Property Division in Divorce
Everyone knows that property gets divided in a divorce. But how? What is the outcome based upon? And how does it work?
There are at least two parts to it. First, there are the legal aspects. Next, there are the practical aspects.
Said another way: There’s the theory behind it and how it really works.
Community Property versus Separate Property
The place to begin the analysis is before the marriage begins. Before marriage, no Community Property exists. It can’t. It is impossible to own Community Property if there is no “Community,” and the marriage is what makes the Community.
So, before marriage, there are only Separate Estates. That is, all the property owned before marriage is owned Separately. It is Separate Property.
Once people are married and living under Texas law, though, the Community Estate begins. The Separate Estates do not cease to exist; they exist along with the new Community Estate. Technically, it is possible to “opt-out” of the Community Property system through a Premarital Agreement (a Pre-nupt or Prenuptial Agreement). Still, even in those situations, there is commonly a provision regarding what to do if the “opt-out” didn’t work completely, and a Community Estate gets formed anyway.
The next step is to figure out what is in the Community Estate and why you care.
Definition of Community Property
The Community Estate is made up of everything acquired during the marriage, other than those things that are Separate Property. That is, you figure out whether something is in the Community Estate by figuring out whether it is in one or both of the Separate Estates. If it is not, and it was acquired during the marriage, then it is Community Property.
Definition of Separate Property
The Separate Estates are made up of:
1. Property owned prior to marriage;
2. Property acquired by gift;
3. Property acquired by inheritance;
4. Property acquired pursuant to a Prenuptial Agreement that defines it as Separate Property;
5. Certain proceeds of Personal Injury Claims;
6. The income from gifts from the spouse, if a contrary intent was not expressed; and
7. Anything traceable to Separate Property.
Everything else is Community Property.
Dividing the Marital Estate
The importance of knowing the difference between the two types of property is that in a Divorce, the Court divides the Community Property, not the Separate Property. Theoretically, the Judge does not have the power to divide Separate Property. There is no jurisdiction to divide the Separate Estates. Items of Separate Property are to be set aside to the parties to whom they belong.
So, on the practical side of things, the first step is to determine what is Separate Property. Anything claimed as Separate Property must either be admitted as such by the other spouse or proven to be by “Clear and Convincing” evidence.
“Clear and Convincing” is a Standard of Proof that is not common. For most things in a Divorce, the standard is Preponderance of the Evidence. The Preponderance Standard means “more likely than not.” That is, what is probably true. Of the two positions taken by the parties, the Court is to decide which is more likely.
Clear and Convincing, though, is more than that. To prove something by Clear and Convincing Evidence, the proponent of the fact must bring forward enough evidence that the “Fact-Finder” has a “firm conviction” that the truth is as the proponent suggests it is.
The Fact-Finder can be either a Judge or a Jury. In a Texas Divorce, either party is entitled to request – actually “demand” – a Jury Trial. That’s true, even if the only Jury issue being decided is whether a piece of property is Separate or Community.
Whichever the Fact-Finder is in the case – Judge or Jury – that is the entity that must be convinced. The Fact-Finder must have a Firm Conviction that the item is Separate Property if it is to be designated as Separate Property. Otherwise, the Community Presumption prevails.
At the outset of any Divorce, the Legal Presumption is that all property owned by the parties is Community Property. At the trial of the case – if the parties do not settle – all property will be treated as Community, except for property that has been shown by Clear and Convincing Evidence to be Separate.
And all property that is treated as Community will be subject to division by the Court.
In this case, “the Court” means the Judge. Although Texas allows Jury trials in Divorce for some issues, it does not allow them for all matters. How the Community Estate is divided is always a question for the Judge. That question cannot be decided by a Jury.
Just and Right Equitable Division
A Texas Divorce Judge is obligated to make a “just and right, equitable division” of the community estate. That is the standard that the Judge is supposed to use.
He or she is supposed to do what is fair, considering the facts of the case. But what facts can the Judge consider?
Here are a few:
The age of the parties;
The health of the parties;
The needs of the parties;
The income of the parties;
The earning capacity and opportunities for future wealth and income of the parties;
The separate estate of each party;
The debts and liabilities of the parties;
The Custody of any children of the marriage;
Any adultery committed during the marriage; and
Any cruelty by either party to the marriage.
What is interesting about many of these factors is the way that they can cut either way. For example, a significantly older spouse can argue, “I need more of the estate because I don’t have many more years to earn.”
With the same set of facts, the younger spouse can argue to the older, “You don’t need as much money as I do because you are not going to have as many years of life left that you need to pay for.”
Some of the factors, though, only give an advantage in any proposed division to one party.
For example, if the Wife has committed adultery, the scales tip in favor of the Husband. And vice versa.
If the Husband has been cruel to the Wife during the marriage, the scales tip in favor of the Wife. And vice versa.
