A Texas Appellate court recently had to decide how to characterize the money a couple received from a personal injury settlement. In the case, the husband and wife sued a nursing home for negligence in caring for the husband. They asked for damages for past and future mental anguish, past and future pain and suffering, past and future disfigurement and impairment, past and future medical expenses, and exemplary damages. The wife also sought damages for loss of consortium. The husband and wife later settled the personal injury case.

Initial Presumptions

When the husband died and his trust had to be distributed a dispute among the beneficiaries required the Court to determine if the personal injury settlement was separate property or community property. The proceeds from the personal injury case were received during the marriage and are therefore presumed to be community property. In addition, the personal injury settlement did not itemize the damages being paid for each of the several claims which would have gone a long way to determining what portion was community property and what portion was separate property. The one important feature of the settlement agreement was that it did separate the damages paid to each spouse.

The Family Code

The Family Code explicitly characterizes personal injury recoveries as separate property except for damages paid to compensate for loss of earning capacity during the marriage. The courts have interpreted additional items that are treated as community property based on the logic of representing recovery for expenses associated with injury to the community estate such as medical expenses. Punitive damages had been labeled as community property in a previous case involving a contract dispute, but there is no statute that explicitly characterizes damages in contract cases as separate property like there is for personal injury cases. The Court relied on this distinction to determine that punitive damages in a personal injury case are not community property and do qualify for the special protections available to separate property.

Protect Your Rights

If you or your spouse received a personal injury settlement do you know how much of it is separate property and how much of it is community property? Work with an experienced Woodlands Divorce Lawyer and protect your rights.

As we’ve discussed before, separate property is property acquired before the marriage. It is important to identify separate property because in a divorce case the judge does not have the authority to award your ex-spouse your separate property, the judge can only divide community property. As long as the name on the title of separate property does not change it will remain separate property. Unfortunately in a refinance transaction the lenders usually end up having people name their spouse as co-owners of the property. During the refinance process your lender may have told you that it would be quicker or easier to have both spouses on everything. That may be true for them, but it could have put you in great jeopardy.

If you accidentally made your spouse a co-owner of the home during the marriage then you have opened yourself up to a hornet’s nest of community property litigation in your Woodlands Divorce case which could have been avoided with some careful planning ahead of time. Contact us today at (832) 592-7913 if you need to protect your rights to separate or community property.

Check out our free Woodlands Divorce Guide if you need more answers.

Has your spouse already filed for divorce and you are not sure how to protect yourself?

Are you wondering:

• How much child support is involved in your divorce?
• Is spousal maintenance going to be awarded in your divorce?
• How often will you see your kids after the divorce?
• What is separate property and what is community property?
• What happens to retirement accounts in a divorce?

To help answer some of the most common questions I am proud to announce the release of my Woodlands Divorce Guide available for free download. You can get your copy by clicking on the link below.

The Woodlands Divorce Guide

If you have a question that is not answered in this version of The Guide, post your question in the comments below or contact us and we will consider it for inclusion in future editions.

Who Must Prove What?

When a spouse receives a settlement from a lawsuit during marriage, some of which could be separate property and some of which could be community property, it is that spouse’s burden to demonstrate which portion of the settlement is his or her separate property. This is important to remember, the person claiming the personal injury award as community property does not have to prove a thing unless the other spouse is able to establish the award is separate property by clear and convincing evidence. Call (832) 592-7913 and speak with a Woodlands Divorce Lawyer about protecting your rights if you or your spouse settled a lawsuit during your marriage.

Yes, and no. If your spouse cooperates you can get divorced and property divided in Texas. However, if your spouse does not cooperate you may be in for a difficult time.

Recently the Houston Court of Appeals confirmed that if the out of state spouse has no contacts at all with Texas then the Texas divorce court does not have authority to divide property and debt. A Texas court does have authority to grant the spouse that lives in Texas a divorce to determine their legal status, but does not always have the authority to divide property and debt. Contact a Woodlands Divorce Lawyer today if you need to get divorced from a spouse that does not live in Texas.

Background

Albert and Sophia began living together in 1987. One year later, Sophia gave birth to their only child. To help cover living expenses, Sophia’s educational expenses, and the expenses of Albert’s asbestos consulting business, Sophia applied for and received student loans totaling over $90,000. In February 1994, Albert and Sophia married, and in 2002, Sophia filed a petition for divorce.

The Trial

In a surprise ruling, the trial court ordered Albert to pay Sophia’s entire student loan debt. Albert’s divorce attorney quickly filed an appeal on this critical issue.

Student Loan Debt

Albert’s divorce attorney argued that the trial court was legally wrong when it ruled that he had to pay Sophia’s student loan because the loans were taken out before they were married.

Property owned or claimed by a spouse before marriage or acquired after marriage by gift, devise, or descent is that spouse’s separate property. A court may not decree that separate property of one spouse becomes the separate property of the other spouse because “the nature of separate property is determined by the Texas Constitution, rather than by what is ‘just and right.’”

Sophia’s divorce attorney did not dispute that the student loans were acquired before marriage. At trial, Sophia testified as follows:

Q All right. Ma’am, you and your husband got married in 1994. Isn’t that a fair statement?

A Yes.

Q And these student loans that you made, you made long before 1994, didn’t you?

A I made them before 1994.

Q Okay. So, these are not even community debts, are they? These are your separate property debts?

A Yes, I guess you can say that.

When Sophia received the student loan proceeds, those proceeds constituted Sophia’s separate property. If the divorce court had awarded Albert part of the student loan proceeds, it clearly would have been in violation of Sophia’s separate property right to the proceeds. The appeals court relied on this point to characterize the pre-marriage student loan debt as separate debt which could therefore not be assigned to the other spouse.

