Divorce—Decrees and Agreements Incident to Divorce
Courts have inherent and statutory power to enforce decrees, but a decree’s enforceability is determined by the nature of the decree itself. Ex parte Gorena, 595 S.W.2d 841, 845 (Tex. 1979) (orig. proceeding). The decree must set out the details of compliance in clear, specific, and unambiguous terms so that the parties will readily know exactly what obligations are imposed. Ex parte Slavin, 412 S.W.2d 43, 44 (Tex. 1967) (orig. proceeding). A general residuary clause in a divorce decree can divide property if the property was not otherwise divided in a specific award. See In re W.L.W., 370 S.W.3d 799, 804 (Tex. App.—Fort Worth 2012, orig. proceeding). The decree must inform the parties of their obligations without calling on them to make or draw conclusions about which persons might well differ. Ex parte Slavin, 412 S.W.2d at 44–45. Except as discussed below, if the requirement of specificity is met, the final decree will be enforceable by contempt as a court order even if the terms of the judgment have been determined by agreement of the parties rather than by decision of the judge. McCray v. McCray, 584 S.W.2d 279, 281 (Tex. 1979) (per curiam) (although rules relating to contract interpretation apply, agreed judgment is accorded same finality and binding force as final judgment rendered at conclusion of adversary proceeding).
§ 23.2Orders Not Enforceable by Contempt
Certain provisions of a divorce decree are not enforceable by contempt, either because enforcement would violate constitutional principles or because the court lacks the requisite subject-matter jurisdiction. For example, a finding of contempt for violation of an order for the payment of debts resulting in imprisonment violates the Texas Constitution. Ex parte Yates, 387 S.W.2d 377, 380 (Tex. 1965) (orig. proceeding). Similarly, orders requiring a party to perform an act the party is incapable of performing are likewise not subject to enforcement by contempt. Ex parte Gonzales, 414 S.W.2d 656, 657 (Tex. 1967) (orig. proceeding). Orders requiring religious instruction violate article I, section 6, of the Texas Constitution and are not enforceable by contempt. See Salvaggio v. Barnett, 248 S.W.2d 244 (Tex. App.—Galveston, writ ref’d n.r.e.). Accordingly, visitation cannot be conditioned on taking a child to Sunday school. Watts v. Watts, 563 S.W.2d 314, 316–17 (Tex. App.—Dallas 1978, writ ref’d n.r.e.), disapproved on other grounds, Jones v. Cable, 626 S.W.2d 734, 736 (Tex. 1981). Unless otherwise allowed by statute, orders for the support of children beyond their eighteenth birthdays are unenforceable by contempt, even if such orders incorporate an agreement to that effect, absent statutory authority for such an order. In re Cobble, 592 S.W.2d 46, 48–49 (Tex. App.—Tyler 1979, writ dism’d). An order enjoining future speech, even if defamatory, may be an unconstitutional infringement on free speech and therefore not enforceable by contempt. Kinney v. Barnes, 443 S.W.3d 87, 98–99 (Tex. 2014). A decree providing for the payment of contractual alimony and not spousal maintenance is not enforceable by contempt. In re Green, 221 S.W.3d 645 (Tex. 2007) (per curiam).
COMMENT: Under certain conditions, orders for the support of children over the age of eighteen but still enrolled in an accredited secondary school in a program leading toward a high school diploma under chapter 25 of the Texas Education Code, enrolled in courses for joint high school and junior college credit pursuant to Education Code section 130.008, or enrolled on a full-time basis in a private secondary school in a program leading toward a high school diploma, and meeting relevant attendance requirements, are valid and enforceable court orders. See Tex. Fam. Code § 154.002(a). Furthermore, the court retains the authority to issue orders for the support of an adult disabled child over the age of eighteen. See Tex. Fam. Code § 154.302 et seq.
Other provisions of a decree may be enforceable by contract. A marital property agreement, although incorporated into a final divorce decree, is treated as a contract, and its legal force and meaning are governed by the law of contracts, not by the law of judgments. Allen v. Allen, 717 S.W.2d 311, 313 (Tex. 1986). A person may contract to support his spouse, and that obligation, to the extent it exceeds his legal duty, is a debt. Ex parte Hall, 854 S.W.2d 656, 658 (Tex. 1993) (orig. proceeding). Where the duty to make support payments arises from an agreement between the parties, rather than from a divorce decree based entirely on the power conferred by the Family Code, the rights and obligations of the parties are governed by the rules of contract. See Hutchings v. Bates, 406 S.W.2d 419, 420 (Tex. 1966); Griffin v. Griffin, 535 S.W.2d 42, 43–44 (Tex. App.—Austin 1976, no writ). As with any other contract, absent the parties’ consent, the provisions of an agreed decree cannot be set aside except on the basis of fraud, accident, or mutual mistake of fact. Schwartz v. Schwartz, 247 S.W.3d 804 (Tex. App.—Dallas 2008, no pet.). However, a court may modify the provisions of a decree pertaining to the parent-child relationship as authorized by the Texas Family Code. See Tex. Fam. Code ch. 156.
§ 23.3Specificity of Dates and Times
The divorce decree should specify the dates, times, and locations of any required acts, including the conveyance of property or payment of money. The requirement to pay certain medical bills “timely” has been held to be unduly vague. Ex parte Carpenter, 566 S.W.2d 123, 124 (Tex. App.—Houston [14th Dist.] 1978, orig. proceeding) (per curiam). However, an order that required certain transfers of personalty or payments of money be made “immediately,” while not as desirable as stating a specific time, has been held to have unequivocal meaning and therefore not to be unduly vague. Ex parte Fernandez, 645 S.W.2d 636, 638 (Tex. App.—El Paso 1983, orig. proceeding). Payment into the “registry of the court” is also not unduly vague, because it is a common procedure, provided the court and county are identified in the order sought to be enforced. Ex parte Fernandez, 645 S.W.2d at 638.
§ 23.4Execution and Delivery of Instruments
General language providing for the execution of future documents necessary to effect the terms of the decree is often too vague for enforcement by contempt. See Ex parte Choate, 582 S.W.2d 625, 627–28 (Tex. App.—Beaumont 1979, orig. proceeding) (order holding husband in contempt for failure to sign “required instruments” was void).
COMMENT: The attorney may wish to include specific language requiring the execution of certain transfer documents attached to the decree as exhibits, as such language should increase the availability of contempt.
§ 23.5Clarification and Enforcement of Orders
The court retains the inherent power to clarify or enforce a divorce decree as long as the court does not substantively alter the property division made in the original decree. Clarifying a decree that imposes an equitable lien against property to provide that the lien must be satisfied on the sale of the property is not a substantive alteration. Karigan v. Karigan, 239 S.W.3d 436 (Tex. App.—Dallas 2007, no pet.). Various procedures for clarification and enforcement of property divisions and orders in parent-child cases are discussed in chapters 31, 33, and 34 of this manual.
Life Insurance: The trial court is authorized to divest title to a life insurance policy as part of the division of the estate of the parties. Wallace v. Wallace, 371 S.W.2d 918, 920–22 (Tex. App.—San Antonio 1963, writ dism’d). The court may also order that the policy be transferred to the noninsured spouse to be held in trust for the benefit of the children or that life insurance coverage be continued for the benefit of the children. Forms 24-25 and 24-26 in this manual are designed to assist in securing the change of beneficiary and to obtain confirmation of continued coverage.
A constructive trust may be imposed on the proceeds of a life insurance policy paid to a third party when the divorce decree orders the insured to name the children or the former spouse, who is the trustee for the children, as beneficiary. Hudspeth v. Stoker, 644 S.W.2d 92, 95–96 (Tex. App.—San Antonio 1982, writ ref’d); Roberts v. Roberts, 560 S.W.2d 438, 439-40 (Tex. App.—Beaumont 1977, writ ref’d).
An ownership interest in an undivided life insurance policy may be asserted in a suit for a postdecree division of property under Family Code chapter 9.
If a decree of divorce or annulment is rendered after an insured has designated the insured’s spouse as a beneficiary under a life insurance policy in force at the time of rendition of the decree, a provision in the policy in favor of the insured’s former spouse is not effective unless (1) the decree designates the insured’s former spouse as the beneficiary, (2) the insured redesignates the former spouse as the beneficiary after rendition of the decree, or (3) the former spouse is designated to receive the proceeds in trust for, on behalf of, or for the benefit of a child or a dependent of either former spouse. Tex. Fam. Code § 9.301(a); see also Gray v. Nash, 259 S.W.3d 286 (Tex. App.—Fort Worth 2008, pet. denied). But see Egelhoff v. Egelhoff, 532 U.S. 141 (2001) (ERISA requires payment of benefits to designated beneficiary notwithstanding state law to the contrary). Although ERISA requires payment of benefits to the designated beneficiary, it does not preempt a postdistribution lawsuit against that beneficiary. Hennig v. Didyk, 438 S.W.3d 177 (Tex. App.—Dallas 2014, pet. denied) (ex-wife ordered to pay proceeds to estate of ex-husband where agreed divorce decree awarded husband all life insurance policies incident to his employment).
If the predecree designation fails, the proceeds of the policy are payable to the named alternative beneficiary or, if there is not a named alternative beneficiary, to the estate of the insured. Tex. Fam. Code § 9.301(b). An insurer who pays the proceeds of a life insurance policy issued by the insurer to the beneficiary under a predecree designation that is not effective under section 9.301(a) is liable for payment of the proceeds to the proper person or estate only if before the improper payment the insurer received written notice at its home office from an interested person that the designation was not effective and the insurer did not interplead the proceeds into the registry of a court of competent jurisdiction. Tex. Fam. Code § 9.301(c).
