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					           DIVORCE ISSUES:
SEPARATE PROPERTY, COMMUNITY PROPERTY
       AND MARITAL AGREEMENTS




             JOHN NICHOLS
     LAW OFFICES OF JOHN NICHOLS
       1301 McKinney, Suite 3636
         Houston, Texas 77010
          Phone: 713-654-0708
           Fax: 713-654-0706
        Website: nicholslaw.com
      E-mail: john@nicholslaw.com




             PRESENTED TO

        Houston TSCPA Foundation
      Free Friday - Quarterly Seminar
      1700 West Loop South, 7th Floor
        Houston, Texas 77027-3084
               713-622-7733

              August 2, 2002
                                            TABLE OF CONTENTS

1.   Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

     •         Identify
     •         Characterize
     •         Value
     •         Divide

2.   Characterization / Tracing / Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

     B.        Characterization / Tracing / Reimbursement . . . . . . . . . . . . . . . . . . . . . .                              1
               1.   Separate Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            1
               2.   Community Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               1
               3.   Inception of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       1
               4.   Mutation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
               5.   Community Out-First Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 2
               6.   Clearinghouse and Identical Sum Inference Methods . . . . . . . . . . . .                                      2
               7.   Minimum Sum Balance Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         2
               8.   Pro Rata Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              3
               9.   Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
               10.  Commingling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        3
               11.  Property of Mixed Character . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  3

     A.        Characterization - Presumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
               1.   Community Property Presumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
               2.   Specific Presumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
                    a.     Transfer to a Child
                    b.     Mutation
                    c.     Credit
                    d.     Community Credit
                    e.     Purchase Money
                    f.     Withdrawal of Commingled Funds
                    g.     Deed Recitals
                    h.     Interspousal Conveyance
                    i.     Including Other Spouses’s Name in Title
                    j.     Income from Interspousal Gift

     B.        Characterization - Specific Types of Property . . . . . . . . . . . . . . . . . . . . . 5
               1.   Property Acquired by Recovery of Personal Injuries . . . . . . . . . . . . . 5
                    a.     Intangible Damages that are Separate Property


                                                             -i-
      b.     Tangible or Economic Damages that are
             Community Property
2.    Real Estate Related Property Interests . . . . . . . . . . . . . . . . . . . . . . . . 6
      a.     Earnest money contracts
      b.     Lease option with deed placed in escrow
      c.     Contract for deed
      d.     Adverse possession
      e.     Fixtures
      f.     Improvements on separate property
      g.     Cemetery plots
      h.     Crops
      i.     Timber
3.    Oil, Bas, and Mineral Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
      a.     Leasehold interests
      b.     Working interests
      c.     Royalty interest
      d.     Bonus payments
      e.     Delay rentals
      f.     Interests located in foreign state
4.    Rents and Other Income From Separate Property . . . . . . . . . . . . . . . 8
5.    Livestock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.    Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
      a.     Life insurance
      b.     Employee life insurance
      c.     Worker’s compensation insurance
      d.     Disability insurance
      e.     National service life insurance
      f.     Servicemen’s group life insurance
      g.     Property insurance
      h.     Insurance renewal commissions
      i.     Insurance agent termination payments/deferred
             compensation
      j.     Contingent fee contracts
7.    Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
      a.     Accrued vacation and sick leave benefits
      b.     Disability benefits
      c.     Employment bonuses
      d.     Early retirement or separation bonuses
8.    Employment Contracts - Athletes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.    Earnings of Spouse and Child . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.   Lottery Prizes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11.   Professional Degree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

                                         -ii-
     12.       Retirement and Pension Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        12
               a.      Defined benefit plans
               b.      Defined contribution plans
               c.      Disability retirement benefits
               d.      Social security disability benefits
               e.      Texas statutory retirement plans
               f.      Railroad retirement benefits
               g.      Military disability and retirement benefits
               h.      Federal (Non-military) Retirement and
                       other benefits
     13.       Intellectual Property - Copyrights, Patents, and Trademarks . . . . .                                          14
     14.       Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
               a.      Undistributed trust income
               b.      Distributed trust income
     15.       Stock Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            16
     16.       Stock Splits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       16
     17.       Cash Dividend From Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     16
     18.       Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          16
     19.       Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     16
     20.       Professional Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   16
     21.       Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         17
               a.      Partnership interests
               b.      Partnership property
               c.      Distributions of profits and surplus
               d.      Right to participate in management
               e.      Joint venture
               f.      Limited partnership
     22.       Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         17
               a.      Inception of title rule applies
               b.      Increase in value of stock
               c.      Alter ego
               d.      Subchapter S corporation

C.   Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
     1.   A Claim for Reimbursement is an Equitable Right . . . . . . . . . . . . . . 18
     2.   The Types of Reimbursement and Measures of
          Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
          a.    Debts, insurance, interest, and taxes
                (not limited to purchase money indebtedness)
          b.    Improvements to real property
          c.    Enhancement in value due to community time,
                toil, talent or effort
          d.    Life insurance policy premiums

                                                    -iii-
                e.     For separate property lost to commingling
     3.         Where Marital property Reimbursement Might Not Be
                Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
                a.     For paying for family living expenses
                b.     For cost of college degree
                c.     For payment of alimony or chid support
                d.     For reimbursement claims against third parties
     4.         Where Marital Property Reimbursement May Be Available . . . . . . 21
                a.     Where community credit is used to guarantee
                       corporate debt
                b.     Where separate funds are deposited into community
                       bank accounts
                c.     Subchapter S. corporations
                d.     Where distributions from closely-held corporation
                       exceed profits
                e.     Burden of proof

D.   Checklist: Direct Examination of CPA for Tracing / Characterization
     / Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

E.   Checklist: Cross Examination of CPA for Tracing / Characterization
     / Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

F.   Characterization of Personal Injury and Workers Compensation
     Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   25
     1.   Basic Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               25
          a. Date of marriage
          b.        Date of injury
          c.        Date of settlement/judgment
     2.   Applicable Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    25
          a.        Burden of Proof
          b.        Standard of Proof
     3.   Determination of Percent or Value of Total Recovery
          Allocated to Various Elements of Damages . . . . . . . . . . . . . . . . . . .                                    25
          a.        Medical expense
          b.        Loss of earning capacity
     4.   Sources of Documentary Evidence . . . . . . . . . . . . . . . . . . . . . . . . . .                               26
          a.        Correspondence between parties
          b.        Pleadings
          c.        Written discovery
          d.        Depositions
          e.        Medical and psychological records
          f.        Expert Material

                                                    -iv-
                         g.    Briefs
                         h.    Answers to jury questions
                         i.    Judgment
                         j.    Settlement and agreements
                         k.    Release
               5.        Testimonial Proof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
                         a.    Testimony of claimant
                         b.    Testimony of attorney for claimant
                         c.    Testimony of representatives of defendant

3.   Inception of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

     A.        Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

     B.        Inception of Title - Back to Basics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
               1.    How is characterization determined . . . . . . . . . . . . . . . . . . . . . . . . . . 27
               2.    When does inception of title occur . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

     C.        What is the Date of Acquisition? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

     D.        When is Property Acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

     E.        Legal Title and Equitable Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

     F.        Legal and Equitable Title are of Equal Dignity . . . . . . . . . . . . . . . . . . . . 29

     G.        Community Property Rights in Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    29
               1.  Leasehold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     29
               2.  Life estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   29
               3.  Fee simple . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      29

     H.        Rights are Same in Perfected or Inchoate Title . . . . . . . . . . . . . . . . . . . 29

     I.        Corporate Stock Appreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

     J.        Inception of Title Does Not Apply to Retirement or Pension Benefits30

     K.        Problems With Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           30
               1.    Defined Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           30
               2.    Defined Contribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              36
               3.    Miscellaneous Pension Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  38



                                                            -v-
4.   Checklist, Predicates and Presentation of Proof in Property Cases . . . . . . 42

     A.    Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

     B.    Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
           1.   Marshaling Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
                a.       Potential parties
                b.       Potential witnesses
                c.       Potential documents
           2.   Data Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

     C.    Predicates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
           1.    General Predicates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
                 a.     Blackboards / Sketchpads
                 b.     Business records
                 c.     Motion pictures
                 d.     Photographs
                 e.     Physical evidence: articles and objects
                 f.     Summaries
                 g.     Tape recordings
                 h.     Television tapes
                 i.     Videotapes
                 j.     Views
           2.    Valuing Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

     D.    Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
           1.   Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
           2.   Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

     E.    Factors Considered in Dividing Property . . . . . . . . . . . . . . . . . . . . . . . . 69
           1.    General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
           2.    Particular Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
                 a.     Future need for support
                 b.     Fault in the breakup of the marriage
                 c.     Disparity of incomes or of earning capacities
                 d.     Spouses capacities and abilities
                 e.     Benefits the innocent spouse would have
                        derived from the continuation of the marriage
                 f.     Business opportunities
                 g.     Education and training
                 h.     Relative physical conditions
                 i.     Relative financial condition and obligations
                 j.     Disparity of ages

                                                         -vi-
               k.        Size of marital estate
               l.        Size of non-marital estate
               m.        Expected inheritance of spouses
               n.        Nature of property
               o.        Attorney’s fees
               p.        Custody of children
               q.        Reimbursement between estates
               r.        Gifts to spouse during marriage
               s.        Excessive marital property gifts to others
               t.        Wasting marital assets
               u.        Out of state property
               v.        Tax consequences
               w.        Credit for temporary alimony paid
               x.        Insurance proceeds
               y.        Fraud
               z.        Torts


F.   Techniques for Division of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       76
     1.   Partition or Sale of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                76
     2.   Sale of Homestead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              77
     3.   Setting Aside Homestead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  77
          a.      General
          b.      Limitations upon use of homestead
          c.      Obligation to make payments, etc.
          d.      Disposition of proceeds
     4.   Sole Proprietorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            78
     5.   General Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            79
          a.      General
          b.      Division of partnership interests
          c.      Cannot award specific partnership assets
          d.      Effect of award to non-partner spouse
     6.   Limited Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            81
          a.      General
          b. Division of Divorce
     7.   Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       82
     8.   Closely Held Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  82
          a.      General
          b.      Alter ego

     9.        Professional Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
     10.       Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
               a.    General