Protect Your Rights

Don’t get stuck paying for a debt that is not yours. Call (832) 592-7913 and speak with a Montgomery County Divorce Attorney at The Shea Law Firm.

To find out more about divorce in Montgomery County take some time to review my free Woodlands Divorce Guide

About The Author

The Woodlands Divorce Resource is here to help you with your divorce, child custody, or other family law issue in Montgomery County or Harris County. Many of our visitors come from the areas of The Woodlands, Conroe, Oak Ridge North, Cut and Shoot, and other communities in the Montgomery County area or Houston and North Harris County. If you need legal assistance with your family law issue speak with a Montgomery County divorce lawyer in The Woodlands, TX today and protect your rights. Contact The Shea Law Firm at (832) 592-7913.

Alfred Baker was married in 1984. In 1996 he received an inheritance of $300,000 and placed it in separate accounts, not marital bank accounts. As we’ve discussed earlier, an inheritance received during the course of a marriage is separate property and not community property. With these funds, Alfred spent $104,000 to pay off the mortgage and $50,000 on home improvements. Unfortunately Alfred’s marriage broke down and his wife filed for divorce in 2006.

In divorce court, Alfred’s wife agreed that he spent $104,000 on the mortgage. Her divorce attorney disputed the $50,000 reimbursement for home improvement and the judge was left to decide the issue.

The divorce court judge agreed with Alfred and awarded him a reimbursement claim for the full $154,000. Alfred’s wife was not satisfied and appealed the decision.

The appeals court reversed the $50,000 reimbursement based on insufficient evidence. The court discussed the following legal requirements to uphold Alfred’s claim:

1. When a party seeks reimbursement for a benefit conferred by his separate estate to the community estate, the party seeking reimbursement must prove the benefit arose from a separate estate by clear and convincing evidence.
2. When funds from one marital estate are used to make improvements to the property of another marital estate, the proper measure of reimbursement is not the amount paid to make the improvements, but the enhancement value of the receiving estate. Enhancement value is determined by the market value of the property before the improvements were made as compared to the market value of the property after the improvements were made.

Alfred’s only evidence to support his claim was his testimony. His divorce lawyer did not prove to the court’s satisfaction the enhancement value of the improvements. He did not present any receipts or documents showing specific expenditures as well as tracing the funds to the separate account. With such little evidence the court could not support his claim for reimbursement.

If you or your spouse used separate property to benefit the marital estate while you were married speak with a Woodlands Divorce Attorney today to protect your rights.

The Woodlands Divorce Resource is here to help you with your divorce, child custody, or other family law issue in Montgomery County or Harris County. Many of our visitors come from the areas of Conroe, Oak Ridge North, Cut and Shoot, and other communities in the Montgomery County area or Houston and North Harris County. If you need legal assistance with your family law issue speak with a Conroe Divorce Lawyer today.

Community property is everything acquired during the marriage that is not properly identified as separate property. The Conroe and Houston Divorce Courts must presume that all property acquired during the marriage is community property unless either spouse can prove to the court by clear and convincing evidence that certain items are protected as separate property.

When Does This Presumption End?

The day your divorce decree is entered and final. The community property presumption remains in effect even after you or your spouse file for divorce all the way through the last day in court. Some individuals choose to use a property agreement while their divorce is pending in order to provide some protection from their spouse’s debts or to protect their own earnings. Speak with a Conroe Divorce Attorney today if you need help protecting your property during your divorce.

The Woodlands Divorce Resource is here to help you with your divorce, child custody, or other family law issue in Montgomery County or Harris County. Many of our visitors come from the areas of Conroe, Oak Ridge North, Cut and Shoot, and other communities in the Montgomery County area or Houston. If you need legal assistance with your family law issue speak with a The Woodlands Divorce Attorney today.

Separate property is:

(1) property owned or claimed by a spouse before marriage;

(2) property acquired by the spouse during marriage by gift, devise, or descent; and

(3) recovery for personal injuries sustained by the spouse during the marriage, except any recovery for loss of earning capacity during marriage.

Why separate property is important.

The local divorce courts have broad discretion to divide community property as the judge sees fit. The judges do not have the same power over a spouse’s separate property. If you own property that fits any of the above descriptions then your Houston Divorce Attorney can help you keep it and protect it from your soon to be ex-spouse.

Any property on hand in a marriage is presumed to be community property. In order to rebut this presumption of community property, your Montgomery County Divorce Attorney must trace the property on hand during the marriage back to property that was separate (i.e. before the marriage) and continue up to the end of the marriage. This means the entire period from when you first obtained the property up to the date the divorce petition was filed. If you are successful, you can keep your separate property from becoming community property. If you fail, the Court may award significantly more of your separate property to your ex-spouse than he or she is entitled to.

How do you stop this from happening? Simply testifying and giving your word that property in question was originally separate and according to your recollection remained separate is almost always not accepted by the Court. To be successful, you must establish the separate nature of the property though clear and convincing evidence showing the time and means by which you originally obtained possession of the property. If you can provide that proof, then you have another hurdle to overcome.

Property in the form of bank accounts, retirement accounts, or investment accounts typically generate interest, dividends, or capital gains. During a Texas marriage, these items are considered community property even if the account creating the interest, dividend, or capital gain is entirely separate property. In order to preserve your original separate property during a divorce in Montgomery County, you must trace every item of income, deposits, and withdrawals for the entire period of the marriage to prove to the Court exactly how much of the account is still your separate property and how much is now community property.

This is your burden to prove. If the Court has any doubt about the exact value of separate property versus community property it can resolve the dispute as it sees fit. Speak with a Montgomery County Divorce Attorney today to help protect your rights and property while going through divorce.

For additional answers to common questions in a Montgomery County divorce take a look at our free Guide to Divorce in The Woodlands and Montgomery County.