Dallas Divorce Law Blog by Michelle O'Neil

According to an article on KSAT website out of San Antonio, divorce lawyers nationwide are seeing a trend away from divorce in light of the recent economic woes.  We are seeing the same trends in Dallas divorces.  Usually bad economic times increase the stress on marriages, causing a rise in divorce rates.  But this time, it seems that couples are not splitting up as a result of the poor economy.  It isn’t that couples are rekindline their marriages, but more that they cannot afford to get divorced.  Housing values have falled, 401K values have fallen, and there is just not as much to divide.  Debt values may outweigh assets values, leaving nothing positive to gain from the divorce.  Spouses may not be able to get credit cards or personal loans to finance attorneys fees to obtain a divorce.  In fact, most credit card companies have reduced the credit limits on credit cards, leaving less available credit to borrow from.  I’ve even seen some spouses who cannot obtain new housing post-divorce, leaving them few options but to stay in an unhappy marriage just for a place to live.

The Wall Street Journal reports that more men are receiving alimony, up to 3.6% over the 5-year period ending in 2006, compared to 2.4% in the previous 5-year period.  Even in the Dallas, Texas area divorces, more men are sacrificing their career opportunities in favor of their wife’s.   Wives make more money than husbands in 33% of all marriages (including those where the husband may  not work.)

Alimony is the money that a higher-earning spouse gives to a lower-earning spouse following the end of the marriage.  Texas has a very limited court-ordered alimony statute, only providing alimony (aka maintenance in Texas) where the parties have been married for 10 or more years, plus the spouses lack property in the divorce to provide for the other spouse’sreasonalbe needs, plus either the spouse lacks the ability to earn wages to meet minimum needs or the spouse or a child have a disability that makes working outside the home difficult.  However, alimony can be provided for by agreement even when the situation lies outsides of the exact parameters of the legal statute.

Men are receiving alimony today for the classic reasons that women traditionally did.  A common argument is that they sacrificed their careers for the sake of their wives or children.

Some spouses find it distasteful to write a check each month to their former spouse.  So, the increasingly common practice is to trade alimony for a fatter slice of the marrital property pie.

A recent article in the American Bar Journal confirms what Dallas divorce lawyers are seeing — the downturn in the economy is making divorces more difficult.  For many couples, their primary assets are the house and the 401K.  House values are declining and so the asset is not worth as much to the divorcing couple.  Also, the physical division of a house as an asset is more difficult because home sales have slowed and mortgage refinances are more difficult to get.  This makes it more difficult for a spouse to receive the division of the equity from that asset.  Some couples are already so heavily mortgaged that there is no equity in the house, so when the value falls, they may have negative equity.

With the sharp declines in the stock market, 401K values are also tumbling.  This leaves less to divide of a normally fairly liquid and divisible asset.

In many cases, a divorce that would have once been a split of an estate with a positive net worth is now an argument over division of debts.  Some couples are even staying together because of the bad economy.  Or… worse… getting a divorce, but continuing to live together.

New case out of the Dallas Court of Appeals… Magness v. Magness, 241 S.W.3d 910 (Tex. App. — Dallas 2007)… If you owned a house prior to marriage and, through refinance or whatever circumstances, added your new spouse’s name to the deed after marriage, the law creates a presumption that you intended to make a gift out of the interest to the new spouse.

Facts: Wife held title to the home prior to marriage. Ater marriage, she refinanced the home, executing a deed transferring a one-half interest in the home to her husband. The couple divorced and wife claimed that she did not intend the deed to be a gift transferring ownership to husband. Husband did not testify about whether wife had made a gift. The trial court found that husband and wife each owned a one-half separate interest in the home. Wife appealed.

 

Held: Affirmed. The granting of the deed to husband created a presumption that wife intended a gift. The trial court did not err in finding that this presumption was not overcome.

Opinion: Inception of title shows that he house was originally wife’s separate property. The question remaining is whether the wife intended the deed transfer to constitute a gift. “A deed for property from one spouse as grantor to the other spouse as grantee creates a presumption the grantee spouse received the property as separate property by gift.” This presumption may be rebutted by proof of fraud, accident, or mistake. The trial court, as the exclusive judge of credibility and weight given to evidence, determined that this presumption was not rebutted. This was not an abuse of discretion.

Signing what the title company puts in front of you, ignorant of the consequences, is insufficient to rebut the gift presumption.  Affirmative factual evidence – not just conclusions – of fraud, accident, or mistake must be shown.  This case provides fairly clear direction for the all-to-common refinance situations.

I recently spoke at the UT Family Law on the Frontlines Seminar in Galveston on the Topic of helping clients deal with debts in divorces.  Debts can be a huge issue in any divorce. However, the divorce lawyer is very limited in her ability to change the liability on the debts. When two people get a divorce, the debts can be apportioned between them, but the liability to the creditor cannot be altered. So, for example, if two spouses purchase a car together and both names are listed as liable on the debt, the divorce will only order one of those people to pay the debt. It cannot change the fact that both people owe the finance company for the car. If the spouse that is supposed to pay the debt does not do so, then the creditor still has remedies against the other spouse, regardless of the language of the divorce orders. If you need advice about dealing with debts in your marriage or divorce, please contact us for an appointment.