Health Insurance for Child: The court must render an order for the medical support of a child in any suit affecting the parent-child relationship in which the court orders periodic payments of child support or determines that medical support of the child must be established, modified, or clarified. Tex. Fam. Code § 154.181(a)(1), (a)(2). On rendering a final order, the court must make specific findings with respect to how health-care coverage is to be provided and must follow the statutory priorities unless good cause is shown for not doing so. Tex. Fam. Code §§ 154.181(d), 154.182(b). Except for good cause shown or on agreement of the parties, the court must require the parent ordered to provide health-care coverage to provide evidence to the court’s satisfaction that the parent has applied for or secured health insurance or has otherwise taken necessary action to provide for health-care coverage for the child as ordered. Tex. Fam. Code § 154.181(d).
Detailed coverage of this topic is provided in chapter 9 of this manual.
Form 24-27 in this manual is designed to assist the obligee of a child support order in verifying the continued existence of the coverage.
Dental Insurance for Child: In any suit affecting the parent-child relationship, the court must render an order for the dental support of the child. Tex. Fam. Code § 154.1815(b). On rendering a final order, the court must make specific findings with respect to how dental coverage is to be provided and must follow the statutory priorities unless good cause is shown for not doing so. Tex. Fam. Code §§ 154.1815(e), 154.1825(c). Except for good cause shown or on agreement of the parties, the court must require the parent ordered to provide dental coverage to provide evidence to the court’s satisfaction that the parent has applied for or secured dental insurance or has otherwise taken necessary action to provide for dental insurance coverage for the child as ordered. Tex. Fam. Code § 154.1815(e).
Detailed coverage of this topic is provided in chapter 9 of this manual.
Form 24-27 in this manual is designed to assist the obligee of a child support order in verifying the continued existence of the coverage.
Insurance for Child Support after Obligor’s Death: The court may order a child support obligor to obtain and maintain life insurance to satisfy the support obligation in the event of the obligor’s death. Tex. Fam. Code § 154.016. For a discussion of this topic, see section 9.10 in this manual.
Disposition of Insurance Policies: In the decree of divorce, the trial court shall specifically divide or award the rights of each spouse in an insurance policy. Tex. Fam. Code § 7.004.
If the decree does not specifically award all the rights of the spouses in an insurance policy (for example, casualty, homeowner’s insurance, auto insurance) other than life insurance in effect at the time the decree is rendered, the policy remains in effect until it expires according to its own terms. If the interest in the insured property is awarded solely to one former spouse by the decree, the proceeds are payable to that former spouse. If each spouse receives an interest in the insured property, the proceeds are payable to those former spouses in proportion to the interests awarded. If the insurance coverage is directly related to the person of one of the former spouses, the proceeds are payable to that former spouse. The failure of either former spouse to change the endorsement on a policy to reflect the proper distribution of proceeds established by section 7.005 does not relieve the insurer of liability to pay the proceeds or any other obligation of the policy. Tex. Fam. Code § 7.005(a)–(c).
§ 23.7Continuation of Insurance Coverage to Former Spouse
Health Insurance: After divorce, a spouse can elect to continue health insurance under either federal or state law. The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires most group health plans to offer continued coverage for former spouses of members of the group. COBRA provisions for health insurance are codified at 26 U.S.C. § 4980B (Internal Revenue Code), 29 U.S.C. §§ 1161–1168 (ERISA), and 42 U.S.C. §§ 300bb–1 to –8. COBRA does not apply to church plans, small employer plans (fewer than twenty employees), and certain governmental plans.
A former spouse desiring to obtain continued health insurance coverage under a former spouse’s group policy must make the election by notifying the plan administrator within sixty days of the severance of the family relationship. The applicant must have been a dependent of the group member on the day preceding the date of the dissolution of the marriage. The coverage is available for a period of thirty-six months following the dissolution or until the applicant is covered under another group plan or Medicare, whichever occurs first.
The Texas Insurance Code contains similar extended coverage provisions for all group health insurance policies delivered, issued for delivery, or renewed in Texas and does not exempt small employers or churches. See Tex. Ins. Code §§ 1251.301–.310. Either the group member or dependent must notify the plan administrator within fifteen days of the dissolution of the marriage. Tex. Ins. Code § 1251.308(a). (This fifteen-day notice is not required for plans covered by the federal version.) The applicant must request the continued coverage within sixty days of the dissolution. Tex. Ins. Code § 1251.308(d). Unlike under the federal COBRA, which allows for continuation of coverage even if the spouse has only been a member of the plan for one day, the applicant must have been a member of the group for at least one year before the dissolution. Tex. Ins. Code § 1251.302. The Texas version also provides for extended coverage for a period of thirty-six months or until the applicant becomes eligible for coverage under another plan, whichever occurs first. Tex. Ins. Code § 1251.310. Forms 24-28 and 24-29 in this manual are designed for seeking continuation of health insurance coverage.
COMMENT: Failure to strictly comply with the notice requirements of both federal and Texas COBRA provisions may result in the complete loss of the opportunity to continue health insurance coverage.
Homeowner’s or Fire Insurance: A homeowner’s or fire insurance policy covering residential property remains in effect regardless of divorce or change of ownership between the spouses, unless excluded by endorsement, until regular expiration or cancellation of the policy. Tex. Ins. Code § 2002.003.
Automobile Insurance: Automobile insurance coverage continues during a period of separation in contemplation of divorce. Tex. Ins. Code § 1952.056.
§ 23.8Debts and Tax Liabilities
The court’s authority to divide the estate of the parties includes the authority to order one of the parties to pay liabilities incurred during marriage. The court’s award cannot prejudice the rights of creditors, but, as between husband and wife, it may award property to one party and liabilities incurred during marriage to the other. Johnson v. Johnson, 948 S.W.2d 835, 838 (Tex. App.—San Antonio 1997, pet. denied) (liabilities incurred during marriage must be paid; if parties cannot agree, it is duty of trial court to enter appropriate order).
However, taxes on community income must be specifically addressed to a party. General language ordering one party to pay the “community debts” is not sufficient to include an obligation to pay taxes on community income. Brooks v. Brooks, 515 S.W.2d 730, 733 (Tex. App.—Eastland 1974, writ ref’d n.r.e.).
COMMENT: While decrees often require a party to be responsible for the taxes associated with the property awarded to that party or confirmed as the party’s separate property, the parties should also address the tax consequences of any assets that were disposed of during the year of divorce but before the date of divorce. For example, if, in the year of divorce, a wife sold shares of stock in her name to pay her husband’s interim attorney’s fees and temporary spousal support, should the wife, the husband, or both the wife and the husband be responsible for the tax resulting from that sale?
§ 23.9Spousal Maintenance and Contractual Alimony
Spousal Maintenance: The purpose of spousal maintenance is to provide temporary and rehabilitative support for a spouse whose ability to support himself has eroded over time while engaged in homemaking activities and whose capital assets are insufficient to provide support. Howe v. Howe, 551 S.W.3d 236, 256 (Tex. App.—El Paso 2018, no pet.). There are several scenarios for which Texas law allows an award of spousal maintenance at the time of divorce. See Tex. Fam. Code § 8.051. In all cases, the spouse seeking maintenance must lack sufficient property, including his separate property, on dissolution of the marriage to provide for his minimum reasonable needs. Tex. Fam. Code § 8.051. Such maintenance may be granted if the party from whom maintenance is requested was convicted of or received deferred adjudication for a criminal offense that also constitutes an act of family violence, as defined by Family Code section 71.004, committed during the marriage against the other spouse or the other spouse’s child and the offense occurred within two years before the date on which the suit was filed or while the suit is pending. Tex. Fam. Code § 8.051(1). Alternatively, maintenance may be granted if the spouse seeking maintenance (1) is unable to earn sufficient income to provide for his minimum reasonable needs because of an incapacitating physical or mental disability or (2) has been married to the other spouse for ten years or longer and lacks the ability to earn sufficient income to provide for his minimum reasonable needs or (3) is the custodian of a child of the marriage of any age who requires substantial care and personal supervision because of a physical or mental disability that prevents the spouse from earning sufficient income to provide for his minimum reasonable needs. Tex. Fam. Code § 8.051(2).
The trial court is not required to determine whether a spouse seeking spousal support will be able to provide for his minimum reasonable needs at some point in the future. The trial court must only consider the requesting spouse’s eligibility for maintenance at the time of the divorce. Castillo v. Castillo, No. 13-16-00174-CV, 2018 WL 1960168, at *3 (Tex. App.—Corpus Christi–Edinburg Apr. 26, 2018, no pet.) (mem. op.).
A spouse is not required to spend down long-term assets, liquidate all available assets, or incur new debt simply to obtain job skills and meet needs in the short term. Trueheart v. Trueheart, No. 14-02-01256-CV, 2003 WL 22176626, at *3 (Tex. App.—Houston [14th Dist.] Sept. 23, 2003, no pet.) (mem. op.); see also Alfayoumi v. Alzoubi, No. 13-15-00094-CV, 2017 WL 929482, at *2 (Tex. App.—Corpus Christi–Edinburg Mar. 9, 2017, no pet.) (mem. op.) (wife not required to spend down $250,000 in gold awarded to her to meet her short-term needs).