                                                  -vii-
                          b.     Goodwill of professional practice
               11.        Foreign Personalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        85
               12.        Money Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          86
                          a.     General
                          b.     Terms of payment
                          c.     Security for payment
                          d.     Execution of promissory note
                          e.     Settlement of breach of contract action
               13.        Appointment of Receiver, Trustee, or Commissioner . . . . . . . . . . .                                   87
                          a.     General
                          b.     No bond required
               14.        Equitable Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    88
                          a.     General
                          b.     Judgment lien distinguished
                          c.     Lien on homestead
                          d.     Lien on separate property
               15.        Property Purchased in name of Third Parties . . . . . . . . . . . . . . . . . .                           90
               16.        Fraudulent Transfers of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  90
                          a.     General
                          b.     Gifts to third parties
                          c.     Transfers to paramours
                          d.     Fraudulent concealment and dissipation
                          e.     Remedies
               17.        Constructive Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          94
               18.        Debts and Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                94
                          a.     Debts to third persons
                          b.     Disposition of exempt property
                          c.     Disposition of non-exempt property
                          d.     Right of indemnity
                          e.     Right to Reimbursement
               19.        Tax Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   95
                          a.     Tax is Not a Debt
                          b.     Liability for Tax Assessments
                          c.     Payment for Reimbursement
               20.        Beneficial Interests in Insurance Policies . . . . . . . . . . . . . . . . . . . . .                      97
               21.        Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         97
               22.        Bankruptcy and Divorce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              97

5.   Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

     A.        Sources of Valuing Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
               1.   Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
               2.   Automobiles, Planes, Boats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

                                                             -viii-
              3.        Manufactured Homes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
              4.        Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
              5.        Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
              6.        Intellectual Property and Trade-Marks, Names or Secrets . . . . . . 100
              7.        Animals and Livestock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
              8.        Crops and Timber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
              9.        Household Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
              10.       Art, Jewelry and Collectibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
              11.       Club Memberships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

6.   Property Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

     A.       Reference Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

     B.       Uniform Premarital Agreement Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      101
              1.    Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   101
              2.    Formalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     102
              3.    Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   103
              4.    Effect of Marriage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        105
              5.    Amendment or Revocation of Agreement . . . . . . . . . . . . . . . . . . . .                              105
              6.    Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       105
              7.    Enforcement in the Event of a Void Marriage . . . . . . . . . . . . . . . . .                             108
              8.    Limitations of Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            109
              9.    Application and Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  109
              10.   Short Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   110

     C.       Other Property Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 110
              1.    Property Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          110
              2.    Partition or Exchange of Community Property . . . . . . . . . . . . . . . .                               110
              3.    Agreement Between Spouses Concerning Income
                    or Property Derived From Separate Property . . . . . . . . . . . . . . . .                                111
              4.    Formalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     112
              5.    Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       112
              6.    Partition or Exchange Agreements: Rights of Creditors,
                    Recordation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       114
              7.    Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     114

     D.       Marital Agreement - Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
              1.    Is The Agreement The Product of an Arms-Length
                    Transaction or an Equal Bargaining Position? . . . . . . . . . . . . . . . . 116
              2.    What Was The Status of the Parties Before the
                    Agreement was Signed and at the Time of Enforcement? . . . . . . 116
              3.    Was There Adequate Legal Representation for Both

                                                           -ix-
                         Parties? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   118
               4.        Was There Full and Complete Disclosure Before the
                         Agreement was Signed? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  119
               5.        Was Either Party Pressured to Sign the Agreement
                         Through Undue Influence, Duress, or Coercion? . . . . . . . . . . . . . .                                  121
               6.        Was There Legal Consideration or Adequate Consideration
                         For the Waiver of Statutory or Common Law Rights
                         In the Agreement Itself? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             122
               7.        Proving Spouse Understood Agreement at Time of
                         Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    122
               8.        Proving Spouse Had Adequate Time to Consider Terms of
                         Antenuptial Agreement Prior to Execution . . . . . . . . . . . . . . . . . . .                             124
               9.        Conscionability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        125

7.   Fringe Benefits of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

     A.        Long-Term Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 126

     B.        Bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

     C.        Restricted Stock and Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 128

     D.        Vacation Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

8.   Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

     A.        Fact Sheet for Legal Assistants and Clients . . . . . . . . . . . . . . . . . . . .                                  134
               1.    Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        134
               2.    Alternate Payee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              135
               3.    Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      135
               4.    The Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         136
               5.    To Do . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      138

     B.        Fact Sheet for the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              139
               1.    Employee Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   139
               2.    The Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         139
               3.    Please Send the Following . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      144
               4.    Please Provide Any Other Information . . . . . . . . . . . . . . . . . . . . . . .                             144

     C.        Fact Sheet for the Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
               1.    The Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
               2.    Other Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148


                                                              -x-
      D.       Closing the Property Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

9.    Military and Civil Service Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 160

      A.       Military Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        160
               1.     Active Duty Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             160
               2.     Retired Active Duty Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   161
               3.     Reserve Component / National Guard Member . . . . . . . . . . . . . . .                                    162
               4.     Retired Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          163
               5.     Military Retirement Apportionment Request . . . . . . . . . . . . . . . . . .                              164

      B.       Civil Service Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     165
               1.     Two Federal Retirement Systems . . . . . . . . . . . . . . . . . . . . . . . . . .                         165
               2.     Benefits Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           165
               3.     Division of Retirement Benefits and Direct Payments . . . . . . . . . .                                    166
               4.     Survivor Benefits for Former Spouse . . . . . . . . . . . . . . . . . . . . . . . .                        166
               5.     Drafting Enforceable Decrees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     168
               6.     Drafting Decrees Dealing With Awards of Thrift Savings
                      Plan Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      183
               7.     Transfer From CSRS to FERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       185
               8.     Health Insurance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                186
               9.     Civil Service Disability Benefits to the Extent They Are
                      Earned During the Marriage Are Divisible . . . . . . . . . . . . . . . . . . .                             186
               10.    Federal Worker’s Compensation Benefits . . . . . . . . . . . . . . . . . . .                               186
               11.    Assignment of Federal Employees Group Life Insurance
                      Benefits Now Allow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             186

10.   Miscellaneous Torts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

      A.       Life Insurance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

      B.       The Refinanced Home Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

      C.       Paying Obligations From a Prior Marriage During . . . . . . . . . . . . . . . 189

      D.       Alimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

      E.       Quasi-Community Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192

      F.       Foreign Marriage Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

      G.       Torts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195


                                                             -xi-
                1.         Spousal Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
                2.         Third Party Tort Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197

      H.        Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198

      I.        Reimbursement - The Guaranteed Loan . . . . . . . . . . . . . . . . . . . . . . . . 199

      J.        Commingling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

11.   Alimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201

12.   Legal Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202

      A.        Legal Issues: Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             202
                1.    Alimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      202
                2.    Alter Ego . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      202
                3.    Bonus Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               203
                4.    Burden of Proof - Character . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    203
                5.    Burden of Proof - Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . .                          203
                6.    Cemetery Plot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          203
                7.    Commingling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          203
                8.    Community Credit - Improvements . . . . . . . . . . . . . . . . . . . . . . . . . .                          203
                9.    Community Credit - Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       204
                10.   Community Out First - Tracing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                      204
                11.   Constructive Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             204
                12.   Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         204
                13.   Crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    205
                14.   Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   205
                15.   Delay Rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          205
                16.   Disability Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             205
                17.   Dividends - Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             205
                18.   Dividends - Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            205
                19.   Earned Acreage and Farmouts . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          206
                20.   Earnings of Minors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             206
                21.   Earnings of Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               206
                22.   Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              207
                23.   Enhancement Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                207
                24.   Fortuitousness and Resulting Appreciation of Separate
                      Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     207
                25.   Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    207
                26.   General Economic Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       207
                27.   Goodwill (Professional Practice) . . . . . . . . . . . . . . . . . . . . . . . . . . .                       207
                28.   Goodwill (Professional) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                208

                                                              -xii-
29.   Inception of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       208
30.   Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        208
31.   Leasehold Interests (Minerals) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   209
32.   Life Insurance (Cash Surrender Value) . . . . . . . . . . . . . . . . . . . . . .                          209
33.   Life Insurance (Premiums) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  209
34.   Liquidating Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              209
35.   Livestock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    209
36.   Loss of Consortium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             210
37.   Lottery Prizes and Gambling Winnings . . . . . . . . . . . . . . . . . . . . . .                           210
38.   Mercantile Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            210
39.   Merger Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              210
40.   Mutation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   210
41.   Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       210
42.   Oil and Gas Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     210
43.   Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      211
44.   Partnership (Profits Distributed) . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  211
45.   Partnership (Profits Undistributed) . . . . . . . . . . . . . . . . . . . . . . . . . .                    211
46.   Presumption (Joint Title) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              211
47.   Presumption (Community Property) . . . . . . . . . . . . . . . . . . . . . . . . .                         212
48.   Presumption (Burden of Proof) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    212
49.   Presumption (Rebuttable) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 212
50.   Presumption (Irrebuttable / Real Est.) . . . . . . . . . . . . . . . . . . . . . . .                       212
51.   Presumption (Gift / Participation) . . . . . . . . . . . . . . . . . . . . . . . . . . .                   212
52.   Presumption (Gift to Spouse) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   213
53.   Presumption (Gift / Spouse / Income) . . . . . . . . . . . . . . . . . . . . . . .                         213
54.   Presumption (Constructive Fraud) . . . . . . . . . . . . . . . . . . . . . . . . . .                       213
55.   Rebutting the Community Presumption . . . . . . . . . . . . . . . . . . . . . .                            213
56.   Reimbursement (General) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  214
57.   Reimbursement (Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        214
58.   Reimbursement (Living Expenses) . . . . . . . . . . . . . . . . . . . . . . . . .                          214
59.   Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            214
60.   Reimbursement (Time, Toil, Talent) . . . . . . . . . . . . . . . . . . . . . . . . .                       215
61.   Reimbursement (Cannot Trace) . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       215
62.   Rents from Separate Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     215
63.   Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            215
64.   Royalty Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        215
65.   Separate Property (Defined) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    216
66.   Separate Property (Personalty) . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     216
67.   Separate Property (Realty) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 216
68.   Social Security Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               216
69.   Stock Increase in Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              216
70.   Tax Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       216
71.   Tax Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    217

                                         -xiii-
     72.       Tax Consequences (Future) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     217
     73.       Timber and Mineral Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  217
     74.       Tracing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   217
     75.       Tracing (Loan Proceeds) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   218
     76.       Tracing (Expert Testimony) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  218
     77.       Trust Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        219
     78.       Waiving “the Rule” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            219
     79.       Workers’ Compensation Benefits . . . . . . . . . . . . . . . . . . . . . . . . . .                          219
     80.       Working Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           220
     81.       Wrongful Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          220

