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The division of property can be one of the most complicated aspects of a Texas divorce. The fact is particularly relevant in a high-asset divorce.
Texas is a community property state. This means all assets are jointly owned and subject to be split 50/50. These assets include real estate, retirement accounts, investments, personal property, and more. Other community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Washington, and Wisconsin.
The experienced attorneys at The Springer Law Firm have extensive knowledge of community property laws in Texas. If you are considering divorce, it is crucial that you hire legal counsel with a deep understanding of Texas property division laws.
A recent case before the Court of Appeals for the First District of Texas is an example of the complexity of classifying what is community property.
Spouse Denied Right to Future Bonuses in First Trial
When the Texas couple originally argued the division of property in a January 2017 bench trial, the court didn’t award the wife any interest in the husband’s as-yet-unpaid bonuses. She appealed the decision, then voluntarily dismissed her appeal before once again suing for a portion of bonuses he received since the divorce was finalized. The husband obtained a summary judgment in December 2018, but the wife was later awarded another trial before a new judge.
Second Trial Awards Part of Bonus Earned After Divorce
In the second trial, the trial court determined that some of the bonuses were in fact community property and awarded her more than $1 million. The husband’s appeal argued that res judicata (a matter that has been adjudicated by a competent court and may not be pursued further by the same parties) bars the relitigating of the bonuses. In a cross-appeal, the wife challenged that she was entitled to more than the $1 million in May 2019.
Appellate Court Affirms First Separate Property Classification
The Court of Appeals for the First District of Texas concluded that res judicata should have barred the second trial from happening. The court reversed and vacated the judgment in the second trial in December 2021.
Understanding the Laws Behind the Decisions
The wife argued in the initial trial that she was eligible for 50% of the future bonus because it was based on work performed during the marriage. The initial trial court concluded otherwise because the bonus was also based on criteria that wouldn’t occur until after the divorce was finalized.
In the husband’s asset inventory, he did include one bonus that he would receive before the divorce could be finalized. That bonus amount was projected and considered community property to be divided. He also included potential bonuses he would receive in the future and provided a value of $0. The bonuses had no current value because they depended on future events.
The court agreed with his $0 valuation. The court said it could not award contingent assets and anything that is earned on those would be earned post-divorce. The appeals court agreed with the res judicata because the assets had been accounted for and valued in the first trial. And in effect, 50% of $0 is $0. Anything earned after the divorce was separate property.
Strong Legal Representation for Your Katy Divorce
Our decades of experience give us considerable insight into how to fight for your rights in a divorce. Fighting for the classification of community property could affect millions of dollars. Depending on the specifics of the situation, bonuses received after a divorce might be marital property if the value of the bonus is earned during the marriage.
If you want to protect future income as personal property or argue that it is subject to community property, we have the background to stand for your best interests. We’ll make every effort to avoid litigation but are ready to take the battle to the courtroom.
Contact us today for a no-cost consultation about your case. We’ll offer honest advice and potential next steps. Call (281) 990-6025 to schedule.