The term “minimum reasonable needs” is not defined in the Family Code. A trial court determines whether a party’s minimum reasonable needs are met on a fact-specific, individualized, case-by-case basis. Howe, 551 S.W.3d at 256. A court abuses its discretion if it awards maintenance when there is insufficient evidence of the requesting spouse’s minimum reasonable needs. See Howe, 551 S.W.3d at 257. A court also abuses its discretion in awarding maintenance if the requesting spouse will receive more income than his proven minimum reasonable needs. The income can include Social Security benefits and payments for a judgment awarded to the requesting spouse by the court as part of the property division. See Willis v. Willis, 533 S.W.3d 547, 556 (Tex. App.—Houston [14th Dist.] 2017, no pet.).
The ten-year marriage requirement is measured as of the time of trial, not the time of filing suit. See Hipolito v. Hipolito, 200 S.W.3d 805 (Tex. App.—Dallas 2006, pet. denied).
Texas Family Code section 8.053 creates a rebuttable statutory presumption against the award of spousal maintenance based on a marriage of ten years or longer. To rebut this presumption, the requesting spouse must show he has exercised diligence in (1) earning sufficient income to provide for his minimum reasonable needs or (2) in developing the necessary skills to provide for his minimum reasonable needs during separation and during the pendency of the dissolution suit. Tex. Fam. Code § 8.053; see Day v. Day, 452 S.W.3d 430 (Tex. App.—Houston [1st Dist.] 2014, pet. denied). Evidence that a requesting spouse had exercised diligence in attempting to develop necessary skills to provide for the spouse’s minimum reasonable needs was sufficient to rebut this presumption. See Arellano v. Arellano, No. 01-16-00854-CV, 2018 WL 284333, at *4 (Tex. App.—Houston [1st Dist.] Jan. 4, 2018, no pet.) (mem. op.). A requesting spouse’s high-school education, twenty years of marriage as a homemaker, work at a low-paying job, lack of transportation, and child-rearing responsibilities also were sufficient to rebut this presumption. See In re Marriage of Eilers, 205 S.W.3d 637, 646 (Tex. App.—Waco 2007, pet. denied).
If the court determines that the requesting spouse is eligible for postdivorce spousal maintenance, the court may consider a multitude of factors in deciding on the nature, amount, duration, and manner of the periodic payments. Among these factors are—
1.each spouse’s ability to provide for that spouse’s minimum reasonable needs independently, considering that spouse’s financial resources on dissolution of the marriage;
2.the education and employment skills of the spouses, the time necessary to acquire sufficient education or training to enable the spouse seeking maintenance to earn sufficient income, and the availability and feasibility of that education or training;
3.the duration of the marriage;
4.the age, employment history, earning ability, and physical and emotional condition of the spouse seeking maintenance;
5.the effect on each spouse’s ability to provide for that spouse’s minimum reasonable needs while providing periodic child support payments or maintenance, if applicable;
6.acts by either spouse resulting in excessive or abnormal expenditures or destruction, concealment, or fraudulent disposition of community property, joint tenancy, or other property held in common;
7.the contribution by one spouse to the education, training, or increased earning power of the other spouse;
8.the property brought to the marriage by either spouse;
9.the contribution of a spouse as homemaker;
10.marital misconduct, including adultery and cruel treatment, by either spouse during the marriage; and
11.any history or pattern of family violence, as defined by Family Code section 71.004.
Tex. Fam. Code § 8.052. These factors apply only once the trial court had determined that a spouse is eligible for spousal support. Howe, 551 S.W.3d at 257.
The court may not deny a request for maintenance on the basis that the spouse could acquire additional debts to meet monthly expenses. Limbaugh v. Limbaugh, 71 S.W.3d 1, 15 (Tex. App.—Waco 2002, no pet.).
If the spouse seeking maintenance is not suffering from an impediment that diminishes the ability to meet minimum reasonable needs, the court must limit the time the spouse receives court-ordered spousal maintenance to the shortest reasonable period sufficient for that spouse to earn sufficient income to provide for his minimum reasonable needs. The court may not order maintenance that remains in effect for more than five years after the date of the order if the spouses were married for less than ten years and eligibility for maintenance is based on family violence or if the spouses were married for at least ten but not more than twenty years; the limit is seven years if the spouses were married for at least twenty but not more than thirty years; the limit is ten years if the spouses were married for thirty years or more. See Tex. Fam. Code § 8.054(a).
However, an order of longer duration may be made for a spouse who is unable to earn sufficient income because of having an incapacitating physical or mental disability (Code section 8.051(2)(A)) or because of being the custodian of a child who requires substantial care and personal supervision because of a physical or mental disability (Code section 8.051(2)(C)). In these circumstances, the court may order maintenance for as long as the spouse continues to satisfy those eligibility criteria. Tex. Fam. Code § 8.054(b). On its own motion or that of a party, the court may order periodic review of such an order. Tex. Fam. Code § 8.054(c). Continuation of maintenance under these circumstances is subject to a motion to modify under Family Code section 8.057. Tex. Fam. Code § 8.054(d). An order may require that payment of spousal maintenance continue until “further order of the court.” Summerville v. Bright, No. 05-19-00989-CV, 2020 WL 3566721 (Tex. App.—Dallas July 1, 2020, no pet.) (mem. op.).
The amount awarded may be modified by the filing of a motion in the court that originally rendered the order. A party affected by the order may file the motion to modify. Tex. Fam. Code § 8.057(a). The person seeking the modification must plead and prove that there has been a material and substantial change in circumstances that occurred after the date of the order, including circumstances reflected in the factors specified in Code section 8.052, relating to either party or to a child of the marriage requiring substantial care and personal supervision because of a physical or mental disability. The court shall apply the modification only to payment accruing after the filing of the motion and may not increase maintenance to an amount or duration that exceeds the amount or remaining duration of the original maintenance order. Tex. Fam. Code § 8.057(c); see Carlin v. Carlin, 92 S.W.3d 902, 911 (Tex. App.—Beaumont 2002, no pet.) (in suit to extend maintenance, former wife did not establish by preponderance of evidence that she had incapacitating disability and that disability prevented her from supporting herself through appropriate employment). But see Crane v. Crane, 188 S.W.3d 276 (Tex. App.—Fort Worth 2006, pet. denied) (continuation of spousal maintenance based on incapacitating physical or mental disability is not modification of spousal maintenance and places no special burden of proof on movant other than to prove by preponderance of evidence that disability is continuing).
Medical testimony regarding disability or prognosis based on medical probability is not required to support a claim for spousal maintenance. In fact, no expert testimony of any kind is required to make a case for postdivorce spousal maintenance. The trial court may infer disability from the circumstances. Pickens v. Pickens, 62 S.W.3d 212, 215–16 (Tex. App.—Dallas 2001, pet. denied); see also Galindo v. Galindo, No. 04-13-00325-CV, 2014 WL 1390474, at *2 (Tex. App.—San Antonio Apr. 9, 2014, no pet.) (mem. op.) (trial court could infer incapacity from evidence of long-term medical issues even though wife did not feel she was disabled). However, a spouse’s uncontradicted testimony that she is disabled does not require a court to award spousal maintenance for an indefinite duration. Caudillo v. Caudillo, No. 07-19-00198-CV, 2020 WL 1980524 (Tex. App.—Amarillo Apr. 24, 2020, no pet.) (mem. op.).
The obligation to pay spousal maintenance terminates on the death of either party, remarriage of the obligee, or a court finding of cohabitation of the obligee with another person with whom the obligee has a dating or romantic relationship in a permanent place of abode on a continuing basis. Termination, whether as a result of death or remarriage or a court order based on cohabitation, does not terminate the obligation to pay any maintenance that accrued before the date of termination. Tex. Fam. Code § 8.056.
An agreed maintenance provision, enforceable as a contract, is not subject to Family Code chapter 8 treatment merely because it references chapter 8 or recites that a spouse is eligible for spousal maintenance under chapter 8. However, if the agreement expressly provides that the maintenance may be terminated or modified by court order, the trial court has the authority to address those matters under statutory grounds. Waldrop v. Waldrop, 552 S.W.3d 396 (Tex. App.—Fort Worth 2018, no pet.).
“Maintenance” means an award in a suit for dissolution of a marriage of periodic payments from the future income of one spouse for the support of the other spouse. Tex. Fam. Code § 8.001(1). An award of maintenance is limited to the lesser of $5,000 or 20 percent of the paying spouse’s average monthly gross income. Tex. Fam. Code § 8.055(a). Gross income is defined in Tex. Fam. Code § 8.055(a–1). For purposes of Code chapter 8, gross income includes “wage and salary income and other compensation for personal services” and other specified types of “income.” See Tex. Fam. Code § 8.055(a–1)(1). The statute also identifies certain items not included in gross income, such as return of principal or capital, accounts receivable, and benefits provided by certain government programs. See Tex. Fam. Code § 8.055(a–1)(2). Incumbent in a spousal maintenance award is the obligor spouse’s ability to earn income to satisfy the maintenance obligation. Mathis v. Mathis, No. 12-17-00049-CV, 2018 WL 1324777, at *4 (Tex. App.—Tyler Mar. 15, 2018, no pet.) (mem. op.) (incarcerated spouse lacks “income” from any source identified in Code section 8.055(a–1)).
Spousal maintenance may be subject to an order or writ of income withholding. See Tex. Fam. Code §§ 8.101–.108. Only an amount (including any amount being withheld for child support) up to 50 percent of the obligor’s disposable earnings is subject to withholding. Tex. Fam. Code § 8.106.