B.   Legal Issues: Division Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        220
     1.    Fault of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            220
     2.    Needs of Children of the Marriage (including adults) . . . . . . . . . . .                                      221
     3.    Spouse to Whom Custody is Granted . . . . . . . . . . . . . . . . . . . . . . .                                 222
     4.    Amount of Child Support Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          222
     5.    Need for Future Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     222
     6.    Needs of Spouses in Future and Disparity of Earnings
           Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         222
     7.    Business Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    223
     8.    Spouses Capacities and Abilities . . . . . . . . . . . . . . . . . . . . . . . . . .                            223
     9.    Relative Financial Condition and Obligations . . . . . . . . . . . . . . . . .                                  224
     10.   Education and Future Employability . . . . . . . . . . . . . . . . . . . . . . . . .                            224
     11.   Ages of Spouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 224
     12.   Health of Spouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 224
     13.   Benefits Innocent Spouses Would Receive
           from Continuation of Marriage . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         225
     14.   Wasting of Community Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           225
     15.   Credit for Temporary Alimony Paid . . . . . . . . . . . . . . . . . . . . . . . . .                             226
     16.   Size of the Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              226
     17.   Size of Spouses Separate Estates . . . . . . . . . . . . . . . . . . . . . . . . .                              226
     18.   Community Indebtedness and Liabilities . . . . . . . . . . . . . . . . . . . . .                                227
     19.   Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    227
     20.   Community Funds Used to Purchase Out-of-State Property . . . . .                                                227
     21.   Gifts to Spouse During Marriage . . . . . . . . . . . . . . . . . . . . . . . . . . .                           228
     22.   Excessive Gifts to Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     228
     23.   Expected Inheritance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  228
     24.   Attorney’s Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               228
     25.   Reimbursement Between Marital Estate and Increase in
           Value of Separate Property by Community Effort . . . . . . . . . . . . . .                                      229
     26.   Nature of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                229
     27.   Alcoholism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          230



                                                   -xiv-
C.   Enforcing Property Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230
     1.    Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230




                                                 -xv-
                           ACKNOWLEDGMENT


The Firm wishes to thank Debbie Harrington (of the firm) for typing this material
and to Brandon Davis for the original research and collection of materials used
in this outline.



                               APPRECIATION

Appreciation is extended to Brian Webb, attorney, from Dallas, Texas for his
contributions to this article which appear on pages 69 - 97 and were published
in 1994 by Knowles Publishing, Inc. as a part of its Trial Lawyer’s Series on
Family Law, Chapter 4.
                      DIVORCE ISSUES:
           SEPARATE PROPERTY, COMMUNITY PROPERTY
                  AND MARITAL AGREEMENTS


I.    Introduction

      This article is presented on Divorce Issues: Separate Property, Community Property
      and Martial Agreements. In all matrimonial cases there are four (4) basic categories
      to consider when looking at the assets and liabilities of a couple. They are:

      4.    Identify the assets and liabilities;
      5.    Characterize the assets and liabilities;
      6.    Value the assets and liabilities; and
      7.    Divide the assets and liabilities.

II.   Characterization / Tracing / Reimbursement

      A.    CHARACTERIZATION - Definitions, Tracing Methods and Approaches

            1.       Separate Property: Property owned or claimed by the spouse before
                     marriage; property acquired by the spouse during marriage by gift,
                     devise, or descent; the recovery for personal injuries sustained by the
                     spouse during marriage, except any recovery for loss of earning
                     capacity during marriage; current or future community property that the
                     spouses have agreed in writing, in a premarital or marital partition and
                     exchange agreement will be separate property; and, all income or
                     property arising from a gift of property from one spouse to the other
                     spouse. Tex. Fam. Code Chapter 3, Subchapter A.

            2.       Community Property: The property, other than separate property,
                     acquired by either spouse during marriage. Tex. Fam. Code Ann.
                     §3.002.

            3.       Inception of Title: The character of property, as community property or
                     separate property, is determined at the earliest moment to which the
                     claimant can claim title. Welder v. Lambert, 445 S.W. 281 (Tex. 1898).
                     With regard to real estate, this is generally the signing of the purchase
                     contract, not necessarily the date of the deed. Wierzchula v.

                                             1
     Wierzchula, 623 S.W. 2d 730, 732 (Tex. Civ. App. - Houston [1 st Dist.]
     1981, no writ).

4.   Mutation: An asset of a specific character, whether separate or
     community, retains that character after undergoing a change in form if
     it now exists in the form of another asset. The party asserting separate
     property has the burden of overcoming the presumption that property
     acquired during marriage is community property by tracing the assets
     back to the property that, because of its time and manner of acquisition,
     was separate in character. Gleich v. Bongio, 99 S.W.2d 881 (Tex.
     1937).

5.   Community First-Out Rule: If funds from different estates are
     deposited into a bank account, the first funds withdrawn are presumed
     to be community property. This is a rebuttable presumption. Sibley v.
     Sibley, 286 S.W.2d 658 (Tex. 1955).

6.   Clearinghouse and Identical Sum Inference Methods: The
     clearinghouse method assumes that after one or more identifiable sums
     of separate funds went into the account, identifiable withdrawals were
     made that are clearly the withdrawals of the separate funds and are
     therefore separate property themselves.Estate of Hanau v. Hanau, 730
     S.W.2d 663 (Tex. 1987). The identical sum inference method is similar
     to the clearinghouse method except that it involves only one deposit,
     rather than a series of deposits, followed by an identical withdrawal,
     usually a short time later. McKinley v. McKinley, 496 S.W.2d 540 (Tex.
     1973).

7.   Minimum Sum Balance Method: Useful for funds on account wherein
     a portion can be conclusively proven to be separate property and there
     have been few identifiable transactions. The party seeking to prove the
     amount of separate funds traces the account through each transaction
     to show that the balance of the account never went below the amount
     proven to be separate property. This theory presumes that only
     separate property remains after all other withdrawals are made. Padon
     v. Padon, 670 S.W.2d 354 (Tex. App. - San Antonio 1984, no writ).


8.   Pro Rata Approach: If mixed funds are withdrawn from an account, the
     withdrawal should be pro rata in proportion to the respective balances
     of separate and community funds in the account. It would not be
     necessary to analyze the character of each withdrawal. Mariana v. Gen.

                             2
           Am. Life Ins., 898 S.W.2d 397 (Tex. App. - Fort Worth 1995, writ
           denied).

     9.    Increases: The natural increase or decrease in the value of a separate
           asset does not affect character. Dillingham v. Dillingham, 434 S.W.2d
           459 (Tex. Civ. App. - Fort Worth 1968, writ dism’d).

     10.   Commingling: The separate assets of a spouse have been so
           hopelessly mixed or combined with community assets that they can no
           longer be traced. Cockerham v. Cockerham, 527 S.W.2d 162 (Tex.
           1975).

     11.   Property of Mixed Character: An asset is not necessarily entirely
           community property or separate property. If the source of funds used to
           purchase an asset comes from different estates, the resulting asset will
           be owned in differing percentage interests by the various marital
           estates. Gleich v. Bongio, 99 S.W.2d (Tex. 1937).

B.   CHARACTERIZATION - Presumptions

     1.    Community Property Presumption: Property possessed by either
           spouse during or on dissolution of the marriage is presumed to be
           community property. Tex. Fam. Code Ann. §3.003(a). The degree of
           proof necessary to establish that property is separate property in order
           to rebut the community property presumption is clear and convincing
           evidence. Tex. Fam. Code Ann. §3.003(b). The testimony of a spouse,
           even if not corroborated, may suffice to prove by clear and convincing
           evidence that property is the testifying spouse’s separate property.
           Vannerson v. Vannerson, 857 S.W.2d 659 (Tex. App. - Houston [1 st.
           Dist.] 1993, writ denied). The party asserting separate property
           ownership must clearly trace the original separate property into the
           particular assets on hand during the marriage. Norris v. Vaughan, 260
           S.W.2d 676 (Tex. 1953).



     2.    Specific Presumptions

           a.     Transfer to a Child: Presumed to be a gift. Kyles v. Kyles, 832
                  S.W.2d 194 (Tex. Civ. App. - Beaumont 1992, no writ).

           b.     Mutation: Property acquired in exchange for separate property


                                   3
     becomes the separate property of the spouse who exchanged
     the property. Gleich v. Bongio, 99 S.W.2d 881 (Tex. 1937).

c.   Credit: Property acquired on credit takes the character of the
     credit. Cockerham v. Cockerham, 527 S.W.2d 162 (Tex. 1975);
     Sparks v. Taylor, 90 S.W. 485 (Tex. 1906).

d.   Community Credit: Debts incurred during the marriage are
     presumed to be on community credit unless it is shown that the
     creditor agreed to look solely to the separate estate of the
     contracting spouse for repayment. Cockerham v. Cockerham,
     527 S.W.2d 162 (Tex. 1975).

e.   Purchase Money: Money used for the purchase of property is
     presumed to have been community funds unless there is clear
     and convincing evidence to the contrary. Cooke v. Corday, 333
     S.W.2d 461 (Tex. Civ. App. - Beaumont 1960, no writ).

f.   Withdrawal of Commingled Funds: Where a joint account
     contains both community and separate funds, it is presumed that
     community funds are withdrawn first—the community out first rule.
     Sibley v. Sibley, 286 S.W.2d 658 (Tex. 1955).

g.   Deed Recitals: When a deed recites separate property was
     used to pay for the property, or that the property is taken as a
     receiving spouse’s separate estate, a rebuttable presumption of
     separate property arises. Henry S. Miller Co. v. Evans, 452
     S.W.2d 426 (Tex. 1970). When the other spouse is grantor or
     otherwise chargeable with causing or acquiescing in the recital,
     the presumption of separate property becomes irrebuttable,
     absent fraud. Grost v. Grost, 561 S.W.2d 223 (Tex. Civ. App. -
     Tyler 1977, writ dism’d); Pemelton v. Pemelton, 809 S.W.2d
     642, 646 (Tex. Civ. App. - Corpus Christi 1991, rev’d on other
     grounds, sub nom.)

h.   Interspousal Conveyance: Where one spouse conveys
     property to the other spouse, there is a rebuttable presumption
     of gift, even absent a recital in the instrument of conveyance.
     Grost v. Grost, 561 S.W.2d 223 (Tex. Civ. App. - Tyler 1977, writ
     dism’d); Pemelton v. Pemelton, 809 S.W.2d 642, 646 (Tex. Civ.
     App. - Corpus Christi 1991, rev’d on other grounds, sub nom.)


