Articles Posted in separate property

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 ›

What happens to the engagement ring if someone calls off the wedding?

Unfortunately, before some engaged couples can make it down the aisle to say “I do”, someone says “I don’t”. The issue of who gets to keep the engagement ring often surfaces during this heartbreaking time.

An engagement ring is a gift and the law requires three elements to constitute an irrevocable gift:

In Maher v. Maher, a husband challenged the court’s final divorce decree. He argued, among other things, that the trial court had mischaracterized and misvalued certain assets of the marital estate. The wife had sought the divorce on the grounds that they had discord or personality conflicts. She asked for a division of community property, confirmation of her separate property, reimbursement, and attorneys’ fees. The husband asked for a division of community property in which he received a disproportionate share, confirmation of his separate property, reimbursement, and attorneys’ fees.

The matter went to trial. The wife testified they had a son who was over 18 years old. The couple didn’t have a close marital relationship, and the wife claimed the husband’s drinking threatened their relationship. In 1995, her parents started giving her monetary gifts, and when her mother died, she became the beneficiary of a bypass trust that her mother created.

When her father died, she received distributions from his estate too. From her parents, she’d received over $1.2 million, which she claimed was separate property. She also explained that they’d given her husband monetary gifts of about $68,000, which she said was his separate property.

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Family law judges encourage those getting a divorce to enter into settlement negotiations rather than proceed to trial. Under rule 11 of the Texas Rules of Civil Procedure, agreements reached during these negotiations are not enforceable unless they are written, signed, and filed with the divorce papers as part of the record, or the agreement is made in open court and entered as part of the record. In order to have the agreement be enforced, all material terms are supposed to be included, and they should be clear and unambiguous.

In Bush v. Bush, a Texas Court of Appeals considered the enforceability of a rule 11 agreement. The case was an appeal from a divorce decree in which the husband challenged the trial court’s award of two parcels of real property to his former wife. The wife sued for divorce in March 2013, and in response the husband filed a counter petition for divorce and moved to enforce a rule 11 agreement regarding the division of property, which his ex-wife and he had filed in a prior divorce case that was dismissed in 2006.

He subsequently moved to transfer and consolidate the current divorce proceeding with the previously dismissed case. The trial court came to the decision that the prior divorce had been dismissed by agreement of the parties and that since the parties agreed to the dismissal and signed the order, everything in the prior proceeding had been dismissed, and the prior case did not need to be reinstated into the current case. It also found that rule 11 agreements may be revoked until they are accepted by the court and incorporated in a final order, and this wasn’t done in the prior proceeding. The court also held that even if the agreement had survived, it didn’t have the specificity necessary to be enforced, although with respect to the sale of a particular piece of real property, the agreement might be enforceable through the application of contract law.

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I know what you’re thinking…. “I’m already married; how is it not too late?” Don’t worry; the solution is a postnup! The Texas Family Code allows for couples to enter into a postnuptial agreement (or marital property agreement), which will offer many of the same protections and advantages that a prenuptial agreement offers.

Current Property. At the time of marriage, both spouses often have separate property interests and liabilities that were acquired prior to marriage. Without a prenup, the spouses’ separate property estates often become commingled and indistinguishable from the community estate of the spouses that begins upon marriage, especially if the spouses have been married for a substantial period of time. For example, during marriage, a spouse may inherit a large estate from a relative, gifts, buy a house, sell or trade property, or put separate property money in the same bank account. Although you and your spouse did not execute a premarital agreement, it is not too late to distinguish your separate property in a marital property agreement.

Chapter 4 of the Texas Family Code, Subchapter B, outlines the statutory requirements and guidelines for a marital agreement. Section 4.102 states:

Understanding separate property laws is crucial for divorcing spouses. If a spouse can prove certain property as his or her separate property, then the Constitution of State of Texas prohibits that spouse from being divested of his or her separate property. As such, separate property is “off the table,” so to speak, when it comes to division of the estate either by a court or through a settlement agreement. Therefore, if a spouse is able to prove certain property as his or her separate property, then such characterization can dramatically influence the framework for settlement negotiations and/or relief sought from the Court. Continue Reading ›

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