If an obligor is ordered to pay an obligee both spousal maintenance under Family Code chapter 8 and child support under chapter 154, the court must order payment of the maintenance to the state disbursement unit. Tex. Fam. Code § 8.062.
For a discussion of the enforcement of spousal maintenance and the return of any overpayments, see chapter 32 of this manual.
The court that rendered an order for the payment of maintenance has continuing jurisdiction to render enforceable qualified domestic relations orders or similar orders (QDROs) permitting payment of pension, retirement plan, or other employee benefits to an alternate payee or other lawful payee to satisfy amounts due under the maintenance order. Tex. Fam. Code § 8.351(a). For a discussion of the use of QDROs for payment of spousal maintenance, see chapter 25 of this manual.
Spousal maintenance is not property. O’Carolan v. Hopper, 71 S.W.3d 529, 533 (Tex. App.—Austin 2002, no pet.). A court may not award maintenance in lieu of any interest in the available community property. O’Carolan, 71 S.W.3d at 533–34.
The court has the authority to render a spousal maintenance award only in a suit for dissolution of marriage or, after a dissolution of marriage by a court that did not have personal jurisdiction over an absent spouse, in a proceeding for maintenance in a court that has personal jurisdiction over both former spouses. Tex. Fam. Code § 8.051. Loss of job or incapacitating disability occurring after the original order cannot be grounds for the institution of spousal maintenance. Tex. Fam. Code § 8.057(d).
Contractual Alimony: The husband and wife can agree to an alimony contract that is enforceable under Texas law as a contract. Francis v. Francis, 412 S.W.2d 29, 33 (Tex. 1967). An affidavit of sponsorship for an alien spouse creates a contractual support obligation that the court cannot modify. In re Marriage of Kamali & Alizadeh, 356 S.W.3d 544, 547 (Tex. App.—Texarkana 2011, no pet.). Chapter 8 of the Family Code also provides that an order for maintenance or an agreement for periodic payments of maintenance voluntarily entered into between the parties and approved by the court may be enforced by contempt. Tex. Fam. Code § 8.059(a). This provision applies only to agreements that would qualify for maintenance in both amount and duration under Family Code chapter 8 (with a $5,000 monthly cap and, generally, a limit of five to ten years). See In re Green, 221 S.W.3d 645 (Tex. 2007) (orig. proceeding) (per curiam); Kee v. Kee, 307 S.W.3d 812 (Tex. App.—Dallas 2010, pet. denied). A court cannot order wage withholding to enforce payment of contractual alimony. Heller v. Heller, 359 S.W.3d 902 (Tex. App.—Beaumont 2012, no pet.). However, section 8.101 allows withholding for agreed periodic payments to the extent that they do not exceed in amount or duration maintenance that the court could have ordered. See Tex. Fam. Code § 8.101. See chapter 32 of this manual concerning enforcement of spousal maintenance provisions.
Tax Considerations of Alimony and Maintenance: Federal tax treatment of alimony and separate maintenance payments differs depending on when the underlying decree or agreement was executed or, in some instances, modified. Under recent amendments to the Internal Revenue Code, longstanding provisions regarding the deductibility and taxation of such payments will no longer be in effect for instruments executed after December 31, 2018, or for instruments executed on or before that date but modified thereafter if the modification expressly provides that the amended law applies to the modification. See Tax Cuts and Jobs Act, Pub. L. No. 115-97, § 11051(c), 131 Stat. 2054 (2017). The provisions set out below apply only to payments under decrees and agreements executed before January 1, 2019, and not thereafter modified to apply the new law.
Note: Internal Revenue Code sections 62(a)(10), 71, and 215, cited below, were stricken in the 2017 Act and are effective only as noted above.
Sections 62(a)(10), 71, and 215 of the Internal Revenue Code provide for tax treatment of “alimony” and “separate maintenance” payments. Qualified payments under these sections are deductible in arriving at adjusted gross income by the payor (26 U.S.C. §§ 62(a)(10), 215) and are taxable to the payee as ordinary income (26 U.S.C. § 71). For the payments to qualify, the requirements are that—
1.the payment must be made in cash,
2.the payment must be received by (or on behalf of) a spouse pursuant to a divorce or separation instrument,
3.the liability to pay must be terminable on the death of the recipient,
4.the spouses involved must not file a joint return,
5.the spouses involved must not be in the same household when the payments are made,
6.the payment is not for child support or tied to any contingency relating to a child, and
7.the instrument involved does not designate the payment as a payment not includable in gross income under section 71 and not allowable as a deduction under section 215.
26 U.S.C. § 71(b), (c), (e); Temp. Treas. Reg. § 1.71–1T.
Payments of alimony in cash can also be made by checks and money orders payable on demand. Generally, transfers of services or property or the receiving spouse’s use of property owned by the payor spouse do not qualify as alimony. Temp. Treas. Reg. § 1.71–1T, Question 5. However, payments to a third party for the benefit of the payee spouse will generally qualify, as long as all the other requirements are met. Payments to maintain property owned by the payor spouse do not qualify, however. Payments made by the payor spouse of life insurance premiums on the payor spouse’s life will qualify as alimony to the extent that the payee spouse is the owner of the policy. Temp. Treas. Reg. § 1.71–1T, Question 6. Additionally, cash payments made by the payor spouse based on a specific written request of the payee spouse will qualify as alimony if all other requirements are met. Temp. Treas. Reg. § 1.71–1T, Question 7.
The alimony agreement must be in writing, and it must be in the form of (1) a decree of divorce or separate maintenance agreement, (2) a written instrument incident to such a decree, (3) a written separation agreement, or (4) a decree requiring a spouse to make payments for the support or maintenance of the other spouse. See 26 U.S.C. § 71(b)(2).
Further, there is no liability to make payments for any period after the death of the payee spouse and no liability to make any payment in cash or property as a substitute for such payments after the death of the payee spouse. 26 U.S.C. § 71(b)(1)(D). If the agreement provides that the payor spouse must make substitute payments after the death of the payee spouse, then the substitute payments as well as all other payments before the death of the payee spouse will fail to qualify as alimony. Temp. Treas. Reg. § 1.71–1T, Question 13.
The payor spouse will be required to recapture any “excess alimony payments.” The payor spouse must include the amount of the excess payments in gross income in the third postseparation year, and the payee spouse is entitled to a corresponding deduction in computing adjusted gross income. If payments in the first postseparation year exceed by more than $15,000 the average of the second-year payments (reduced by excess payments for that year) and the third-year payments, the excess amounts are subject to recapture. There are excess payments in the second year (which are also subject to recapture) if the second-year payments exceed the third-year payments by more than $15,000. See 26 U.S.C. § 71(f)(1)–(4). However, the recapture provisions will not be applicable—
1.to any spousal support under existing court-ordered temporary orders, 26 U.S.C. § 71(f)(5)(B); Temp. Treas. Reg. § 1.71–1T, Question 21;
2.to any fluctuating payments that are not within the control of the payor spouse, 26 U.S.C. § 71(f)(5)(C); and
3.when the payments of alimony cease by reason of the death of the payor spouse or the death or remarriage of the payee spouse, 26 U.S.C. § 71(f)(5)(A); Temp. Treas. Reg. § 1.71–1T, Question 25.
A number of contingencies that have frequently been included in alimony contracts, such as disability of the paying party or sale of specified real property, are not exceptions to the recapture rules.
A husband and wife may designate payments that would otherwise qualify as alimony to be nondeductible by the payor spouse and nontaxable to the payee spouse by so stating in a qualifying written agreement. 26 U.S.C. § 71(b)(1)(B); Temp. Treas. Reg. § 1.71–1T, Question 8. The designation must be in writing, and a copy of the written election must be attached to the payee spouse’s first filed income tax return for each year in which the designation applies. Temp. Treas. Reg. § 1.71–1T, Question 8. If the payor spouse deducts the payment, the payee spouse is required to furnish to the payor spouse his or her Social Security number, which the payor spouse must report on the payor spouse’s federal income tax return. Temp. Treas. Reg. § 1.215–1T, Question 1.
For information on the tax consequences of alimony, see IRS Publication 504 (“Divorced or Separated Individuals”).
Suits for Dissolution of Marriage: The court may award reasonable attorney’s fees and expenses in a suit for dissolution of a marriage. The fees and expenses and any postjudgment interest may be ordered paid directly to the attorney, who may enforce the order in the attorney’s own name by any means available for the enforcement of a judgment for debt. Tex. Fam. Code § 6.708(c). A spouse’s legal fees in a divorce proceeding are not necessaries. Tedder v. Gardner Aldrich, LLP, 421 S.W.3d 651, 655 (Tex. 2013).
Property Division: Attorney’s fees are a factor to be considered in making an equitable division of the estate, considering the conditions and needs of the parties and all the surrounding circumstances. Murff v. Murff, 615 S.W.2d 696, 699 (Tex. 1981); Carle v. Carle, 234 S.W.2d 1002, 1005 (Tex. 1950). The court may award attorney’s fees in making a just and right division of the community property. Gutierrez v. Gutierrez, 791 S.W.2d 659, 667 (Tex. App.—San Antonio 1990, no writ). If there is no community-property estate as a result of marital agreement, the court may not award attorney’s fees to a party. Chiles v. Chiles, 779 S.W.2d 127, 129 (Tex. App.—Houston [14th Dist.] 1989, writ denied), overruled on other grounds by Twyman v. Twyman, 855 S.W.2d 619, 624 (Tex. 1993). However, the court can award attorney’s fees when there is a negative community estate. See Powell v. Powell, 822 S.W.2d 181, 184 (Tex. App.—Houston [1st Dist.] 1991, writ denied).