                      4
          i.    Including Other Spouse’s Name in Title: Where one spouse
                furnishes separate property consideration and title is taken in the
                name of the other spouse, a rebuttable presumption of gift
                arises. Where one spouse uses separate property to acquire
                property during marriage and takes title to that property in the
                names of both spouses, a rebuttable presumption arises that the
                purchasing spouse intended to make a gift of one-half separate
                property interest to the other spouse. Pemelton v. Pemelton,
                809 S.W.2d 642, 646 (Tex. Civ. App. - Corpus Christi 1991,
                rev’d on other grounds, sub nom.)


          j.    Income from Interspousal Gift: When one spouse makes a
                gift of property to the other spouse, that gift is presumed to
                include all the income or property which might arise from the
                property given. Tex. Fam. Code Ann. §3.005.

C.   CHARACTERIZATION - Specific Types of Property

     1.   Property Acquired by Recovery for Personal Injuries - See also,
          Section B, [Characterization of Personal Injury and Workers
          Compensation Awards] below.

          a.    Intangible Damages that are Separate Property

                i.      Wrongful death damages
                ii.     Physical pain
                iii.    Mental Anguish
                iv.     Emotional distress
                v.      Loss of consortium
                vi.     Loss of companionship of a child
                vii.    Disfigurement
                viii.   Loss of part of body
                ix.     Loss of mental and intellectual function

                Graham v. Franco, 488 S.W.2d 390 (Tex. 1972).

          b.    Tangible or Economic Damages that are Community
                Property

                i.      Medical expenses during marriage


                                  5
           ii.     Loss of services of other spouse during marriage
           iii.    Loss of earning capacity during marriage
           iv.     Punitive damages

           Graham v. Franco, 488 S.W.2d 390 (Tex. 1972).

2.   Real Estate Related Property Interests

     i.    Earnest money contracts: Inception of title occurs at the
           signing of the earnest money contract. Wierzchula v.
           Wierzchula, 623 S.W.2d 730, 732 (Tex.Civ.App.—Houston [1st
           Dist.] 1981, no writ).

     j.    Lease option with deed placed in escrow: The inception of
           title relates back to the time of the original agreement, not the
           time when the deed was removed from escrow and delivered to
           the spouse. Roach v. Roach, 672 S.W.2d 524, 531
           (Tex.App.—Amarillo 1984, no writ).

     c.   Contract for deed: If realty is acquired under a contract for deed
           or an installment land contract, the inception of title relates back
           to the time the contract was entered into, not when the title was
           ultimately conveyed. Riley v. Brown , 452 S.W.2d 548, 551
           (Tex.Civ.App.—Tyler 1970, no writ).

     d.    Adverse possession: If, before marriage, one of the spouses
           trespassed on occupied land, but the title to the land did not ripen
           by adverse possession until the couple married, the land is
           community property. Scott v. Washburn, 324 S.W.2d 957, 959-
           60 (Tex.Civ.App.—Waco 1959, writ ref’d n.r.e.).

     e.    Fixtures: Improvements to realty take the character of the land
           regardless of the character of the funds or credit used to make
           the improvements. Rice v. Rice, 21 Tex. 58 (1858).

     f.    Improvements on separate property: The use of community
           funds to improve separate property does not change the
           character of the property or give the community estate an
           ownership interest in the property. Carter v. Carter, 736 S.W.2d
           775, 780 (Tex.App.—Houston [14th Dist.] 1987, no writ). The
           community estate is entitled only to a claim for reimbursement
           from the separate estate for the community funds used for the


                             6
           improvement. Gleich v. Bongio, 99 S.W.2d 881 (Tex. 1937).

     g.    Cemetery plots: They are presumed to be the separate
           property of the person named as grantee in the certificate of
           ownership or other instrument of conveyance. Tex. Health &
           Safety Code Ann. Section 711.039(a)(Vernon Supp. 1997).

     h.    Crops: Crops are community property whether the crop is
           growing or matured or already harvested at the time of divorce.
           McGarraugh v. McGarraugh, 177 S.W.2d 296
           (Tex.Civ.App.—Amarillo 1943, writ dism’d).

     i.    Timber: Timber grown on separate property is community
           property.  McElwee v. McElwee, 911 S.W.2d 182
           (Tex.App.—Houston [1st Dist.] 1995, writ denied).

3.   Oil, Gas, and Mineral Interests

     a.    Leasehold interests: Determined by the rules of inception of
           title as applied to other types of interests of real property.
           Minerals in place are a part of the realty and thus impressed with
           the same character as the realty. Norris v. Vaughn, 260 S.W.2d
           676 (Tex. 1953).


     b.    Working interest: Determined by the inception of title doctrine.
           A community working interest is not altered by the use of
           separate funds to develop the lease. Norris v. Vaughn, 260
           S.W.2d 676, 682 (Tex. 1953).

     c.    Royalty interest: Royalties paid for oil and gas produced from
           the separate property of a spouse are payment for the extraction
           or waste of the separate estate. Royalties, therefore, remain that
           spouse’s separate property. Norris v. Vaughn, 260 S.W.2d 676,
           679 (Tex. 1953).

     d.    Bonus payments: They retain the same character as the
           character of the underlying mineral estate. Lessing v. Russek,
           234 S.W.2d 891 (Tex.Civ.App.—Austin 1950, writ ref’d n.r.e.).

     e.    Delay rentals: Those earned during the marriage are
           community property regardless of the character of the underlying

                            7
            mineral estate. McGarraugh v. McGarraugh, 177 S.W.2d 296
            (Tex.Civ.App.—Amarillo 1943, writ dism’d).

     f.     Interests located in foreign state: The character of income,
            profits, fruits, and benefits arising from oil and gas property is
            determined by the laws of Texas, regardless of the state in which
            the oil and gas property is located. Tirado v. Tirado, 357
            S.W.2d 468, 471 (Tex.Civ.App.—Texarkana 1962, writ dism’d).

4.   Rents and Other Income from Separate Property: Rent, revenue,
     interest on and other income from separate property that accrues during
     the marriage is community property. Arnold v. Leonard, 273 S.W.2d
     799, 803 (Tex. 1925); McElwee v. McElwee, 911 S.W.2d 182, 188-189
     (Tex.App.—Houston [1st Dist.] 1995, writ denied).

5.   Livestock: The offspring of livestock bred and raised during the
     marriage is community property, whether or not the original herd is
     separate property.   Guiterrez v. Guiterrez, 791 S.W.2d 659
     (Tex.App.—San Antonio 1990, no writ).



6.   Insurance:

     i.     Life insurance: The inception of title rule applies to life
            insurance. McCurdy v. McCurdy, 372 S.W.2d 381, 382
            (Tex.Civ.App.—Waco 1963, writ ref’d). A separate life insurance
            policy is subject to a claim of reimbursement to the community for
            the premiums paid by the community during the marriage. Dent
            v. Dent, 689 S.W.2d 521, 522 (Tex.App.—Fort Worth 1985, no
            writ).

     b.     Employee life insurance: If incident to employment during
            marriage it is community property. Arnold v. Leonard, 273 S.W.
            799 (Tex. 1925).

     c.     Worker’s compensation insurance: To the extent the award
            represents a loss of earnings during the marriage, or replaces
            disability retirement benefits, it is community property.
            Additionally, if the compensation replaces disability retirement
            benefits, the compensation is community property. Anthony v.
            Anthony, 624 S.W.2d 388, (Tex.App.—Austin 1981, writ dism’d).

                             8
d.   Disability insurance: The right to receive disability payments
     from a policy purchased with community funds is a vested
     property right and is community property even if the benefits are
     paid after divorce. Matthews v. Matthews , 414 S.W.2d 703, 707
     (Tex.Civ.App.—Austin 1967, no writ).

e.   National service life insurance: The cash value of an
     insurance policy issued by the Veterans Administration under the
     National Service Life Insurance Act is not divisible property upon
     divorce.    Kamel v. Kamel, 721 S.W.2d 450, 453
     (Tex.App.—Tyler 1986, no writ).

f.   Servicemen’s group life insurance: The insured service
     member has the right to freely designate and alter the
     beneficiaries named under the life insurance contract. Ridgway
     v. Ridgway, 454 U.S. 46, 102 S.Ct. 49, 70 L.Ed.2d (1981).


g.   Property insurance: Casualty insurance proceeds have the
     character of the insured asset. Rolator v. Rolator, 198 S.W.2d
     391, 393 (Tex.Civ.App.—Dallas 1917, no writ).

h.   Insurance renewal commissions:               Future renewal
     commissions on policies written during the marriage but not
     accruing until after divorce are not divisible upon divorce.
     Cunningham v. Cunningham, 183 S.W.2d 985, 986
     (Tex.Civ.App.—Dallas 1944, no writ).

i.   Insurance agent termination payments/deferred
     compensation: The formula to calculate the community’s
     interest in these benefits is as follows: Number of years of
     commissioned service during marriage divided by the number of
     years of commissioned service as of date of divorce multiplied
     by the value of payments as of the date of divorce which equal
     the extent of the community’s interest in termination payments.
     Matter of the Marriage of Wade, 923 S.W.2d 735, 737
     (Tex.App.—Texarkana 1996, writ denied).

j.   Contingent fee contracts: Those acquired during the
     marriage are community property subject to division. Buck v.
     Rogers, 709 S.W.2d 283 (Tex.App.—Corpus Christi 1986, no
     writ).

                      9
7.   Employee Benefits:

     j.     Accrued vacation and sick leave benefits: Accrued but not
            matured during the marriage—community property. Smith v.
            Smith, 733 S.W.2d 915, 916 (Tex.App.—Houston [1st Dist.]
            1987, writ ref’d n.r.e.).

     b.     Disability benefits: Unless federally preempted, disability
            benefits resulting from an overall employee benefit plan of a
            spouse are considered community property. Ex parte Burson,
            615 S.W.2d 192, 194 n.2 (Tex. 1981).

     c.     Employment bonuses: It depends on what period of service
            is being rewarded with the bonus. One approach would be to
            characterize the bonus based upon the marital status of the
            recipient at the time the bonus was paid. Nelson v. Nelson, 222
            Cal.Rptr. 790 (Ca.App. 1986); Echols v. Austin Inc., 529 S.W.2d
            840 (Tex.Civ.App.—Austin 1975, writ ref’d n.r.e.). If the bonus is
            to reward services performed during the marriage, then it is
            community property. Moor v. Moor, 192 S.W.2d 929 (Tex. Civ.
            App.—Fort Worth 1946, no writ).

     d.     Early retirement or separation bonuses: The determination
            is whether the lump-sum represents a payment in exchange for
            future services or whether it represents the employee’s exercise
            of a right which has been acquired as a result of past
            employment services and based upon the duration of those
            services.      Whorrall v. Whorrall, 691 S.W.2d 32
            (Tex.App.—Austin 1985, writ dism’d).

