Methods of Tracing Property In Divorce
Under Texas law, all property on the dissolution of marriage is presumed to be community property, absent clear and convincing evidence to the contrary.
SEPARATE PROPERTY TRACING
What Is Tracing in Divorce Law?
Tracing is an integral part to the more complex practice of family law. It is the long a winding road to the truth of asset characterization. Under Texas law, property possessed by either spouse during or on dissolution of the marriage is presumed to be community property, absent clear and convincing evidence to the contrary. Tex.Fam.Code Ann. §3.003 ( Vernon ). The initial characterization of property as either community or separate is determined by the inception of title to the property. Smith v. Smith, 22 S.W.3d 140, 145 (Tex.App.-Houston [14th Dist.] 2000, no pet.) (op. on reh'g). The major consideration in determining the characterization of property as community or separate is the intention of spouses shown by the circumstances surrounding the inception of title. Scott v. Estate of Scott, 973 S.W.2d 694, 695 (Tex.App.-El Paso 1998, no pet.). Section 3.003 of the family code provides that (a) Property possessed by either spouse during or on dissolution of marriage is presumed to be community property; and (b) The degree of proof necessary to establish that property is separate property is clear and convincing evidence.
Given the presumptive characterization of the property, and the burden of proof for an effective rebuttal is clear and convincing evidence, Courts will apply a higher standard of legal and factual sufficiency review. In re J.F.C., 96 S.W.3d 256, 265-66 (Tex.2002); In re C.H., 89 S.W.3d 17, 26 (Tex.2002). Clear and convincing evidence is defined as that "measure or degree of proof which will produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established." Tex. Fam.Code Ann. § 101.007 ( Vernon XXXX); Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 31 (Tex.1994). There is no requirement that such evidence be unequivocal or undisputed. Addington, 588 S.W.2d at 570. In reviewing the evidence for legal sufficiency, the tier of fact must determine "whether the evidence is such that a fact finder could reasonably form a firm belief or conviction" that the separate property characterization was proven. J.F.C., Supra at 265-66.
Who Has The Burden of Proof For Proving Separate Property?
The burden of overcoming the presumption rests squarely on the spouse claiming such property as separate. The complaining spouse must trace and clearly identify the property claimed to be separate otherwise the presumption remains and the proper shall be judicially divided. The burden of tracing is often difficult, but not impossible. Irvin v. Parker, 139 S.W.3d 703, 484 (Tex.Civ.App.- Fort Worth 1977, writ ref'd n.r.e.); Latham v. Allison, 560 S.W.2d 481, 484 (Tex.Civ.App.- Fort Worth 1977, writ ref'd n.r.e.). Tracing involves establishing the separate origin of the property through evidence showing the time and means by which the spouse originally obtained possession of the property. Nelson v. Nelson, S.W. 3d, 2006 Wl 771378, (Tex.App.-Eastland 2006); Ganesan v. Vallabhaneni, 96 S.W.3d 345, 354 (Tex.App.-Austin 2002, pet. denied). Separate property will retain its character though a series of exchanges so long as the party asserting separate ownership can overcome the community presumption by tracing the assets on hand during the marriage back to property that, because of its time and manner of acquisition, is separate in character. Invin v. Parker, Supra; Cockerham v. Cockerham, 527 S.W.2d 162, 168 (Tex.1975). Yet when evidence shows that separate and community property have been so commingled as to defy re-segregation and identification, the community presumption prevails. Hanau, 730 S.W.2d at 667. It is also not enough to show that separate funds could have been the source of a subsequent deposit of funds. Latham v. Allison, supra.
Method Of Tracing Separate Property In Texas
Although not universally adopted by all lawyers, Tracing can be loosely broken down into six sub-types (Click On Each Type To Read More):
- Community Out First Rule ;
- Minimum Sum Balance ;
- The Clearinghouse (a/k/a Identical Sum Inferences) ;
- Pro Rata Division ;
- Item Tracing ; and
- Value Tracing .
Our Dallas lawyers specialize in divorce, property division and property tracing. Our staff strives to build strong relationships with our clients in order to appreciate their best interests and help them achieve their family law goals. Whether you're facing the burden of a divorce, battling for custody of your child, excitedly anticipating an adoption, or looking to amicably resolve a dispute, we want to be there with you, clearing the way and lightening the load. With attorneys certified by the Texas Board of Legal Specialization in Family Law and over a decade of experience litigating family law disputes, the Wilson Legal Group is specially equipped to meet your needs and address the particular concerns of divorce property division.
Additional Texas Property Division Focus
Why Do You Need An Aggressive Divorce Attorney?
A successful family law case often begins with a strong assertive offense and/or defense, and you need a lawyer capable of being assertive when and as necessary. Our Dallas divorce attorneys have represented clients in hundreds of cases, from simple undisputed divorces to the most complex and difficult matters. They have successfully taken numerous cases to trial and have reached settlements favorable to our clients in scores more cases. Our success is due to our attorneys' strong concern for our clients' best interests that drives them to protect our clients' rights and interests. Our divorce lawyers will not allow you to be taken advantage of but will strive to protect your rights, to fight for your interests, and to give you the strong and aggressive representation your case demands.
Failure to Overcome Presumption of Community Property In Property Tracing
Several cases exists which show what when and how litigants fail to overcome the community property presumption in divorce:
(1) A husband testified that accounts listed in a premarital agreement were his separate property and that they were separate property at divorce. This was the only evidence the accounts were his separate property. The court held there was insufficient evidence to support a separate property finding as without tracing the husband's testimony could not overcome the community property presumption. Osorno v. Osorno, 76 S.W.3d 509 ( Tex. App.— Houston [14th Dist.] 2002, no pet.).
(2) A husband testified that money used to open a bank account came from the sale of stock, but he failed to explain what stocks were sold or the origin of the funds used to purchase the stocks. Robles v. Robles , 965 S.W.2d 605 (Tex. App.—Houston [1st Dist.] 1998, pet. denied).
(3) A husband testified that he had bought a parcel of real property with money he had received in an inheritance, but the deed for the property was not presented to the court and no documentary evidence was presented to trace the money used for the purchase. Robles v. Robles, 965 S.W.2d 605 (Tex. App.—Houston [1st Dist.] 1998, pet. denied).
(4) A wife testified that disputed bank accounts were created with income from her disability benefits provided by her employer and from the sale of timber from her separate real property; both of these sources were community property. McElwee v. McElwee, 911 S.W.2d 182 (Tex. App.—Houston [1st Dist.] 1995, writ denied).
(5) A wife testified that she and three siblings inherited $400,000.00 from their father, and that disputed bank accounts in the parties' names contained only the proceeds from such estate, but her evidence failed to trace the proceeds from her father's estate to the accounts and failed to account for the discrepancy between the amounts shown in the documents relating to the estate and the principal amounts appearing in the various accounts in the wife's evidence. Walton v. Johnson , 879 S.W.2d 942 (Tex. App.—Tyler 1994, writ denied).
(6) A couple's premarital agreement provided that income from the parties' separate property would be deemed community property and used to finance ordinary expenses during the marriage, but that excess income could be deposited to the corpus of separate property and would then become the separate property of the spouse whose separate property produced that income; the wife's proof that $69,000 of the $79,000 purchase price of the parties' residence had been saved excess income from her separate property
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