| |
When a court tries
a divorce case concerning property, the court will try to
categorize property either as separate property or community
property.
A spouse's separate property consists of:
- The property owned or claimed by the spouse before marriage;
- The property acquired by the spouse during marriage,
by gift, devise, or descent, and,
- The recovery for personal injuries sustained by the spouse
during marriage, except any recovery for loss of earning
capacity during the marriage.
The significance of separate property is that a court cannot
divest a spouse of their separate property. Therefore, once
a court determines that a particular piece of property is
separate property, then it must set that property aside to
the separate property owner. The burden is upon a spouse to
prove that property is his or her separate property by clear
and convincing evidence.
Community property consists of all property, other than separate
property acquired by either spouse during marriage. Property
possessed by either spouse during the dissolution of the marriage
is presumed to be community property, unless the spouse can
prove that it is their separate property by clear and convincing
evidence. Community property consists of almost anything of
value, such as real property, personal property, stocks, bonds,
savings accounts, automobiles, retirement benefits, 401(k)
accounts, IRA accounts, stock options, copyright royalties,
patents, income, rental income, life insurance and virtually
anything else of value.
Once the court determines that property is community property,
then the court must divide the property. In dividing community
property, the court is obligated to order a division of the
estate of the parties in a manner the court deems "just
and right", having due regard for the rights of each
party and any children of the marriage. In dividing the community
estate of the parties, the court typically takes into account
one or more of the following factors:
- Fault in the breakup of the marriage
- Health of the parties
- Education of the parties
- The present earnings of the parties
- The earning capacity of the parties in the future
- The party raising the minor children of the marriage
- The specific nature of the property
- Any separate property that a spouse may have
- Any inheritance that a spouse is likely to receive
- Tax issues in connection with property
- Any fraud that one spouse has committed against the community
or the other spouse
The debts of the parties
As a practical matter, if the court has two people before
it, with the same educational background, earning the same
income, and having the same opportunities in the future,
and no children, the court will divide the estate of the
parties 50/50. As more facts favor one individual, then
the court has a tendency to award that individual a greater
percentage of the community property. For example, if the
wife is clearly at fault in causing the marriage to break
up, is young, and in good health, is earning substantial
income, has an MBA, and expects to inherit a lot of money
from her family, and the husband has only a high school
diploma, suffers from deteriorating help, has a low paying
job, and is taking care of the parties three children, then
the husband could expect to receive a substantially greater
portion of the community property than the wife. Property
awards up to 90%, in very unusual circumstances, have been
upheld by the appellate courts in Texas.
Many clients want to approach a divorce settlement insisting
that they get 60%, 70%, or 75% of the community property;
because they believe that the other party was at fault in
the breakup of the marriage. Such an approach can make it
very difficult to settle a case without trial. Usually the
other spouse does not believe that he or she was at fault
in the breakup of the marriage, or even if they were, they
believe they were justified in engaging in the conduct because
of the complaining parties approach to the marriage. Also,
the courts frequently do not place the same degree of emphasis
upon one particular issue as the clients frequently do. For
example, while one party may clearly be at fault in the breakup
of the marriage, the court will be weighing that issue against
the issues of present earning ability, future earning ability,
educational background of the parties, etc. Also, the courts
frequently have a different perception of the value of the
community estate, and that can substantially effect the court’s
division of property. For example, if the party who claims
that the other one is at fault, believes that the equity in
the house is worth $30,000.00, and is demanding 70% division
from the court (or $21,000.00), the court may very well find
that the equity in the house is only $10,000.00, and award
the party not at fault only 60% of that equity ($6,000.00).
Of course, the vast majority of cases do not go to trial.
While evaluating any settlement, the parties should take into
account all of the factors that the court is going to take
into account, when settling a case, there are other factors
that have a significant bearing on the settlement. For example,
if one party particularly wants the house, they should probably
be willing to accept a lower percentage of the community estate
in a settlement in order to make certain they get the house.
There is absolutely no guarantee that the court will award
a person the house. The court may very well decide that it
would be better to sell the house, or award the house to the
other spouse.
Since a judge can take into account so many different factors
in dividing the community estate of the parties, the court
has great discretion in how it divides the estate of the parties.
Very rarely will the appellate courts reverse a trial judge
on the basis that the trial judge was guilty of “abusive
discretion”. Knowing that there is very little possibility
that a party can appeal a trial court’s division of
the estate of the parties, is another factor that has to be
taken into account in making a decision on whether to settle
the case or not.
|
|