Suits Affecting Parent-Child Relationship: In the suit affecting the parent-child relationship brought as part of a divorce proceeding, the court may render judgment for reasonable attorney’s fees and expenses and order the judgment and postjudgment interest to be paid directly to the attorney. A judgment for attorney’s fees and expenses may be enforced in the attorney’s name by any means available for the enforcement of a judgment for debt. Tex. Fam. Code § 106.002.
In a suit other than a suit filed by a governmental entity requesting termination of the parent-child relationship or appointment of the entity as conservator of the child, in addition to the attorney’s fees that may be awarded under Family Code chapter 106, the following persons are entitled to reasonable fees and expenses in an amount set by the court and ordered to be paid by one or more parties to the suit: (1) an attorney appointed as an amicus attorney or as an attorney ad litem for the child and (2) a professional who holds a relevant professional license and who is appointed as guardian ad litem for the child, other than a volunteer advocate. Tex. Fam. Code § 107.023(a). A friend of the court is entitled to compensation for services rendered and for expenses incurred in rendering those services. Tex. Fam. Code § 202.005(a).
Attorney’s Fees as Child Support: There is a split of authority on whether attorney’s fees may be awarded as child support or in the nature of child support. See the discussion in section 40.16 in this manual.
Attorney’s fees are discussed in chapter 20 of this manual.
§ 23.11Suit Affecting Parent-Child Relationship
The final decree of divorce entered in proceedings involving minor children of the marriage must also contain all of those provisions of a final order entered in a suit affecting the parent-child relationship.
A detailed discussion of the final order in suits affecting the parent-child relationship can be found in chapter 40 of this manual.
§ 23.12Managing Conservatorship
In a suit affecting the parent-child relationship, except as provided by Tex. Fam. Code § 153.004, the court may appoint joint managing conservators or may appoint a sole managing conservator. If the parents are or will be separated, the court shall appoint at least one managing conservator. A managing conservator must be a parent, a competent adult, the Department of Family and Protective Services, or a licensed child-placing agency. In making the appointment, the court must consider whether, before the suit was filed or while it is pending, a party engaged in a history or pattern of family violence, as defined by Code section 71.004; a party engaged in a history or pattern of child abuse or child neglect; or a final protective order was rendered against a party. Tex. Fam. Code § 153.005.
Provisions regarding the conservatorship of children can be found in Family Code chapter 153. For a detailed discussion of managing conservatorship, see chapter 40 of this manual.
§ 23.13Possessory Conservatorship
If a managing conservator is appointed, the court may also appoint one or more possessory conservators. Tex. Fam. Code § 153.006(a).
Provisions regarding conservatorship can be found in Family Code chapter 153. For a detailed discussion of possessory conservatorship, see chapter 40 of this manual.
§ 23.14Child Support Provisions
Provisions regarding child support can be found in Family Code chapter 154; subchapter C deals with the child support guidelines. For a detailed treatment of child support, see chapter 9 of this manual.
§ 23.15Withholding from Earnings for Child Support
The trial court must order income withholding directly from the obligor’s disposable earnings for the payment of child support. See Tex. Fam. Code § 158.001. Provisions regarding withholding from earnings for child support can be found in Family Code chapter 158. Section 158.011 contains procedures for filing a request by the obligor with the clerk of the court for voluntary withholding from earnings for child support. Subchapter D of chapter 158 deals with the issuance of judicial writs of withholding, and subchapter F deals with administrative writs of withholding in title IV-D cases. For a more detailed treatment of income withholding, see chapter 9 of this manual.
§ 23.16Medical and Dental Expenses of Children
Section 154.183(c) requires the court to allocate between the parties, according to their circumstances, the reasonable and necessary health-care expenses, including vision and dental expenses, of a child that are not reimbursed by health or dental insurance or otherwise covered by ordered cash medical support, as well as insurance deductibles or copayments paid by either party for the child. Tex. Fam. Code § 154.183(c).
Provisions regarding medical and dental expenses for the child are contained in the child support discussions found in chapter 9 of this manual.
§ 23.17Provisions for Possession and Access
It is the policy of Texas to encourage frequent contact between the child and each parent for periods of possession that optimize the development of a close and continuing relationship between each parent and the child. Tex. Fam. Code § 153.251(b).
Provisions regarding conservatorship can be found in subchapters E and F of Family Code chapter 153. For additional discussion of possession and access, see chapter 40 and chapter 41 of this manual.
§ 23.18Passport Application for Minors
Federal regulations control who may apply for a passport for a minor child. For a detailed discussion of these requirements, see section 40.25 in this manual.
§ 23.19Mandatory Provisions in Decrees Affecting Children
Family Code section 105.006 requires that certain information and provisions be included in final orders entered in a suit affecting the parent-child relationship. For a detailed discussion of these requirements, see section 40.22 in this manual.
§ 23.20Parent Education and Family Stabilization Course
In a suit affecting the parent-child relationship the court may order the parties to attend a parent education and family stabilization course if the court determines that the order is in the child’s best interests. Tex. Fam. Code § 105.009(a). For additional information, see section 40.24 in this manual.
The final order in a suit affecting the parent-child relationship must include a parenting plan. Tex. Fam. Code § 153.603. See the discussion in chapter 16 of this manual regarding parenting plans.
§ 23.22Limits to Enforcement of Support and Conservatorship Agreements Regarding Minors
Family Code section 153.007(c) limits enforcement of terms of an agreed parenting plan regarding support or conservatorship of or access to a minor child to enforcement by all remedies available for enforcement of a judgment, including contempt, but not as a contract. Tex. Fam. Code § 153.007(c); see also Hill v. Hill, 819 S.W.2d 570, 572–73 (Tex. App.—Dallas 1991, writ denied) (contract seeking to fix permanently amount of child support held void as against public policy).
COMMENT: Despite the language of section 153.007(c) precluding the enforcement of orders for the support of children by contract, contracts entered into before September 1, 1995, remain enforceable.
§ 23.23Necessity of Evidence for Final Hearing in Divorce Default
In a suit for divorce, the petition may not be taken as confessed if the respondent does not file an answer. Tex. Fam. Code § 6.701. The statute requires the petitioner, in a suit for divorce, to present proof to support the material allegations in the petition despite a respondent’s failure to answer. O’Neal v. O’Neal, 69 S.W.3d 347, 349 (Tex. App.—Eastland 2002, no pet.).
A petitioner’s conclusions at a default final divorce hearing regarding character of property, division of property, periods of possession of the child, and child support are insufficient by themselves for a court to make a default judgment. Evidence must be introduced by the petitioner as to value of property, character of separate property, and income or financial ability to pay child support. O’Neal, 69 S.W.3d at 350. See also Smith v. Hickman, No. 04-19-00182-CV, 2020 WL 1442663, at *2 (Tex. App.—San Antonio Mar. 25, 2020, no pet.) (mem. op.) (abuse of discretion for court to enter decree of divorce providing for conservatorship, child support, and property division without sufficient evidence). In a default divorce proceeding, the making of a record cannot be waived, because the responding party’s failure to answer does not serve to confess the allegations of the petition and there must be a record containing sufficient evidence to support the default judgment. Short v. Short, No. 05-21-00095-CV, 2022 WL 405821 (Tex. App.—Dallas Feb. 10, 2022, no pet.) (mem. op.). Without a proper valuation of the spouses’ community assets and liabilities, the trial court cannot properly exercise its discretion in making a just and right division of the community estate. Pena v. Pena, No. 13-17-00585-CV, 2018 WL 3301920, at *3 (Tex. App.—Corpus Christi–Edinburg July 5, 2018, no pet.) (mem. op.). However, if the respondent fails to appear and properly assert his separate-property interests, the community-property presumption prevails; characterization of these interests as community property is not a divestiture of separate property but a necessary classification of property in compliance with the community-property presumption. Pearson v. Fillingim, 332 S.W.3d 361 (Tex. 2011) (per curiam).
If English is not the primary language of one of the parties, evidence should be presented that the non-English-speaking party either is able to understand the proceedings or has been provided a competent interpreter. Chisholm v. Chisholm, 209 S.W.3d 96 (Tex. 2006) (per curiam).
§ 23.24Employment and Retirement Benefits
Retirement benefits accrued during a marriage are presumptively community property, but those accrued before or after marriage are not. Howard v. Howard, 490 S.W.3d 179, 184 (Tex. App.—Houston [1st Dist.] 2016, pet. denied).
Where the divorce decree awarded the wife a portion of the husband’s pension ac-counts as of a valuation date and did not expressly award her postdivorce contributions and increases, the wife was not entitled to postdivorce increases in value. Tatum v. Tatum, No. 14-19-0072-CV, 2020 WL 2832104 (Tex. App.—Houston [14th Dist.] May 28, 2020, pet. denied) (mem. op.).
A judge’s intention to render a qualified domestic relations order (QDRO) in the future cannot be a present rendition of a QDRO. Family Code chapter 9 governs obtaining a QDRO when the trial court that rendered a final decree of divorce did not enter a QDRO or similar order permitting payment of benefits to an alternate payee or other lawful payee. Araujo v. Araujo, 493 S.W.3d 232, 237 (Tex. App.—San Antonio 2016, no pet.).