To really understand each of these factors, though, it is essential to look beyond just the statement of the issue and see what courts really find them to mean. Also, note that this is not an exhaustive list. That is, the Judge is allowed to consider all facts that he or she finds relevant. After that, they can divide the estate “within the Court’s discretion,” however the Judge desires.
The Discretion of the Court
“Within the Court’s discretion” means getting an Appellate Court to overturn a case because they find that the Court gave too much to one side or the other is almost impossible. The division can be pretty much anywhere from 100%/0% to 0%/100%, as long as there is just about any possible basis for believing the split to be reasonable.
50-50, 55-45, 60-40, and 65-35 splits are all very possible in the trial of a Texas Divorce, under appropriate facts. Even more severely disproportionate divisions have been affirmed on appeal.
It can be challenging to find Texas Cases that speak to the various factors individually, because of the way cases make it into publication, such that they can be found.
For example, to find a case that speaks just on the propriety of dividing a Marital Estate a certain way solely based on a disparity in age, the following has to happen. First, there would need to be a divorce in which the parties have a gap in age. Then the case has to go to trial. Then one side or the other has to be so unhappy with the outcome and be willing to spend time, money, and energy on an appeal. Then, the issue of the age disparity factor must be discussed and addressed as a reason for the Judge’s decision. And to really focus on it, the Judge would have had to have used it as the only basis. Then the Appellate Court would have to write an opinion discussing whether the way the Judge considered that one factor was appropriate.
In reality, that is unlikely to happen. Instead, a Judge will blend all of the factors present in the case and make a decision. Additionally, even if all of the first things happen and a case gets appealed, the Appellate Court will discuss all of the various factors at play together to explain whether they agree or disagree with the Trial Judge’s decision. And as discussed earlier, they almost always side with the Trial Judge.
But, sometimes, it is possible to find some writing on these elements, even if it’s not solely about just one of them.
For example, in 2003, one of the Houston Courts of Appeals was asked to consider the case of Francis Riley and Florence Riley. At the time Francis and Florence divorced, Francis was 71, and Florence was 59. They had a disparity of 12 years.
The Judge gave significant assets to the older Husband, and the Wife appealed.
Florence, the Wife, claimed that “the trial court awarded the ‘main assets’ solely to Francis and, in so doing, abused its discretion.” The Wife contended that “the ‘main assets’ are the Ford truck, the Cardinal trailer, and the Chevrolet truck.”
The Appellate Court stated:
“The evidence presented at trial established that Francis [the Husband] is retired from both the military and the postal service and receives a monthly pension payment which is less than Florence’s monthly salary. Furthermore, Florence [the Wife] is twelve years younger than Francis, and arguably has a greater earning potential than Francis. Awarding the property in the parties possession is reasonable considering that Francis lives in the Cardinal trailer and hauls the trailer with his Ford truck whenever he travels. Although Florence’s Chevrolet truck has a towing package, it is currently not equipped to haul a trailer. The Court determined that it was fair and just to divide the property according to what the parties determined when they separated seven years ago. Considering the evidence presented at trial regarding the disparities in the age of the parties, their earning capacities, and the use of the assets during the parties’ separation, we find that the trial court’s division of the community estate was neither arbitrary nor unreasonable.”
The Riley case demonstrates that often, the financial factors used by Judges in making the division of the estate during Divorce are intertwined.
In fact, all the main factors can probably be divided into three groups: Financial Factors, Children-related Factors, and Fault Factors.
So, how do children come into the picture when a court is dividing property? They are already an issue elsewhere in the case if they are either underage or disabled or both. There are issues of Custody, Possession scheduling, and Child Support that already involve the children.
One way that the issues of children figure in the division of the estate can be found in the 1976 case of Boriack v. Boriack out of Corpus Christi. This case, in fact, apparently first held specifically that Custody could be a factor for courts to consider when dividing the estate.
In Boriak, the Husband received 56% of the estate, and the Wife received only 44% – at least according to the Wife’s calculation. The Wife complained, on appeal, that there was no reasonable basis for such a disproportionate division.
The Appellate Court, however, pointed out that the Husband had been given Custody – or Primary Possession – of the couple’s three children. The Court then said, “This fact in itself would justify an unequal division favoring him.”
Indeed, the more you dive into trying to understand all of the reasons the Courts have used to come up with what they think is fair, the harder it is to try to nail down the whole list – let alone try to understand them individually.
In the 1991 case of Baccus v. Baccus, the Beaumont Court of Appeals said:
“We are well aware of the many factors which the trial court considers daily in making “just and right” divisions. These factors include future needs for support; fault in the breakup of the marriage; disparity of incomes or of earning capacities; spouses’ capacities and abilities; benefits the innocent spouse would have derived from the continuation of the marriage; business opportunities; education and training; relative physical conditions; relative financial conditions and obligations; disparity of ages; size of community estate; size of separate estate; expected inheritance of the spouses; nature of property; attorneys’ fees; Custody of children; reimbursement; gifts to a spouse during marriage; excessive community property gifts to others; wasting community assets; out-of-state property; tax consequences; and credit for temporary alimony paid.”