8.   Employment Contracts—Athletes: Based on the law in other states,
     the courts are more likely to construe cash on hand as divisible marital
     property and if an athlete must perform services post-divorce, courts are
     inclined to view the contract as not divisible at divorce. For a more in-
     depth analysis of sports contracts, signing bonuses, play off bonuses,
     entertainers, residuals, reprints of books, reruns of television shows,
     book advances, and other related issues, seePeculiar Characterization
     Issues Involving Athletes and Entertainers, State Bar of Texas Annual
     Advanced Family Law Course - 1997, by Katherine A. Kinser.

9.   Earnings of Spouse and Child: Community property and property
     purchased with those earnings is community property. Vallone v.

                            10
      Vallone, 644 S.W.2d 455, 458 (Tex. 1983); Insurance Co. of Texas v.
      Stratton, 287 S.W.2d 320, 323 (Tex.Civ.App.—Waco 1956, writ ref’d
      n.r.e.).

10.   Lottery Prizes: A prize won during the marriage from a lottery ticket
      purchased with separate funds is community property. Dixon v.
      Sanderson, 10 S.W.2d 535, 536 (Tex. 1988).

11.   Professional Degree: A professional degree earned during marriage
      is not property subject to division upon divorce. Frausto v. Frausto,
      611 S.W.2d 656, 659 (Tex.Civ.App.—San Antonio 1980, writ dism’d).

12.   Retirement and Pension Benefits:

      a.    Defined benefit plans:

            i.     Valuation and apportionment when the employee spouse
                   is retired at the time of divorce: Number of months
                   married under plan divided by number of months
                   employed under the plan (before and during marriage)
                   multiplied by the value of the retirement benefits (e.g. the
                   monthly annuity) as of the date of retirement equals the
                   extent of the community interest.

            ii.    Valuation and apportionment when the employee spouse
                   is not retired at the time of divorce: Number of months
                   married under plan divided by the number of months
                   employed under the plan as of the date of divorce
                   multiplied by the value of the retirement benefits (e.g. the
                   monthly annuity) as of the date of divorce equals the
                   extent of the community’s interest.

            Berry v. Berry, 647 S.W.2d 945 (Tex. 1983).

      b.    Defined contribution plans: The court simply subtracts the
            pre-marriage sum from the sum at divorce to determine the
            portion of that was added during marriage and therefore is
            community property. However, if stock is involved, see the stock
            items hereinbelow, which one could creatively apply. Smith v.
            Smith, 22 S.W.3d 140 (Tex. App. - Houston [14th Dist.] 2000, no
            pet.).



                            11
c.   Disability retirement benefits: Disability retirement benefits
     are not recoveries for personal injuries, but are earned property
     rights, being part of the bundle of benefits provided to the
     employee by his or her employer. They are therefore community
     property.    Marshall v. Marshall, 511 S.W.2d 72, 74
     (Tex.Civ.App.—Houston [1st Dist.] 1974, no writ).



d.   Social security disability benefits: Not community property
     and not divisible upon divorce. Richard v. Richard, 659 S.W.2d
     746, 749 (Tex.Civ.App.—Tyler 1983, no writ).

e.   Texas statutory retirement plans: Benefits accruing under
     state retirement acts are divisible upon divorce. Collida v.
     Collida, 546 S.W.2d 708, 710 (Tex.Civ.App.—Beaumont 1977,
     writ dism’d).

f.   Railroad retirement benefits: Only Tier I is not community
     property divisible upon divorce. Kamel v. Kamel, 721 S.W.2d
     450, 452-53 (Tex.App.—Tyler 1986, no writ).

g.   Military disability and retirement benefits:

     i.     Veterans administration disability retirement benefits:
            Not property and therefore not community property.
            Ex parte Burson, 615 S.W.2d 192, 194 (Tex. 1981).

     ii.    Military retirement pay: The portion earned during
            marriage is community property. Haynes v. McIntosh,
            776 S.W.2d 784, 786 (Tex.App.—Corpus Christi 1989,
            writ denied). See defined benefit plans above for
            calculations to be used.

     iii.   Reserve military retirement: Number of military retirement
            points accrued while married divided by number of
            military retirement points accrued as of date of divorce
            multiplied by the value of military retirement as of the date
            of divorce equals the extent of the community interest.
            Bloomer v. Bloomer, 927 S.W.2d 118, 121
            (Tex.App.—Houston [1 st Dist.] 1996, writ denied).



                     12
            iv.    Fleet retainer pay: Not community property subject to
                   division upon divorce. Sprott v. Sprott, 576 S.W.2d 653,
                   655 (Tex.Civ.App.—Beaumont 1978, writ dism’d).



            v.     Survivor benefit plan: If a divorce occurs after retirement
                   and the member of the plan had initially elected to
                   participate in the plan when retiring, a court may order
                   continued participation by the member in favor of the
                   former spouse by ordering the plan participant to
                   redesignate the spouse as a former spouse beneficiary.
                   If not retired upon divorce, the court may also order the
                   plan participant to elect the former spouse as beneficiary.
                   Morris v. Morris, 894 S.W.2d 859 (Tex. App.—Fort Worth
                   1995, no writ).

            vi.    Military readjustment benefits: Not community property
                   subject to division upon divorce. Perez v. Perez, 587
                   S.W.2d 671, 672 (Tex. 1979).

            vii.   Special separation benefit: It is retirement pay subject to
                   division. Marsh v. Wallace, 924 S.W.2d 423, 424-425
                   (Tex.App.—Austin 1996, no writ).

      h.    Federal (Non-military) Retirement and Other Benefits:

            vi.    Civil service retirement benefits: To the extent earned
                   during marriage, the benefits are community property.
                   Naydan v. Naydan, 800 S.W.2d 637, 641
                   (Tex.App.—Dallas 1990, no writ).

            ii.    Civil service disability retirement pay: To the extent
                   earned during marriage, the benefits are community
                   property. Anthony v. Anthony, 624 S.W.2d 388, 390
                   (Tex.App.—Austin 1981, writ dism’d).

            iii.   Federal employees retirement system: To the extent
                   earned during marriage, the benefits are community
                   property.

13.   Intellectual Property—Copyrights, Patents, and Trademarks:
      Copyright protection begins at the time of “creation” of the work. 17

                            13
      USC Section 101. It is difficult to determine how a Texas court might
      apply the inception of title doctrine to copyright questions. Patents are
      dated from the issuance date of the patent, and the patent runs from that
      date. For inception of title purposes, the court would have to determine
      when the spouse first had a claim of right to the invention. When the
      inception of title occurs for trademarks is not precisely clear. Not all
      trademarks are created equally, and ownership rights arise at differing
      times with respect to marks of differing categories. The mere inception
      of a trademark, without use, affords no ownership rights in the mark,
      regardless of its classification. For an in-depth discussion of intellectual
      property, including copyrights, patents, and trademarks, please see
      Richard S. Orsinger’s article entitled Intellectual Property, University of
      Texas School of Law—1997 Texas Marital Property Institute and the
      article by J. Steven King entitled Challenging Characterization Issues,
      State Bar of Texas Advanced Family Law Course -1997.

14.   Trusts:

      n.     Undistributed trust income: Undistributed trust income
             earned by a trust during the marriage, where the corpus of the
             trust is separate property, remains as part of the respective trust
             and is not subject to division upon divorce. In Re: Marriage of
             Burns, 573 S.W.2d 555, 557-58 (Tex.Civ.App.—Texarkana
             1978, writ dism’d). However, if the beneficiary has the right to
             receive a distribution of income but does not take possession of
             the distribution, such retained income may create marital
             property rights for the beneficiary’s spouse. Cleaver v. Cleaver,
             936 S.W.2d 491 (Tex.App.—Tyler 1996, no writ). Undistributed
             income of a trust created by a spouse for that spouse’s own
             benefit, prior to the marriage, is community property. Mercantile
             National Bank of Dallas v. Wilson, 279 S.W.2d 650
             (Tex.Civ.App.—Dallas 1995, writ ref’d n.r.e.).

      b.     Distributed trust income: Income from the separate property
             corpus of a trust created by a spouse for his own benefit is
             community property to the extent the income is received by the
             spouse. In Re Marriage of Burns, 573 S.W.2d 555, 557-58
             (Tex.Civ.App.—Texarkana 1978, writ dism’d).




                              14
15.   Stock Dividends: Stock dividends received during the marriage on
      separate property stock are separate property. Tirado v. Tirado, 357
      S.W.2d 468, 473 (Tex.Civ.App.—Texarkana 1962, writ dism’d).

16.   Stock Splits: New stock created as a result of a stock split during a
      marriage from separate property stock is separate property. Tirado v.
      Tirado, 357 S.W.2d 468, 473 (Tex.Civ.App.—Texarkana 1962, writ
      dism’d).

17.   Cash Dividend From Stock: A cash dividend received during the
      marriage from separate property stock is community property. Amarillo
      Nat’l Bank v. Liston, 464 S.W.2d 395, 406 (Tex.Civ.App.—Amarillo
      1970, writ ref’d, n.r.e.).

18.   Stock Options: Those earned during the marriage are community
      property subject to division upon divorce. Demler v. Demler, 836
      S.W.2d 696, 699 (Tex.App.—Dallas 1992, no writ). Unvested stock
      options constitute a contingent interest in property and are a community
      asset. Bodin v. Bodin, 955 S.W.2d 380 (Tex.App.—San Antonio 1997,
      no writ).

19.   Goodwill: Personal goodwill of a professional is not community
      property that can be divided upon divorce. Nail v. Nail, 486 S.W.2d
      761, 764 (Tex. 1972). Goodwill in a professional corporation that exists
      independently of a professional’s personal skills may be subject to
      division. Finn v. Finn, 658 S.W.2d 735, 742 n.3. (Tex.App.—Dallas
      1983, writ ref’d n.r.e.).