Provisions in a decree that is not a QDRO are not sufficient to affect a spouse’s entitlement to benefits from an employee pension benefit plan governed by ERISA. The United States Supreme Court has addressed the issue of whether the terms of 29 U.S.C. § 1056(d)(1), barring the assignment or alienation of benefits, “invalidated the act of a divorced spouse, the designated beneficiary under her ex-husband’s ERISA pension plan, who purported to waive her entitlement by a federal common law waiver embodied in a divorce decree that was not a QDRO.” Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285, 288 (2009). The Supreme Court held that “such a waiver is not rendered invalid by the text of the antialienation provision, but that the plan administrator properly disregarded the waiver owing to its conflict with the designation made by the former husband in accordance with plan documents.” Kennedy, 555 U.S. at 288.
COMMENT: A client who is a participant in an ERISA plan must be advised to immediately make any desired beneficiary designations in accordance with the formalities required by the plan administrator if benefits under the plan are not addressed by a QDRO.
A QDRO may be used not only to effect a property division, but also to satisfy amounts due under orders for spousal maintenance or child support. See Tex. Fam. Code §§ 8.351–.359, 157.501–.508.
Employment and retirement benefits are the subject of chapter 25 of this manual.
A court may not prohibit a person from executing a new will, executing a codicil to an existing will, or revoking an existing will or codicil in whole or in part. Any portion of a court order that purports to prohibit a person from engaging in any of those actions is void and may be disregarded without penalty or sanction. Tex. Est. Code § 253.001.
[Sections 23.26 through 23.30 are reserved for expansion.]
II. Agreements Incident to Divorce
§ 23.31Agreement Incident to Divorce—Generally
Purpose: Texas public policy encourages the amicable settlement of disputes in divorce cases. Accordingly, spouses may enter into a written agreement concerning the division of the property and liabilities of the spouses and maintenance of either spouse. See Tex. Fam. Code § 7.006(a). If minor children are involved, the agreement (called an “agreed parenting plan”) may also contain provisions regarding child custody, visitation, and child support. See Tex. Fam. Code § 153.007. Once the court approves an agreement incident to divorce, the court will render an order in accordance with the agreement, either by setting forth the agreement in full within the order or by incorporating the agreement by reference in the final decree. Tex. Fam. Code §§ 7.006(b), 153.007(b). A final decree that provides that it was rendered after considering the evidence, as well as the signed agreements and stipulations of the parties, is a valid consent judgment and, as such, is enforceable as both a judgment and a contract. See Allen v. Allen, 717 S.W.2d 311, 313 (Tex. 1986).
COMMENT: Agreements incident to divorce, when contained in a separate agreement, do not have to be filed with the court, and many attorneys choose not to file those agreements in order to protect the client’s confidential information with regard to property. Whether in a separate document or included within the text of the decree, agreements incident to divorce must be used if the parties wish to agree to perform certain acts that the court may not order them to perform. Such agreements are contracts and should contain the elements of a contract in order to afford the remedies available under contract law. However, the attorney should avoid merely incorporating by reference provisions for the support, conservatorship, or visitation of minor children but should set forth these provisions with specific order language within the final decree itself. Any provisions of the agreement that will be subject to enforcement by contempt should be included in the actual court order.
Contractual Alimony: Parties may enter into agreements for the payment of alimony above and beyond in amount and duration that which the court could order as spousal maintenance. See section 23.9 above for an explanation of the tax implications for certain agreements entered before January 1, 2019.
The Family Code provides that the court may enforce by contempt maintenance agreements “voluntarily entered into between the parties and approved by the court.” Tex. Fam. Code § 8.059(a). This provision applies only to agreements that qualify as maintenance in both amount and duration under Family Code chapter 8 (with a $5,000 monthly cap and, generally, a limit of five to ten years). See In re Green, 221 S.W.3d 645 (Tex. 2007) (orig. proceeding) (per curiam). See chapter 32 of this manual concerning enforcement of spousal maintenance provisions.
Additional Contractual Provisions: Although sections 153.007 and 154.124 preclude the enforcement as contracts of agreements regarding child support, certain provisions, such as agreements to pay for post-high school education, automobiles, wedding expenses, COBRA premiums, and so forth, are enforceable by contract and should be contained in an agreement incident to divorce or agreed decree containing the provisions of an agreement incident to divorce. Burtch v. Burtch, 972 S.W.2d 882, 885–90 (Tex. App.—Austin 1998, no pet.) (finding provisions of agreement incident to divorce contained in agreed decree requiring father to pay for college expenses of child were enforceable as contract).
§ 23.32Property-Settlement Agreement
Once the property-settlement agreement is adopted by the decree, the judgment becomes a consent judgment, carrying with it the attributes and problems of a consent judgment. See Peddicord v. Peddicord, 522 S.W.2d 266, 267 (Tex. App.—Beaumont 1975, writ ref’d n.r.e.); see also Lee v. Lee, 509 S.W.2d 922 (Tex. App.—Beaumont 1974, writ ref’d n.r.e.). In rendering judgment on the parties’ settlement agreement, the trial court may not supply terms, provisions, or conditions that were not previously agreed to by the parties. A consent judgment must be in strict compliance with the terms of the parties’ settlement agreement. Snider v. Snider, 343 S.W.3d 453 (Tex. App.—El Paso 2010, no pet.).
The agreement may be revised or repudiated before rendition of the divorce unless it is binding under another rule of law. Tex. Fam. Code § 7.006(a); see also Tex. Fam. Code § 6.602(c) (requiring enforcement of mediated settlement agreements meeting specific statutory requirements); Cayan v. Cayan, 38 S.W.3d 161 (Tex. App.—Houston [14th Dist.] 2000, pet. denied) (divorce decree properly entered based on mediated settlement agreement despite husband’s repudiation). But see Boyd v. Boyd, 67 S.W.3d 398, 404–05 (Tex. App.—Fort Worth 2002, no pet.) (husband’s failure to disclose substantial community assets rendered mediated settlement agreement unenforceable, despite catch-all provision in the agreement).
The terms of the agreement are binding on the court if it finds that the agreement is just and right. An agreement approved by the court may be set forth in full or incorporated by reference in the final decree. An agreement incorporated by reference is not required to be filed with the court or the court clerk. Tex. Fam. Code § 7.006(b). If the court finds the agreement is not just and right, the court may request the spouses to submit a revised agreement or may set the case for a contested hearing. Tex. Fam. Code § 7.006(c).
Consent must exist at the time the consent judgment is rendered. A consent judgment must also be in strict compliance with the parties’ agreement. When a consent judgment is rendered without consent or is not in strict compliance with the terms of the agreement, the judgment must be set aside. Chisholm v. Chisholm, 209 S.W.3d 96, 98 (Tex. 2006) (per curiam). Approval of a settlement does not necessarily constitute rendition of judgment. Judgment is rendered when the trial court officially announces its decision in open court or by written memorandum filed with the clerk. S & A Restaurant Corp. v. Leal, 892 S.W.2d 855, 857 (Tex. 1995). The judge’s intention to render judgment in the future cannot be a present rendition of judgment. The rendition of judgment is a present act, either by spoken word or signed memorandum, that decides the issues on which the ruling is made. The words used by the trial court must clearly indicate the intent to render judgment at the time the words are expressed. Leal, 892 S.W.2d at 858. Words indicating what the trial judge “will grant” and “will approve” do not signify a present rendition of judgment. Hall v. Hall, No. 05-16-01141-CV, 2018 WL 1373951, at *2 (Tex. App.—Dallas Mar. 19, 2018, no pet.) (mem. op.).
However, even if a party repudiates its agreement before rendition of the divorce, the agreement incident to divorce may still be enforceable as a contract and the other party may be able to recover damages for its breach. Cary v. Cary, 894 S.W.2d 111, 112–13 (Tex. App.—Houston [1st Dist.] 1995, no writ).
Under the Texas Family Code, mediated settlement agreements meeting certain statutory formalities are binding on the parties and require rendition of a divorce decree adopting the parties’ agreement. Tex. Fam. Code § 6.602(b), (c). To be binding, a mediated settlement agreement must provide, in a prominently displayed statement with boldfaced type or capital letters or underlined, that the agreement is not subject to revocation and must be signed by each party and the parties’ attorneys, if any, present at the time the agreement is signed. Tex. Fam. Code § 6.602(b).
Parties to a mediated settlement agreement need not agree to all of the provisions to be contained in the divorce decree. Haynes v. Haynes, 180 S.W.3d 927, 930 (Tex. App.—Dallas 2006, no pet.). They are required only to reach an agreement as to all material terms, and a trial court has no discretion to enter a decree that varies from those terms. Haynes, 180 S.W.3d at 930; In re Marriage of Joyner, 196 S.W.3d 883, 890–91 (Tex. App.—Texarkana 2006, pet. denied). Terms necessary to effectuate and implement the parties’ agreement do not affect the agreed substantive division of property and may be left to future articulation by the parties or consideration by the trial court. Haynes, 180 S.W.3d at 930.
A court applies contract principles to interpret a mediated settlement agreement’s meaning. If an agreement can be given a certain or definite legal meaning, it is unambiguous. An unambiguous agreement must be enforced as written as a matter of law. Toler v. Sanders, 371 S.W.3d 477, 480 (Tex. App.—Houston [1st Dist.] 2012, no pet.).
