Marital Property

Front 1

COMMUNITY PROPERTY

Back 1

(TX FAMILY CODE)

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1. What types of property are SP (5 types)?

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Property owned before the marriage; acquired during the marriage by gift, will or inheritance; partitioned CP; property bought w/separate funds; & tort recovery for personal injury (not medical or loss of earning potential)

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2. What types of property are CP?

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Salary & wages. All property other than SP acquired during marriage, & income from SP unless the spouses agree in writing that the income will be separate; income from gift property is spouse’s SP if gift is from other spouse. If not interspousal gift, income from gift is CP.

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3. When is the status of property determined?

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The character of an asset is determined at the time the asset is acquired. This rule, the inception of title rule, applies to all assets but employee retirement benefits & stock options.

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What is the community presumption?

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All assets acquired during marriage are presumed to be CP. All assets acquired on credit during marriage are presumed to be acquired on community credit. All assets on hand when the issue is raised is presumed to be community. The burden on proving property is separate is on the proponent by CCE

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5. How is property divided at death?

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50/50 (probate code).

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6. What happens if community funds are spent on SP or separate funds are spent on CP?

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A claim for reimbursement arises at divorce. No claim for reimbursement on CP spent on CP- only b/t marital estates. Amt is w/in trial court’s discretion. Can not reimburse for child support, alimony, maintenance, living expenses, nominal property contributions, nominal liability payment, student loans owed by spouse.

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7. What if property brought from other state?

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In CL state, spouse’s salary is SP, how title is held determines ownership. Conflict of laws separate property- you don’t lose property when you move. Upon divorce- CP in another state is CP or quasi-CP & gets J&R division. Death= characterized by acquisition.

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8. What is the status of property that was adversely possessed, begun before marriage & finished during marriage?

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If the spouse was a naked trespasser, the property is community. If the spouse entered under a rightful claim, the property is separate.

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9. What is the effect of title being taken only in one spouse’s name?

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In common law states the person that takes title is the owner. In CP states the title does not determine characterization. Rather, under the inception rule it’s the time & circumstances of the acquisition. One exception is when one spouse, using SP, takes title to an asset in other spouse’s name. The presumption in that situation is that a gift was intended.

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10. How are insurance benefits handled?

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The 1st premium payment on plan characterizes CP or SP of policy. (Inception of title rule applies).

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11. How are employee retirement benefit plans handled?

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The benefits accumulated during marriage are CP. Defined benefit plans are ret. benefit then subtract the value on day of marriage from current value. Ret bene= 2% x yrs of service x avg 3 yrs highest salary. Then: total yrs married & employed/total yrs employed x value of ret bene. A deceased spouse has no interest in retirement benefits (federal preemption- also DO have rts to military ret. benefits under USFSPA, but no rights to military disability benefits)

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12. How are business interests during marriage handled?

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For business owned before marriage, TX allows a reimbursement claim for value of time, toil and talent expended (what someone in similar position would have received) (TTT)- value of time reasonably necessary to preserve H’s separate estate- compensation received by H (salary, bonus, fringe benefits).

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13. How is property divided upon divorce?

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A court will effect a just & right division of CP. The court may consider the age & physical condition of the parties, ability & earning power & business opportunities, education, children, length of marriage, child care needs, needs for future support, size of the estate, benefit spouse would have received from continuing marriage, & fault. Also taxes and debts. Ct can set aside SP for support of minor child.

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What if the appellate court disagrees?

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Wide latitude is given to trial judge. A decision will only be reserved if division is so disproportionate as to be manifestly unjust and an abuse of discretion. *Appellate ct can only reverse and remand- may not make own division.

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15. How is property discovered after a divorce is settled handled?

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Later discovered CP is subject to a just & right distribution in a separate action. Statute of limitations is 2 years from the point the other party repudiated the claim of community ownership. (Not 2 yrs from divorce).

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16. How are commingled bank accounts handled?

