Texas Divorce Court May Base Property Valuation on the Evidence Before It
Originally published by Kelly McClure.
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.
The appeals court had previously held there was more than a scintilla of evidence that community funds had been commingled into the account and remanded the case so the trial court could consider the characterization of the account.
On remand, the trial court found there was substantial evidence community funds had been commingled into the account. It also found the husband “offered no documentary evidence, and no clear and convincing evidence tracing separate funds into the [account]…” The court found the account was a community asset and awarded 50% of the funds to the wife.
The appeals court acknowledged the prenuptial agreement contained a presumption that property held in one party’s name was that party’s separate property, but found the presumption had been rebutted with evidence of commingling. The husband therefore had the burden to trace the deposits to separate funds by clear and convincing evidence, but the trial court found he did not meet it. The appeals court found the trial court did not err in concluding the account was community property.
The husband also argued the trial court erred in characterizing a legal settlement as community property. According to the record, the husband filed the suit in his own name after the divorce petition was filed but before the divorce was finalized.
The husband did not disclose the asset during the divorce. The decree stated that undisclosed assets were awarded to the party who did not have control or possession of them. The trial court therefore did not err in finding the asset was not the husband’s separate property.
The husband also argued the trial court erred in failing to value the community estate at the time of the divorce. The general rule is that property should be valued as of the date of the divorce. The trial court generally had the discretion to determine if an appraisal is close enough to the date of the divorce to be considered in determining the value.
The husband argued the court should have based the division of the account on its value on the date of the divorce, not the date of the filing. There was evidence, however, that the husband refused to provide information about the account during discovery. The wife testified he refused to provide her with bank documents, but instead only offered her a release so she could obtain the information herself. She testified that she only had one statement showing information from the account. The appeals court noted that the husband was challenging the valuation and property division and therefore he had the burden to show the division was unjust. He did not provide values of the property, and could therefore not complain that the court used the information it had. The trial court valued the property using the only bank statement it had. The appeals court found no abuse of discretion in an unjust or unfair way when it awarded the wife half of the property appraised based on the evidence before it. The appeals court made a similar finding regarding other accounts where the only evidence of their value was the wife’s testimony.
The husband also challenged the valuation of a CD account that was awarded to the wife. The wife testified the husband and his mother opened the account with funds from the first account. She testified about its value as of November 2005 and how much was withdrawn when it was closed in August 2007. The husband did not offer any information regarding valuation of this asset at the time of the time of the divorce. On remand, the trial court valued the CD account based on the testimony of its value in 2005. The appeals court found the trial court abused its discretion by failing to use the evidence closer to the divorce.
The husband also argued the trial court improperly awarded the wife 100% of assets it found were undisclosed. The trial court had ordered in the decree that undisclosed assets were awarded to the party who did not have possession or control of them. The husband had not challenged that part of the order in the previous appeals.
The accounts in question were first disclosed in the trial on remand. The accounts had been opened during the marriage by the husband and his mother, who had passed away. They were therefore in the husband’s control, and he failed to disclose them during the original proceedings. The trial court awarded the accounts in accordance with the decree. The appeals court therefore found no abuse of discretion in that action.
The appeals court affirmed the judgment in part and reversed in part.
If you are anticipating a divorce with complex assets, the experienced Texas divorce attorneys at McClure Law Group can advise you and help you through the process. Call us at 214.692.8200 to set up an appointment.
Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.