[Sections 23.33 through 23.40 are reserved for expansion.]
§ 23.41Tax Considerations Generally
COMMENT: When dealing with tax issues, the practitioner or client should consult with a certified public accountant, tax attorney, or other tax professional.
These notes are presented as a quick reference to the most common tax considerations in a divorce case. They are meant only to make the practitioner aware of the potential areas that may be affected and are by no means complete and do not exhaust the possible tax considerations in a divorce. They are meant to be helpful in calling the problems to mind for further consideration and research.
A person’s filing status is determined by his marital status as of the last day of the tax year. Thus, if a final decree of divorce is obtained on or before the last day of the tax year, the parties are considered unmarried for the entire year, cannot file jointly, and must file single returns. 26 U.S.C. § 7703(a); Treas. Reg. § 1.6013–4. Lower rates are available if a spouse meets the requirements of head of household. See 26 U.S.C. §§ 1(b), 2(b).
If a husband and wife are separated, they are considered married for the entire year if on the last day of the tax year no final decree of divorce has been obtained. Treas. Reg. § 1.6013–4. As married individuals, they may file jointly or as married filing separately; they may file a joint return even if one had no income or deductions. 26 U.S.C. § 6013; Treas. Reg. § 1.6013–1(a)(1).
However, a married person who is separated from the other spouse may elect to file as head of household if—
1.the taxpayer files a separate return;
2.the taxpayer’s household was, for more than six months of the year, the principal residence of a child (as described in the statute) of the taxpayer;
3.the taxpayer provided more than one-half of the costs of maintaining the household; and
4.the taxpayer’s spouse did not live in the home during the last six months of the year.
26 U.S.C. § 7703(b); see also 26 U.S.C. § 2(c).
The head-of-household filing status will also be available to the separated spouse if the separated spouse meets the tests set forth in items 1., 3., and 4. above and if the child resided with the taxpayer spouse for more than six months of the year.
The custodial parent has the right to file a return claiming head-of-household status even if that parent is not entitled to the dependency exemption for the child. 26 U.S.C. § 2(b).
Tax Returns: A joint return must include all income, exemptions, and deductions of both spouses. Generally, both spouses are jointly and severally liable for the tax due on a joint return. Treas. Reg. § 1.6013–4(b). Thus, a spouse may be liable for the entire tax even though all the income was earned by the other spouse. If the husband and wife file as married filing separately, each is liable only for the tax due on his or her own return. See Edith Stokby, 26 T.C. 912(A) (1956).
Generally, any income characterized by Texas law as community income is taxed half to each spouse; that is, the community income of both spouses is combined and half the total is included in each spouse’s gross income, along with any separate income of that spouse. Effective for tax years after 1980, however, section 66 of the Internal Revenue Code eliminates the requirement that each spouse report one-half of the other’s income and treats income as belonging to the spouse who earned it only if—
1.the spouses must live apart for the entire calendar year,
2.a joint return is not filed,
3.at least one spouse has “earned income” for the year (as distinguished from “passive” or “investment” income), and
4.no portion of the earned income was transferred between the spouses.
The Internal Revenue Service (IRS) may disallow the benefits of any community-property law to a taxpayer with respect to any income if the taxpayer—
1.acted as if he or she were solely entitled to the income and
2.failed to notify the taxpayer’s spouse before the due date for filing the return for the taxable year in which the income was derived of the nature and amount of such income.
However, a spouse who meets the requirements of an “innocent spouse,” as set forth in section 23.50 below, may be relieved of liability.
While forms 23-1 and 23-6 in this manual include provisions for addressing the division of tax liabilities for predivorce years, changes to the Internal Revenue Code and IRS regulations require careful consideration of the use of this or similar language if there is an entity taxed as a partnership for federal income tax purposes. The Bipartisan Budget Act of 2015 created a new centralized partnership audit regime that generally assesses and collects tax at the partnership level, not the partner level, resulting from an audit of the partnership. Pub. L. No. 114-74, § 1101, 129 Stat. 584 (2015). This new audit regime, set out in 26 U.S.C. §§ 6221–6241, commences with partnership tax years beginning in 2018. Partnership tax years before 2018 are governed by the old audit rules, while those beginning in 2018 are governed by the new audit rules. The new audit regime applies to any entity taxed as a partnership for federal income tax purposes. Thus, entities formed and taxed as partnerships are subject to the audit regime, as well as joint ventures and limited liability companies taxed as partnerships. Charles D. Pulman & Matthew L. Roberts, New Partnership Tax Audit and Collection Rules Impact Divorce Property Settlements, State Bar of Texas Family Law Section Report (Spring 2018). The new audit regime significantly changes the obligations and liabilities of the parties to divorce instruments with respect to the partnership interest and the economic consequences of an IRS audit of a partnership with the result that what should have been a predivorce year tax liability of the parties turns out to be a postdivorce year tax liability of the partnership arising out of an IRS audit of a predivorce year of the partnership. Charles D. Pulman & Matthew L. Roberts, New Partnership Tax Audit and Collection Rules Impact Divorce Property Settlements, State Bar of Texas Family Law Section Report (Spring 2018).
State law controls whether income is separate or community property. United States v. Mitchell, 403 U.S. 190 (1971); Hopkins v. Bacon, 282 U.S. 122 (1930). When the community’s assets are divided between the spouses, any subsequent income and accumulations are separate income and taxable only to the spouse to whom they belong. For the tax year during which the community is dissolved, however, each spouse is still liable for taxes on half the community income for the part of the year before divorce.
For further information on whether to file jointly, separately, or as head of household and on the effect of community property when filing individual tax returns, see IRS Publication 504 (“Divorced or Separated Individuals”), which can be found at www.irs.gov/pub/irs-pdf/p504.pdf.
COMMENT: The potential tax effects of property division require the most careful consideration and should be evaluated not only for settlement purposes but also for presentation to the court if the case is tried. When dealing with the federal tax implications of a proposed division of property, the practitioner or client should consult with a certified public accountant, tax attorney, or other tax professional.
No gain or loss is recognized when property is transferred between spouses or between former spouses “incident to the divorce.” 26 U.S.C. § 1041(a). The spouse receiving the property has a tax basis equal to that of the transferring spouse just before the transfer regardless of the property’s fair market value. 26 U.S.C. § 1041(b); Temp. Treas. Reg. § 1.1041–1T, Question 11. The loss disallowance rules of section 267 do not apply to such transfers. 26 U.S.C. § 267(g). Notwithstanding the nonrecognition rule of section 1041(a), the transferor must recognize gain under a transfer in trust to the extent that liabilities assumed by the trust exceed the transferor’s basis. The transferee’s basis is adjusted to take the gain into account. 26 U.S.C. § 1041(e). Gain must also be recognized when installment obligations are transferred to a trust. 26 U.S.C. § 453B(g).
The provisions of section 1041 are mandatory and not elective, and they will apply to all transfers between spouses regardless of whether a divorce is being contemplated and whether a divorce ever occurs. Temp. Treas. Reg. § 1.1041–1T, Question 2. (But see Temp. Treas. Reg. § 1.1041–1T, Question 9, relating to the transfer of property to a third party for or on behalf of a former or present spouse.)
The general rule regarding a transfer between present or former spouses applies to a transfer of any type of property but does not apply to a transfer of services. See 26 U.S.C. § 1041; Temp. Treas. Reg. § 1.1041–1T, Question 4.
The transferor of property under section 1041 recognizes no gain or loss on the transfer regardless of whether the property being transferred is characterized as separate or community property and regardless of whether the actual division of the property is equal or unequal. Temp. Treas. Reg. § 1.1041–1T, Question 10.
Transfers pursuant to an annulment will also qualify as a nontaxable event under section 1041. Temp. Treas. Reg. § 1.1041–1T, Question 8.
The term incident to the divorce is defined as (1) a transfer that occurs within one year after the date on which the marriage ceases or (2) a transfer that is related to the cessation of the marriage. 26 U.S.C. § 1041(c). The date on which the marriage ceases is determined by applicable state law.
A transfer of property is treated as related to the cessation of marriage if the transfer is pursuant to a decree of divorce, agreement incident to divorce, or separation agreement (including a modification or an amendment to the instrument) and the transfer occurs within six years after the marriage ceases. If either of those conditions is not met, the transfer of the property is presumed to be unrelated to the cessation of the marriage. This presumption may be rebutted only by showing that the transfer was made to effect the division of property owned by the former spouses at the time of the cessation of the marriage. Temp. Treas. Reg. § 1.1041–1T, Question 7.
The receiving party will recognize no gain or loss on a section 1041 transfer and takes the property with the adjusted basis of the transferring party regardless of the property’s fair market value. Temp. Treas. Reg. § 1.1041–1T, Question 11.
Generally, the transfer alone will not cause the recapture of investment tax credit. Temp. Treas. Reg. § 1.1041–1T, Question 13. Further, tacking exists with respect to the recognition of a long-term capital gain or loss relating to the one-year holding period requirement. See 26 U.S.C. § 1223(2).
The transferring party must supply the receiving party with records sufficient to determine the adjusted basis, the holding period, and any amount and period for potential liability for investment tax credit recapture as of the date of the transfer. The receiving party is required to preserve these records. Temp. Treas. Reg. § 1.1041–1T, Question 14. There can be no partial elections with respect to the transfer of certain properties; once an election for nonrecognition of a transfer under an elective transitional rule is made, it is irrevocable. Temp. Treas. Reg. § 1.1041–1T, Question 17. An election is made by the transferring party’s attaching to his first filed income tax return for the taxable year in which the first transfer occurs a statement signed by both parties that includes the Social Security number of each party. Both parties must keep a copy of the signed election, and the transferring party must attach a copy of the election with each tax return filed thereafter that involves the transitional election. Temp. Treas. Reg. § 1.1041–1T, Question 18.
