agreement, the more likely it is to be attacked upon divorce. As such, the wealthier future spouse has an incentive to make the agreement attractive to his or her fiancé.

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weddingIn Texas, all property possessed by either spouse at the time of divorce is presumed to be community property under Texas Family Code § 3.003. A recent appellate case arose out of the divorce of a Texas couple who had been married in Mexico in 1999. In Mexico, they got their civil marriage application, which required them to choose between two marriage property systems, separate property or community property, in order to regulate ownership of their items of property. They chose to have separate property.

In 2015, the wife sued for divorce. She asked for the community property to be divided disproportionately. The husband counterclaimed and stated that he and his wife had to have separate property. He attached a facsimile of the couple’s marriage certificate that included the agreement to have separate property during the marriage, but the certificate wasn’t signed.

At trial, an expert testified for the husband and provided the opinion that in Mexico, a marriage application is treated as a prenuptial agreement. The husband testified that the couple signed the application, but the wife testified she didn’t remember signing the application. She claimed only the husband handled the paperwork, and she didn’t even remember talking about choosing a property regime before the wedding.

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If your business partner is also your life partner, you need to consider a recent Texas high court decision. (read more)

Gonzalez v. Maggio, 500 S.W.3d 656 (Tex. App. – Austin 2016) is a Texas case that illustrates the complexities of ending a business partnership along side of ending a personal partnership. The Texas Court of Appeals reviewed how a husband and wife, who were also law partners, would divide their clients, fees, and remaining clientele.

The case arose out of a divorce in which the husband and wife had also formed a law partnership during their marriage. There was no written partnership agreement but it was undisputed that they shared in the capital, profits and losses 50/50.