Even after that lengthy list, they went on to say that “appellate courts have held that tax consequences stemming from the division of property as well as any unpaid tax liabilities are proper factors to be considered by the trial court in deriving at a fair and just division of the community properties.”
And further, the Court stated, “it is reversible error for a court to refuse to consider tax liability, particularly when it is substantial and one of the spouses is without means to pay the obligation.”
How Does Adultery Matter in Divorce
All of that, and there are still issues of fault to consider.
It’s clear that any adultery can be considered by the Court, even if it happened after separation. But there are also the issues of Cruelty and what all that can entail.
In a 2018 case named In the Marriage of Nadar, the Dallas Court of Appeals gave about as good a synopsis of the law on adultery in Divorce as you can find in one place. They stated the following:
1. Adultery means the voluntary sexual intercourse of a married person with one not the spouse;
2. Adultery in divorce proceedings means voluntary sexual intercourse of a married person with one not the Husband or Wife of the offender;
3. Adultery is not limited to actions committed before the parties separated;
4. Adultery can be shown by direct or circumstantial evidence; and
5. There must be clear and positive proof, and mere suggestion and innuendo are insufficient.
But, even with that, the question still remains as to what impact the adultery will have on the division of the Marital Estate. It is absolutely clear that the truth is not as some people believe, which is that if one party shows that the other committed adultery, the innocent party “gets everything.” That concept is simply wrong
On the other hand, there are cases with adultery involved in which the disproportionate division has been stark. In a 2012 case out of Denton named Halleman v. Halleman, the Wife claimed that the Court gave her Husband between 76% and 99.6%, depending on how you calculated things.
Although the adultery was a significant part of the discussion in the case, the Fort Worth Court of Appeals ultimately stated that, “the trial court’s disproportionate property division is equitable even in the absence of any evidence that Aimee committed adultery before filing for divorce.”
It is interesting to note that the Halleman Court pointed out that in at least one Texas case, adultery has been proven simply by virtue of evidence that the Husband in the case “went into [a] room with his high school sweetheart and stayed there with the doors closed and lights off for more than twenty minutes.”
This shows, of course, that all trials, courts, juries, and judges are unique. Evidence that is mere suggestion and innuendo to some is considered proof by others.
Cruelty may be even harder to deal with that adultery, at least as far as figuring out how to use it to calculate the division of the Community Property. In 1848, the Texas Supreme Court wrote in a footnote in the case of Sheffield v. Sheffield:
“No exact legal definition can be given of the terms’ excesses,’ ‘cruel treatment’ and ‘outrages.’ The habits and character of the parties, their social condition and standing, their previous training, the provocation given, the frequency of the acts, etc., all must be taken into consideration in each particular case. Whether living together has been rendered insupportable is a question of law for the Court, after the jury have found the commission of acts complained of.”
In fact, the definition of Cruelty in Divorce has not changed much beyond that found by the 1888 Texas Supreme Court Case of McAlister v. McAlister:
“The ordinary meaning of cruelty in actions for Divorce is that the act endangers or threatens the life, limb or health of the aggrieved party. To this, in our courts, is added any outrage upon the feelings inflicting mental pain or anguish.”
In 1951, the Amarillo Court of Appeals said in the Ingham v. Ingham case,
“Each case depends upon its own peculiar circumstances. “Cruelty,” as the word is used in divorce cases, has been defined as such an act as will endanger or threaten the life, limb or health of the aggrieved party, including any outrages upon the feelings or any infliction of mental pain or anguish. Our courts have held that “cruel treatment” need not be confined to acts of violence alone. The true test is whether the treatment rendered further living together insupportable.”
Peculiar circumstances being what they are, the El Paso Court of Appeals found in the 2011 case of Newberry v. Newberry that viewing pornography could be sufficient for a finding of cruelty, at least when coupled with facts that they believed proved adultery as well.
The Newberry court stated that according to at least one Texas case, “evidence of husband’s adultery could support [a] finding of cruel treatment.”
And although it is not perfectly clear what the division of the Community Property was in the Newberry case, at least according to the Husband on appeal, the Judge gave the Wife almost 88% of the property, while giving the Husband over 95% of the debt. Regardless, the Appellate Court found the findings of cruelty and adultery were proper and that the division of the Community Estate was fair.
The cases go on and on. Indeed, there are so many facets to so many of the factors that trying to analyze them all could be a lifetime work.
That said, property division can be tough in a divorce. Knowing at least some about what facts matter can help you to help your attorney and hopefully get yourself the best result possible.