20.   Professional Corporation: In a small professional corporation the
      value of the business depends directly on the skills of the individual and
      not on the growth of capital. The better practice seems to be to limit the
      protected portion of the growth to that attributable to inflation or an
      economy-wide (or, even industry-wide) growth rate. Such a rule is more
      consistent with community property doctrine, at least as to gains from
      inflation. Moreover, gain attributable to normal growth should be treated
      similarly since inflation occurs only when real growth lags behind the
      growth of the money supply. Some portion of the increased value of a
      business should be regarded as protected. See Jensen v. Jensen, 665
      S.W.2d 107 (Tex. 1984).

21.   Partnerships



                              15
      p.   Partnership interests: Whether a partner’s interest in a
           partnership is separate or community is determined by the
           inception of title rule. Harris v. Harris, 765 S.W.2d 798, 802
           (Tex.App.—Houston [14th Dist] 1989, writ denied).

      b.   Partnership property: It is neither separate nor community
           because neither a partner nor the partner’s spouse has an
           interest in partnership property. Harris v. Harris, 765 S.W.2d
           798, 802 (Tex.App.—Houston [14th Dist] 1989, writ denied).

      c.   Distributions of profits and surplus: If received during the
           marriage, they are community property regardless of whether the
           partner’s interest in the partnership is separate or community.
           Harris v. Harris, 765 S.W.2d 798, 802 (Tex.App.—Houston [14th
           Dist] 1989, writ denied).

      d.   Right to participate in management: A partner’s interest in a
           partnership does not include the partner’s right to participate in
           management.

      e.   Joint venture: Should be treated like partnerships for purposes
           of characterization and division upon divorce.

      f.   Limited partnership: A limited partner’s interest in the limited
           partnership is personal property (as opposed to real property).
           A partner has no interest in specific limited partnership property.
           Upon divorce, a community partnership interest could be
           assigned in whole or in part to the non-partner spouse, which
           would allow the non-partner spouse to receive income from the
           interest without having liability as a partner.

22.   Corporations

      a.   Inception of title rule applies: This rule is to be applied to a
           corporation as of the date the stock is acquired and only applies
           to a corporation as of the date of incorporation. Vallone v.
           Vallone, 644 S.W.2d 455, 457 (Tex. 1982). A business that is
           incorporated and initially capitalized during marriage is
           community property, notwithstanding the ownership and
           operation of the business as a sole proprietorship before
           marriage. Allen v. Allen, 704 S.W.2d 600, 604 (Tex.App.—Fort
           Worth 1986, no writ). A corporation organized during marriage

                            16
                 and capitalized with separate property is characterized as the
                 separate property of that spouse. Allen v. Allen, 704 S.W.2d
                 600, 604 (Tex.App.—Fort Worth 1986, no writ); Holloway v.
                 Holloway, 671 S.W.2d 51, 56-57 (Tex.App.—Dallas 1983, writ
                 dism’d).

           b.    Increase in value of stock: An increase in the value of
                 corporate stock belonging to a separate estate that is due to
                 natural growth or the fluctuations of the market remains separate
                 property. Dillingham v. Dillingham, 434 S.W.2d 459, 461-62
                 (Tex.Civ.App.—Fort Worth 1986, writ dism’d).

           c.    Alter ego: If the separate property corporation is found to be the
                 alter ego of the spouse, the increase in value of the spouse’s
                 stock becomes a part of the community estate. If community
                 property was commingled with the purported corporation, tracing
                 principles apply. If the commingling of separate and community
                 property prevents identification of the separate property by clear
                 and convincing evidence, the statutory presumption applies and
                 the entire corporation is deemed community property.
                 Dillingham v. Dillingham, 434 S.W.2d 459, 461-62
                 (Tex.Civ.App.—Fort Worth 1986, writ dism’d).

           d.    Subchapter S corporation: A corporation that elected
                 subchapter S status is treated as a subchapter C corporation for
                 purposes of determining community or separate property
                 character. Thomas v. Thomas, 738 S.W.2d 342, 344-45
                 (Tex.App.—Houston [1st Dist.] 1987, writ denied).

D.   REIMBURSEMENT

     17.   A claim for reimbursement is an equitable right, not a legal right;
           therefore equitable principles govern.

     2.    The Types of Reimbursement and Measures of Reimbursement

           r.    Debts, insurance, interest, and taxes (not limited to
                 purchase money indebtedness): A claim for reimbursement
                 for funds expended by an estate to pay debts, taxes, interest, or
                 insurance for the property of another estate is measured by the
                 amount paid. An offset against a claim for reimbursement for
                 funds expended by an estate to pay debts, taxes, interest, or

                                 17
     insurance for the property of another estate is measured by the
     value of any related benefit received by the paying estate, such
     as the fair value of the use of the property by the paying estate,
     income received by the paying estate from the property, and any
     reduction in the amount of any income tax obligation of the
     paying estate by virtue of the paying estate’s claiming tax-
     deductible items relating to the property, such as depreciation,
     interest, taxes, maintenance, and other deductible payments.
     Texas Pattern Jury Charge 204.1 (1998).

b.   Improvements to real property: A claim for reimbursement for
     funds expended by an estate for improvements to real property
     of another estate is measured by the enhancement in value to the
     receiving estate resulting from such expenditures. An offset
     against a claim for reimbursement for improvements to real
     property of another estate is measured by the value of any
     related benefit received by the paying estate, such as the fair
     value of the use of the property by the paying estate, income
     received by the paying estate from the property, and any
     reduction in the amount of any income tax obligation of the
     paying estate by virtue of the paying estate’s claiming tax-
     deductible items relating to the property, such as depreciation,
     interest, taxes, maintenance, and other deductible payments.
     Texas Pattern Jury Charge 204.1 (1998).

c.   Enhancement in value due to community time, toil, talent or
     effort:

     i.     Based upon the holding in Vallone v. Vallone, 644
            S.W.2d 455 (Tex. 1983), the community estate has a
            claim for reimbursement for uncompensated or under
            compensated time, toil and talent expended by a spouse
            for the benefit and/or enhancement of his/her separate
            property interests beyond that necessary to maintain that
            separate property asset or interest. However, an
            increase in the value of a separate property business
            “resulting from fortuitous circumstances and unrelated to
            an expenditure of community effort will not entitle the
            community estate to reimbursement.” Harris v. Harris,
            765 S.W.2d 798, 805 (Tex. App—Houston [14th Dist.]
            1989, writ denied).

     ii.    Based upon the holding in Jensen v. Jensen, 65 S.W.2d

                     18
                 107 (Tex. 1984), the community will be reimbursed for the
                 value of time and effort expended by either or both
                 spouses to enhance the separate estate of either, other
                 than that reasonably necessary to manage and preserve
                 the separate estate, less the remuneration received for
                 the time and effort in the form of salary, bonus, dividends,
                 and other fringe benefits, those items being community
                 property when received. The right to reimbursement is
                 only for the value of time, toil, and effort expended to
                 enhance the separate estate “other than that reasonably
                 necessary to manage and preserve the separate estate,
                 for which the community did not receive adequate
                 compensation.”

          iii.   A claim for reimbursement to the community estate for the
                 spouse’s time, toil, talent, or effort expended to enhance
                 a spouse’s separate estate is measured by the value of
                 such community time, toil, talent, and effort other than that
                 reasonably necessary to manage and preserve the
                 separate estate, and for which the community did not
                 receive adequate compensation. An offset against a
                 claim for reimbursement for the spouse’s time, toil, talent,
                 or effort expended to enhance a spouse’s separate
                 estate is measured by the compensation paid to the
                 community in the form of salary, bonuses, dividends, and
                 other fringe benefits. Texas Pattern Jury Charge 204.1
                 (1998).

     d.   Life insurance policy premiums: A claim for reimbursement
          arises when community funds are used to pay premiums on a
          separate property life insurance policy.         A claim for
          reimbursement of funds expended by an estate to pay life
          insurance premiums on a policy owned by another estate is
          measured by the amount of premiums paid, less the value of any
          related benefit received by the spouse seeking reimbursement.
          Texas Pattern Jury Charge 204.01 (1998).

     e.   For separate property lost to commingling: Where separate
          property has been commingled and cannot be traced, courts
          have offered relief to the spouse who lost such assets by granting
          reimbursement for the separate property lost to commingling.

3.   Where Marital Property Reimbursement Might Not Be Available

                          19
           a.     For paying for family living expenses
           b.     For cost of college degree
           c.     For payment of alimony or child support
           d.     For reimbursement claims against third parties

     4.    Where Marital Property Reimbursement Might Be Available

           a.     Where community credit is used to guarantee corporate debt
           b.     Where separate funds are deposited into community bank
                  accounts
           c.     Subchapter S corporations
           d.     Where distributions from closely-held corporation exceed profits
           e.     Burden of proof: A spouse seeking equitable reimbursement
                  has the burden of proving each element of the claim by a
                  preponderance of the evidence.            A spouse seeking
                  reimbursement to a separate estate must prove by clear and
                  convincing evidence that the funds expended were separate
                  property. It is unclear who has the burden of proving offsets to
                  claims for reimbursement.