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Apply community out first rule. Also known as the lowest intermediate balance rule. Community funds are presumed to be withdrawn first.

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17. When can spousal maintenance be ordered?

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If a couple is married at least 10 years (unless 1 spouse convicted of fam. violence in last 2 yrs), & one spouse lacks sufficient property to provide for her minimum needs. The spouse seeking support must be unable to support herself b/c of a disability OR be a custodian of a disabled child OR lack employment skills adequate to provide for her minimum reasonable needs.

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18. How much money can be awarded as spousal maintenance?

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A maximum of $2500 a month or 20% of spouses average monthly gross income. No more than 36 months unless spouse was disabled at time of divorce or has custody of disabled child.

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19. What are the factors of spousal maintenance?

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(1) Lack of employment history & employment skills, (2) physical & mental condition, (3) contributions as a homemaker to spouse’s earning ability, (4) spouse’s ability to meet his personal needs and child support obligations. Can be modified downward (not up) and ends by death, remarriage, romantic cohabitation.

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20. How is property of a bigamous marriage handled?

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If spouse is unaware of the bigamous marriage, she is called a putative spouse & she gets share of CP. If spouse is aware of preexisting marriage, the relationship is characterized as a meretricious relationship & the spouse gets nothing. If 1st spouse dies, not bigamous- all CP.

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21. What are the requirements for a premarital agreement that would alter the character of community assets?

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It must be in writing & signed by both parties, no consideration is required (an exchange), parties may agree that SP remains SP, agreement can govern the disposition of property upon separation, divorce, or death. Can waive rights to homestead, spousal maintenance. Can’t agree that premarital property becomes CP after marriage. Cannot limit obligation to provide child support.

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22. How can a premarital agreement be set aside?

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By proving that it was not signed voluntarily, or unconscionable when made & there was no fair disclosure of spouses property or obligations, right to disclosure was not waived in writing and there was no prior knowledge of spouse’s property or financial obligations.

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23. How can premarital SP be converted to CP?

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Spouses can agree in writing to convert SP to CP. Spouses can also agree to convert CP to SP & can even partition unequally.

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24. Are survivorship agreements valid for disposition of CP?

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Yes, the agreement must be in writing & signed by both spouses, either spouse can revoke w/written notice to other, & a court order will be necessary to adjudicate the agreement valid (clear title)

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25. What power does one spouse have to challenge the CP gift of another spouse?

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One spouse can make reasonable gifts of CP as long as such gifts are not so disproportionate as to be in fraud of the spouse’s community rights (constructive fraud). Factors to look at: relationship b/t donor & donee, amount of gift in relation to comm. estate, is spouse adequately provided for with remaining estate. (also applies to beneficiaries on life insurance).

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26. What effect does a divorce have on preexisting creditors?

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A divorce does not affect the rights of preexisting creditors. If only one party is personally liable b/c the other didn’t sign, a secured creditor can go after CP in an in rem suit seeking to have a constructive trust placed on the property.

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27. What is the liability for torts committed by one spouse? (I.E. wife commits tort during marriage--what property can be reached?)

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All CP is subject to judgment for torts committed during marriage. (W’s SP, W’s sole/joint management CP, H’s sole/joint management- NOT H’s SP).
PRE MARRIAGE TORT---Only SP and sole management of tortfeasor & joint management CP is available, not spouse’s SMCP or SP.

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28. What is the liability of one spouse for contracts entered into by the other?

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Each spouse has a duty to support the other spouse & his or her minor children. Each spouse is personally liable for the other spouse’s contracts for necessaries. Other contracts where other spouse is not personally liable, creditors can only reach liable spouse’s property subject to his control. Homestead can’t be mortgaged or conveyed without joinder. (But protection for B3PPFV in conveyance issue).

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29. What are the rights in regards to oil and gas?

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Delay rentals= CP; bonuses= SP; royalties= SP.