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Articles Posted in Property

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In some Texas divorce cases, the parties are able to reach an agreement on property division.  Such an agreement is treated as a contract, even when it is incorporated into a final agreed divorce decree.  If there is an ambiguity, the agreement may be reformed to correct a mutual mistake or reflect the parties’ intent.  An ambiguity exists if the meaning is uncertain or could reasonably be interpreted in more than one way.  To show there was a mutual mistake, a party must prove there was a definite agreement that was misstated in the contract due to a mistake of both parties.

In a recent case, a wife moved for clarification to correct the trial court’s omission of the amount of her portion of the husband’s military retirement. The couple divorced in 2000.  The agreed final divorce decree awarded the wife an amount of the husband’s Navy disposable retired pay, and 50% of all increases.  The amount was supposed to be “determined under the formula set forth below,” but the decree did not contain a provision setting forth a specific portion or calculation.  The decree awarded` the portion of the retirement pay “not awarded to [the wife]” to the husband.

The husband started receiving his military retirement benefits in 2015.  When the wife contacted the Defense Finance and Accounting Service to get her share of the benefits, she was told she could not be paid because the decree did not include a formula awarding her a portion of the retirement.

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As a result of his illustrious career, Dr. Dre’s net worth currently sits at a whopping $820 million – but maybe not for long. After 24 years, Dr. Dre’s wife, Nicole Young, is filing for divorce from the producer, rapper, and hip-hop icon. Reports indicate that the couple did not execute a premarital agreement prior to their 1996 marriage, which opens up Dr. Dre to significant financial exposure. In the absence of a premarital agreement, California – a community property state much like Texas – provides that property accumulated during marriage is owned by the community estate. Put simply, all of Dr. Dre’s income during the marriage, from his royalties as a solo rapper to his profits from Beats by Dre, is up for grabs. This means that Dr. Dre could see his hard-earned fortune be split in half right before his eyes in the coming months. Continue reading →

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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