E.   Checklist: Direct Examination of CPA for Tracing / Characterization /
     Reimbursement

     1.    Name

     2.    Profession or occupation

     3.    Educational background

     4.    Professional training

     5.    Professional associations or affiliations

     6.    Academic positions

     7.    Research projects

     8.    Published papers, articles or writings

     9.    Relationship of the expert to the litigation



                                   20
     10.   Knowledge of facts of the case

     11.   Source of knowledge of facts of the case

     12.   Treatise and articles read in preparation of testimony

     13.   Prove the CPA up as an expert (be prepared for a Daubert challenge
           and prepare the expert for a Daubert challenge)

     14.   Ascertain what records the CPA reviewed to form his/her opinion(s)

     15.   Mark the records as an exhibit and offer them into evidence

     16.   If the CPA has prepared a report, then offer the report into evidence

     17.   Let the CPA go through the report

     18.   Ask the CPA his/her conclusions in a broad, open-ended question so
           he/she can explain their analysis, opinion(s), and conclusion(s), and the
           basis for same




F.   Checklist: Cross Examination of CPA for Tracing/Characterization/
     Reimbursement

     1.    Lack of education

     2.    Lack of knowledge in field

     3.    License suspended or revoked

     4.    Lack of certification

     5.    Lack of professional memberships

     6.    Lack of experience in area

     7.    Lack of writing or research in area

     8.    Specialty not basis of this lawsuit

     9.    Lack of experience in this particular area
10.   Failed to keep abreast of recent developments in specialty area

11.   Bias

12.   Testified for many times for this particular attorney

13.   Social, family, business, or professional connections with opposing
      party

14.   Unreasonable fees

15.   Research and testing confined to one theory in the case

16.   Lack of firsthand knowledge

17.   No independent verification data

18.   Failure to consult with authorities to confirm conclusions

19.   Test interpretations open to questions

20.   Theory invalid in the case

21.   Incorrect opinion

22.   Subjective judgment played major role in conclusions

23.   Opinion primarily based on data given to him by opposing attorney but
      never verified

24.   Failure to consider recent developments in area

25.   Make a Daubert challenge

26.   Bring up something else they could have reviewed or an authority they
      could have used

27.   Get your own expert to review their CPA’s report to point out
      weaknesses, places of attack, and errors, and let your CPA suggest
      questions for cross-examination

28.   Ascertain how many times they have testified to show they don’t have
      enough experience or that they have so much experience testifying they

                              22
           are always a hired gun

     29.   Ask how many times they have done tracing schedules / characterized
           property / valued a reimbursement claim

     30.   What presumptions/theories the CPA used in the tracing/
           characterization/ valuing a reimbursement claim

     31.   Ascertain, if possible, the offsetting benefits of the reimbursement claim
           (or use your own CPA for that)

     32.   Try to show their CPA did not allow for economic growth or mistakenly
           included it

     33.   Delve into how much time, toil, and effort was used, and try to show it
           was necessary time, toil, and effort, that is not reimburseable, or that
           he/she did not take this type of necessary time, toil, and effort into
           consideration


     34.   On tracing, try to find a mistake and then show that the rest of the tracing
           is flawed

     35.   Ascertain how much the CPA has been paid, and by whom (lawyer or
           client), the CPA’s hourly rates, whether the CPA charges different hourly
           rates for different functions

G.   Characterization of Personal Injury and Workers Compensation
     Awards

     1.    Basic Information

           a.     Date of marriage
           b.     Date of injury
           c.     Date of settlement/judgment

     2.    Applicable Standards

           a.     Burden of Proof: On party claiming separate property
                  character. Tarver v. Tarver, 394 S.W.2d 780 (Tex. 1965)
           b.     Standard of Proof: Clear and convincing evidence. Texas
                  Family Code Sec. 3.003(b)

                                  23
3.   Determination of Percent or Value of Total Recovery Allocated
     to Various Elements of Damages
     a.    Medical expense
           i.    Incurred during marriage (community - Osborn v.
                 Osborn, 961 S.W.2d 408 (Tex. App. - Houston [1st
                 Dist.] 1997, writ denied))
           ii.    Incurred outside of marriage (separate)

     b.    Loss of earning capacity
           i.    Occurring during marriage (community - Lewis v.
                 Lewis, 944 S.W.2d 630 (Tex. 1997); Charter Oaks
                 Fire Insurance Company v. Few, 456 S.W.2d 156
                 (Tex. Civ. App. - Tyler, 1970, reversed on other
                 grounds 463 S.W.2d 424 (Tex. 1971)).


           ii.    Occurring before or after marriage (separate - Lewis
                  v. Lewis, 944 S.W.2d 630 (Tex. 1997); General
                  Insurance Company of America v. Casper, 426
                  S.W.2d 606 (Tex. Civ. App. - Tyler 1968, writ ref’d.
                  n.r.e. ); Hicks v. Hicks, 546 S.W.2d 71 (Tex. Civ. App.
                  - Dallas 1977, no writ)).

           iii.   Loss of future earning capacity (separate - Osborn v.
                  Osborn, 961 S.W.2d 408 (Tex. App. - Houston [1st
                  Dist.] 1997, writ denied)).

           iv.    Pain and suffering (separate - Osborn v. Osborn, 961
                  S.W.2d408(Tex.App.-Houston [1st Dist.]1997,writ
                  denied))
           v.     Disfigurement (separate - Osborn v. Osborn, 961
                  S.W.2d 408 (Tex. App.- Houston [1 1st Dist.] 1997, writ
                  denied)).
           vi.    Loss of consortium (separate - Osborn v. Osborn,
                  961 S.W.2d 408 (Tex. App.- Houston [1st Dist.] 1997,
                  writ denied); Whittlesey v. Miller, 572 S.W.2d 665
                  (Tex. 1978)).
           vii.   Wrongful death - (separate - Johnson v. Holly Farms


                         24
                                 of Texas, Inc., 731 S.W.2d 641 (Tex. App.- Amarillo
                                 1987, no writ)).
                         viii.   Unable to determine (community - Kyles v. Kyles, 832
                                 S.W.2d 194 (Tex. App.- Beaumont 1992, no writ)).

           4.     Sources of Documentary Evidence

                  a.     Correspondence between parties
                  b.     Pleadings
                  c.     Written discovery
                  d.     Depositions
                  e.     Medical and psychological records
                  f.     Expert materials
                  g.     Briefs
                  h.     Answers to jury questions
                  i.     Judgment
                  j.     Settlement agreements
                  k.     Release

           5.     Testimonial Proof
                  a.    Testimony of claimant - Osborn v. Osborn, 961 S.W.2d 408 (Tex.
                        App. - Houston [1st Dist.] 1997, writ denied) disapproved as
                        speculative in dicta.
                  b.    Testimony of attorney for claimant?
                  c.    Testimony of representatives of defendant?
                  d.    See Slaton v. Slaton, 987 S.W.2d 180 (Tex. App. - Houston
                        [14th Dist.] 1999, no writ) court found wife proved separate
                        property portion of personal injury settlement by clear and
                        convincing evidence

III   INCEPTION OF TITLE TO PROPERTY

      A.   INTRODUCTION

           One might think that after over 150 years of case law and many legislative
           sessions, there couldn't possibly be any unresolved issues in Texas marital
           property rights. Surprisingly, this isn't true. To be fair, some problems involve
           contemporary types of property not frequently encountered until recently, such
           as stock options. Other types of unresolved problems, such as commingled
           accounts, have been around for quite some time.

      B.   INCEPTION OF TITLE - BACK TO BASICS

                                          25
     1.     How Is Characterization Determined?
            The character of property as separate or community must be
            established by facts that existed at the inception of title. Lee v. Lee, 112
            Tex. 392, 247 S.W. 828 (1923); Bell v. Bell, 593 S.W. 2d 424 (Tex. Civ.
            App.- Houston [14th Dist.] 1980).

     2.     When Does Inception of Title Occur?
            “Inception of title” occurs when a party first has a right of claim to
            property by virtue of which title is finally vested. Welder v. Lambert, 91
            Tex. 510, 22 S.W. 281, 284-86 (1896). Henry S. Miller Co. v. Evans,
            452 S.W. 2d 426, 430 (Tex.1970). Roach v. Roach, 672 S.W.2d 524
            (Tex. App.-Amarillo 1984); Saldana v. Saldana, 791 S.W.2d 316 (Tex.
            App. - Corpus Christi 1990) citing Strong v. Garrett, 148 Tex. 265, 224
            S.W.2d 471 (1949).



C.   WHAT IS THE DATE OF ACQUISITION?

     In determining whether the property is separate or community, the important
     thing to ascertain is the date of acquisition of the right, rather than the date of
     acquiring the possession. Fuhrman v. Fuhrman, 302 S.W.2d 205 (Tex. Civ.
     App. - El Paso 1957, writ dism’d w.o.j.). For example, where husband’s right
     to purchase school lands, which he had contracted to buy before marriage, was
     forfeited during marriage for failure to make required payments, the exercise
     by husband of the right to repurchase at reappraised value, accorded by
     statute, was not inception of title. Inception of title was when the contract was
     initially signed prior to marriage, and land remained separate property. McRae
     v. McRae, 144 S.W.2d 320 (Tex. Civ. App. 1940, writ ref’d).

D.   WHEN IS PROPERTY ACQUIRED?

     Property is deemed to be “acquired” as of the time the ownership thereof or the
     claim thereto had its inception. Boyd v. Orr, 170 S.W.2d 829 (Tex. Civ. App. -
     1943, writ ref’d w.o.m.). Whether the claim of right or title to property is to be
     regarded as origin or inception and therefore, acquisition of property for
     purpose of determining its character as separate or community, is not to be
     determined by whether the claim was, when it was first asserted, legally
     enforceable. What is important is this: was the claim to right or title asserted
     in good faith; was it pursued and persisted in until right or title ripened; that is,
     was ripening of title, in law and in fact, referable to claim. Wrightsman v.
     Commissioner, 111 F.2d 227 (5th Cir. 1949). The term “acquired” refers to the

                                      26
     origin or inception of the right or title to property, rather than to the completion
     or ripening of the right or title thereto. Wrightsman, supra.

E.   LEGAL TITLE AND EQUITABLE TITLE

     If a spouse holds legal title to community property, the title in the other spouse
     is equitable. Mitchell v. Schofield, 106 Tex. 512, 171 S.W. 1121 (1915).




F.   LEGAL AND EQUITABLE TITLE ARE OF EQUAL DIGNITY

     The interest of a spouse in the community estate is a vested property right.
     Under the community property system, the spouse is an equal owner, along with
     other spouse, in all the community property. In other words, their rights, title and
     interests are of equal dignity. Leyva v. Rodriguez, 195 S.W.2d 704 (Tex. Civ.
     App. 1946, writ ref’d n.r.e.).

G.   COMMUNITY PROPERTY RIGHTS IN TITLE

     As a broad general rule, community rights may attach to any title that is
     cognizable by law, regardless of whether the title is legal or equitable. For
     example, such rights may arise in a:

     1.     leasehold. Lawson v. Barre, 6 Tex. 217 (1851);

     2.     life estate, remainder, or reversion. Crenshaw v. Harris, 16 Tex. Civ.
            App. 263, 41 S.W. 391 (1897);

     3.     fee simple. Lawson v. Barre, supra.

