Don’t Let This Life Insurance Divorce Mistake Cost You $8,390.93

When you’re doing something you haven’t done before, you have to be careful. Inexperience leads to mistakes. And when it comes to your divorce, mistakes can be incredibly expensive financially and emotionally. Today we are going to look at a case (not mine) where a woman lost over $8,000 in assets because of her mistake. A mistake she could have avoided with the right divorce lawyer.

In this case a woman thought she was getting half of the cash value of a life insurance policy. The judge even told her that’s what he awarded her.

The only problem was, she never got it.

The Facts

So here is what happened. A husband and wife could not settle their divorce so they left it up to the judge. During the trial, the husband testified that he bought life insurance before he married the wife. The law says that makes it separate property. He also testified that he continued to pay premiums on the policy after they were married.

On his Inventory the husband listed a portion of the cash value in the policy as community property.

At the end of the case the trial judge issued his ruling giving the wife one half of the cash value in the life insurance.

The husband appealed the decision, and won!

Is The Life Insurance Separate Property?

Let’s take a look at if the life insurance cash value is separate property. He bought the life insurance before marriage so the policy itself is separate property. However, he paid premiums during the marriage.

Does that make the cash value (or part of it) community property?

Is It Separate Property & Community Property?

Here is an important point you must remember. Property is either community property or separate property. It is never both.

If you use community property to enhance separate property it does not change the separate property into community property.

So if that is an issue in your case, you better know the correct theory of recovery or you can lose out on a lot of money.

Why Did She Lose What The Judge Gave Her?

Well, for one thing, neither side entered the husband’s Inventory into the trial record. It might seem like a minor detail but it is a pretty big oversight from a trial perspective. Since nobody made his Inventory a part of the record, the judge could not consider his identification of part of the cash value as community property as evidence.

The key evidence the court could consider was that he purchased the policy before marriage. That made it separate property.

Since it was separate property, the judge had no authority to give the wife any part of the cash value of the life insurance policy.

You absolutely must correctly identify community and separate property because if you mess up this is what happens.

How To Avoid This Divorce Decree Mistake

Keep control over your divorce settlement. Don’t leave it up to a judge who knows nothing about you, your kids, your property, or your life. It’s really as simple as that. This husband and wife had to go through a trial and an appeal because the judge messed up.

That gets real expensive real fast in Montgomery County.

On top of that, the wife in this case ended up losing $8,390.93 when the Texas appeals court fixed the divorce decree mistake.

If you want to avoid these kinds of surprises, check out an uncontested divorce – where you keep control.