Gift Tax Exclusion: If spouses or former spouses enter a written agreement relative to their marital and property rights and a divorce occurs within the three-year period beginning on the date one year before the agreement is entered (whether the decree approves the agreement or not), any transfer made pursuant to the agreement to either spouse to settle marital or property rights or for child support is deemed a transfer for full and adequate consideration in money or money’s worth. 26 U.S.C. § 2516.
Retirement Accounts: Transfers of a person’s interest in an individual retirement account or individual retirement annuity under a divorce decree or written instrument incident to a divorce, in a qualified plan under a qualified domestic relations order, or in a qualified governmental or church plan are treated as nontaxable transfers. 26 U.S.C. §§ 408(d)(6), 414(p)(10), (p)(11).
Residence: An individual taxpayer may exclude up to $250,000 ($500,000 for certain joint returns) of gain on the sale or exchange of a residence if the residence has been owned and used by the taxpayer as the taxpayer’s principal residence for at least two of the last five years. 26 U.S.C. § 121(a), (b).
An individual taxpayer who fails to satisfy these requirements by reason of a change of place of employment, health, or unforeseen circumstances may exclude a fraction of the taxpayer’s realized gain based on the fraction of the two-year period that the property was owned and used by the taxpayer as the taxpayer’s principal residence. The amount to be excluded is the lesser of a fraction of the maximum amount that could be excluded if the two-year ownership and use requirement had been met or the actual gain on the sale. 26 U.S.C. § 121(c).
Stock Options: Under IRS Revenue Ruling 2002–22, a taxpayer who transfers interests in nonstatutory stock options and nonqualified deferred compensation to the taxpayer’s former spouse incident to divorce is not required to include an amount in gross income on transfer. The former spouse, and not the taxpayer, is required to include an amount in gross income when the former spouse exercises the stock options or when the deferred compensation is paid or made available to the former spouse.
For a discussion of the tax consequences of alimony, see section 23.9 above.
Child support payments made for a minor child are not deductible by the payor and are not taxable to the payee.
Although the tax deduction for personal exemptions is suspended, the eligibility to claim an exemption may be important for tax credits and other tax benefits:
Exemption deduction suspended. The deduction for personal exemptions is suspended for tax years 2018 through 2025 by the Tax Cuts and Jobs Act. Although the exemption amount is zero, eligibility to claim an exemption may make you eligible for other tax benefits. See Pub. 501 for details. Although taxpayers can’t claim a deduction for exemptions, eligibility to claim an exemption for a child remains important for determining who may claim the child tax credit, the additional child tax credit, and the credit for other dependents, as well as other tax benefits. See the instructions and Pub. 501 for details.
IRS Form 8332 Rev. October 2018. See 26 U.S.C. § 151(d)(5), as added by Tax Cuts and Jobs Act, Pub. L. No. 115-97, § 11041(a), 131 Stat. 2054 (2017).
Generally, the divorced or separated parent who has custody of a child for the greater portion of the calendar year is entitled to the dependency exemption for the child. 26 U.S.C. § 152(a), (e)(1). The child must be in the custody of one or both parents for more than half the year and must receive half his support during the year from his parents. 26 U.S.C. § 152(e)(1).
Parents of a child are considered divorced or separated if they are divorced or legally separated under a decree, they are separated under a written separation agreement, or they have lived apart at all times during the last six months of the calendar year. 26 U.S.C. § 152(e)(1)(A).
However, the custodial parent will not be entitled to the dependency exemption if (1) the noncustodial parent attaches to his or her income tax return for the year of the exemption a written declaration signed by the custodial parent stating that he or she will not claim the exemption, (2) a decree or agreement executed before January 1, 1985, specifically provides that the noncustodial parent shall have the exemption and the noncustodial parent pays $600 or more during the year as support for the child, or (3) a multiple-support agreement is in effect. 26 U.S.C. § 152(e)(2), (e)(3), (e)(5).
The release of the exemption by the custodial parent may be for a single year, for a number of specific years, or for all future years. IRS Form 8332 (“Release of Claim to Exemption for Child of Divorced or Separated Parents”) may be used for this purpose. If the release is for more than one year, the noncustodial parent must attach the original designation of release to the tax return for the first year in which the exemption is to be claimed and attach a copy of the release to the return for each succeeding taxable year in which the noncustodial parent claims the dependency exemption. Temp. Treas. Reg. § 1.152–4T, Question 4. Alternatively, the agreement incident to divorce may include language with regard to the release of the dependency exemption to the noncustodial parent. In that case, the applicable pages of the agreement can be sent with the federal income tax return in order to claim the exemption.
For further information claiming dependency exemptions, see IRS Publication 504 (“Divorced or Separated Individuals”), which can be found at www.irs.gov/pub/irs-pdf/p504.pdf.
§ 23.47Medical and Dental Expense Deductions
Medical and dental expenses incurred for a child are deductible by either parent who has paid the medical or dental expenses regardless of which parent is entitled to the dependency exemption. 26 U.S.C. § 213(d)(5); Temp. Treas. Reg. § 1.152–4T, Question 5. Uncompensated medical expenses are deductible to the extent they exceed 10 percent of adjusted gross income. 26 U.S.C. § 213(a). (The floor is reduced to 7.5 percent for tax years 2017 and 2018. 26 U.S.C. § 213(f), as amended by Tax Cuts and Jobs Act, Pub. L. No. 115-97, § 11027(a), 131 Stat. 2054 (2017).) See also 26 U.S.C. § 7703(b) (regarding married individuals who may be considered not married for federal income tax purposes). For information on deducting medical expenses, see IRS Publication 502 (“Medical and Dental Expenses”), which can be found at www.irs.gov/pub/irs-pdf/p502.pdf.
A divorced or separated taxpayer who is the “custodial parent” may be able to take a tax credit for expenses for household services and personal care that are necessary to enable the parent to be gainfully employed, even if that parent did not claim a dependency exemption. See 26 U.S.C. § 21(e)(5). For information on deducting child and dependent care expense, see IRS Publication 503 (“Child and Dependent Care Expenses”), which can be found at www.irs.gov/pub/irs-pdf/p503.pdf.
§ 23.49Costs of Obtaining Divorce
Legal fees and court costs for obtaining a divorce are nondeductible personal expenses. See United States v. Gilmore, 372 U.S. 39 (1963). Provisions in effect for tax years before 2018 that allowed for deduction under 26 U.S.C. § 212(1), (3) of legal fees paid for tax advice in connection with divorce to obtain alimony includable in gross income have been temporarily suspended.
These and other “miscellaneous itemized deductions” are not allowed for any taxable year beginning after December 31, 2017, and before January 1, 2026. 26 U.S.C. § 67(g), as added by Tax Cuts and Jobs Act, Pub. L. No. 115-97, § 11045, 131 Stat. 2054 (2017).
For further information about deducting the costs of getting a divorce, see IRS Publication 504 (“Divorced or Separated Individuals”), which can be found at www.irs.gov/pub/irs-pdf/p504.pdf.
§ 23.50Innocent-Spouse Relief and Separate-Liability Election
A taxpayer filing a joint return may be shielded from tax liability under either the innocent-spouse relief or separate-liability election.
Under the innocent-spouse relief, an individual shall be relieved of a tax liability, including penalty and interest, to the extent the liability is attributable to an understatement of tax if—
1.a joint return was filed for the year;
2.there is an understatement of tax on the return attributable to erroneous items of the individual’s spouse;
3.the individual establishes that, in signing the return, the individual did not know, and had no reason to know, of the understatement;
4.taking into account all the facts and circumstances, it would be inequitable to hold the individual liable for the deficiency attributable to the understatement; and
5.the individual elects the benefits of this provision no later than two years after the Internal Revenue Service has begun collection activities with respect to the individual.
The separate-liability election limits an individual’s liability for any deficiency assessed with respect to a joint return to the portion of such deficiency properly allocable to the individual under rules specified in section 6015(d). This election is available if, when the election is filed, the individual is no longer married to, or is legally separated from, the spouse with whom the return was filed or has lived apart from the spouse for at least twelve months before filing the election. The election must be made not later than two years after the Internal Revenue Service has begun collection activities with respect to the individual. 26 U.S.C. § 6015(c).
For information about innocent spouse relief, see IRS Publication 971 (“Innocent Spouse Relief ”), which can be found at www.irs.gov/pub/irs-pdf/p971.pdf.
[Sections 23.51 through 23.60 are reserved for expansion.]
The following websites contain information relating to the topic of this chapter:
IRS Publication 502 (“Medical and Dental Expenses”) (§ 23.47)
www.irs.gov/pub/irs-pdf/p502.pdf
IRS Publication 503 (“Child and Dependent Care Expenses”) (§ 23.48)
www.irs.gov/pub/irs-pdf/p503.pdf
IRS Publication 504 (“Divorced or Separated Individuals”) (§§ 23.9, 23.42, 23.46, 23.49)
www.irs.gov/pub/irs-pdf/p504.pdf
IRS Publication 971 (“Innocent Spouse Relief”) (§ 23.50)
www.irs.gov/pub/irs-pdf/p971.pdf