H.   RIGHTS ARE SAME IN PERFECTED OR INCHOATE TITLE

     Community rights may exist in any thing or right that may be regarded as
     property, regardless of whether the right has become perfected or is still merely
     inchoate. Cannon v. Murphy, 31 Tex. 405 (1868); Lovell v. Lovell, 202 S.W.2d
     291 (Tex. Civ. App.--1947, no writ).

I.   CORPORATE STOCK APPRECIATION

     As it appreciates, corporate stock remains the separate property of the owner


                                     27
     spouse, although the community is entitled to reimbursement for the reasonable
     value of the time and effort of both or either spouse which contributes to the
     value of the stock. Jensen v. Jensen, 665 S.W.2d 107 (Tex.1984). An
     increase in the value of stock from corporate earnings is not regarded as
     community property, but is deemed to be the separate property of the spouse
     owning the stock. Johnson v. First Nat. Bank, 306 S.W.2d 927 (Tex.Civ.App.-
     Fort Worth 1957).




J.   INCEPTION OF TITLE DOES NOT APPLY TO RETIREMENT OR
     PENSION BENEFITS

     A spouse has a community property interest in that portion of the retirement
     benefits of the other spouse which were earned during marriage. Allard v.
     Frech, 754 S.W.2d 111 (Tex. 1988) cert den. 488 U.S. 1006, 102 L.Ed. 2d
     779, 109 S.Ct. 788. The inception of title doctrine does not apply in the case
     of retirement or pension benefits. Dewey v. Dewey, 745 S.W.2d 514 (Tex.App.
     - Corpus Christi 1988, writ den’d).

K.   PROBLEMS WITH PENSION PLANS

     1.     Defined Benefit Plans.

            a.     Benefits Paid Pursuant to Formula. Defined benefit pension
                   rights, still the most common type of pension right, are pension
                   benefits paid pursuant to a formula adopted by the particular
                   employer to compute pension rights. Specific formulas vary
                   greatly, but they all consider the amount of the last salary of the
                   employee, as well as the employee's aggregate period of
                   service. An example of a defined benefit formula is:

                   Pension Benefit=.02 x years of service x
                   last monthly salary

                   So, if the employee worked for 30 years before retiring, the
                   employee would receive a monthly benefit amounting to 60% of
                   the last salary amount.

            b.     No Separate Account For Each Employer. Divorce lawyers
                   need to note a few things about a defined benefit plan. First,


                                   28
     there is no separate account for each employee. The employer
     merely maintains one account for all employees, and the
     employer deposits whatever amounts are actuarially needed to
     fund the future benefit liabilities. So, one cannot call the benefits
     office and ask what is the current balance in the employee's
     account (as you could if the employee had a defined contribution
     benefit).

     The division of pension rights would present few problems at
     divorce if clients would agree to be married to one spouse
     throughout their career and then divorce after retirement. (It
     would be 100% community property.) Few clients are now so
     accommodating. The client is married for only a portion of her
     career. What should happen? Divorce courts need to find ways
     to divide the pension into the portion earned during marriage and
     that earned at other times. How might this be done?

c.   Difficulty in Computing Present Value. One could attempt to
     compute a present value of the pension rights as of the date of
     divorce, but this is very complicated. A number of decisions
     need to be made before this can be done. For example, if the
     employee is working at divorce, one needs to decide, for
     purposes of the computation, the employee's retirement age. (A
     mandatory retirement age is now illegal in almost all instances.)
     Many other choices need to be made, such as what salary figure
     to use in the present value calculation and what interest rate and
     discount rate. See J. T. Oldham, Divorce, Separation and the
     Distribution of Property, §7.10[6]. This is a very complicated
     calculation, and courts therefore seek other ways to value the
     employee's pension rights.

d.   The Taggart Pro Rata Deferred Payment Approach. The most
     common way to divide pension rights is the pro rata deferred
     payment approach. See Oldham, supra, §7.10[5]. Under this
     view, each month of service is assumed to be equal in value to
     any other month. The pension right is perceived to be being
     earned throughout the whole career. So, to determine the
     community claim (under the basic pre-Berry approach) one only
     needs to know what portion of the career the employee was
     married (the “coverture fraction”). This percentage is the
     community claim to the benefit received at retirement. So, under
     the basic approach announced by the court in Cearley v.
     Cearley, 544 S.W.2d 661 (Tex. 1976) and Taggart v. Taggart,

                      29
     552 S.W.2d 422 (Tex. 1977), the community claim could be
     expressed in this way:




     [number of months worked while married]
     ------------------------------------------------------------- x actual pension
     [number. of months worked during total
     career]

     The community share is not received until the employee retires,
     and the community share is calculated from the actual benefit
     received.

     (This basic pro rata calculation based on time is used, unless
     you can convince a court that pension rights were not earned
     based on time. For example, courts in a number of states have
     held that, for military benefits based on "points," the community
     claim should be calculated based on the percentage of points
     earned during marriage. See Marriage of Poppe, 97 Cal.
     App.3d 1 (1979); Bloomer v. Bloomer, 927 S.W.2d 118 (Tex.
     App. -- Houston [1st Dist.] 1996, no writ).)

e.   Taggart Approach Changed By Berry Hypothetical Retirement
     Approach. This basic Taggart rule regarding the pro rata
     deferred payment approach was changed by Berry v. Berry, 647
     S.W.2d 945 (Tex. 1983). This case involved an employee who
     was working at divorce and had defined benefit pension rights.
     He was married during the first part of his career. The initial
     decree was silent regarding pension rights; the case arose as a
     post-divorce partition action filed when the employee retired.
     The court of appeals applied the basic pro rata deferred
     payment formula outlined above. The Supreme Court reversed:

     i.      The Supreme Court concluded that the application of the
             pro rata deferred sharing approach was inappropriate in
             this case. The court was concerned that things happened
             after divorce that made the rights more valuable, and the
             non-employee should not be able to share in these
             increases in value. A few things happened after divorce


                        30
       in Berry to increase the value of the benefits. First, the
       defined benefit formula was changed in a way that
       increased the benefit amount. Also, Mr. Berry received at
       least 12 pay raises. (It is unclear whether he was
       promoted.) The court concluded that these later years of
       employment were therefore more valuable than earlier
       years.

ii.    The Supreme Court affirmed the method used by the trial
       court to determine the community claim to the employee's
       pension rights in this situation. The trial court found that
       Mr. Berry would have received $221 if he had retired on
       the date of the divorce. So, since Mr. Berry had been
       married throughout his career until the date of divorce, the
       community claim was to $221 per month. Mrs. Berry
       received 50% of this amount (post-divorce partitions at
       that time required a 50-50 split of undivided community
       property).

iii.   The court does not elaborate on how the $221 calculation
       was made. First, Mr. Berry did not have the right to retire
       on the date of divorce, as will be the case of many
       divorcing parties. How did the trial court make its
       calculation? The employee benefits manager of Mr.
       Berry's employer testified that, if Mr. Berry had been
       eligible to retire, he would have received $221. What
       does this mean? Apparently that the benefits manager
       employed the defined benefit formula in effect at the time
       of divorce and used Mr. Berry's salary and length of
       service at the time. If the employee could retire at the
       time of divorce but would receive an early retirement
       penalty for doing so, should that deduction be made?

iv.    The Berry court concluded that the community claim to the
       pension as of the date of divorce (1966) was $221, and
       that Mrs. Berry's claim was to $110. The case was
       decided in 1983, when Mr. Berry has actually retired; what
       should Mrs. Berry now receive? Should the $110
       awarded Mrs. Berry be adjusted for inflation in some
       manner? The court then proceeded to make a statement
       that should be included in any collection of the most
       unfortunate utterances by the Supreme Court of Texas.
       The court stated that "we reject the concept of inflation as

                31
            a factor for our consideration as it relates to the current
            value of retirement benefits." So, Mrs. Berry gets $110
            per month.

     v.     An excellent critique of Berry can be found in Comment,
            37 Baylor L. Rev. 106 (1985).

     vi.    A number of courts have expressed concern that, for
            purposes of pension valuation, later years of employment
            can be more valuable than earlier years, so in a divorce
            involving a spouse who has not yet retired the court
            should value the marital claim to a pension by calculating
            a hypothetical retirement benefit earned as of the date of
            divorce. See Shill v. Shill, 765 P.2d 140 (Idaho 1988);
            Marriage of Oler, 451 N.W.2d 9 (Iowa App. 1989);
            Koelsch v. Koelsch, 713 P.2d 1234 (Ariz. 1986).

f.   Berry Approach Modified By Grier Inflation Factor Approach.
     Happily, the Texas Supreme Court has quietly overruled the
     unfortunate statement about inflation not being factor for
     determining the current value of pension benefits. In Grier v.
     Grier, 731 S.W.2d 931 (Tex. 1987), the court stated that, when
     a working employee is divorcing, after calculating the value of the
     community claim as of the date of divorce (a la Berry) the non-
     employee should share in "increases which may occur other than
     increases attributable to [promotion] or services rendered by the
     . . . spouse after the date of divorce."

     Surprisingly, there has been little appellate guidance about what
     this statement in Grier means. How can lawyers and judges
     distinguish between pension benefits earned after divorce due
     to post-divorce efforts and other pension benefits? One way to
     do this would be to apply some cost of living adjustment to the
     benefit amount from the date of divorce until the non-employee
     begins to receive it.



g.   Other States Review of Post Divorce Increases. A few other
     community property states that have been concerned about the
     issues raised in Berry deal with this problem in other ways. For
     example, in Louisiana, courts generally continue to use aTaggart


                      32
           approach to determine the community claim to pension rights
           (that is, consider all years of employment and calculate the
           community claim from the actual pension benefit). However, the
           employee is given the right to show that some increase in
           pension benefits was due to post-divorce promotions; If the
           employee can make such a showing, the community should not
           share in these increases. See Hare v. Hodgins, 586 So.2d 118
           (La. 1991); Croft v. Croft, 634 So.2d 76 (La. App. 1994). See
           also, Petschel v. Petschel, 406 N.W.2d 604 (Minn. App. 1987).
            Some courts have distinguished between "usual" promotions
           and other types of promotions, for determining what increases
           are excluded. See Croft, supra; Gemma v. Gemma, 778 P.2d
           429 (Nev. 1989).

     h.    Does Texas Follow The Louisiana Approach? It is unclear
           whether a Texas court can now, after Berry/Grier, follow the
           Louisiana approach. In Phillips v. Parish, 814 S.W.2d 501 (Tex.
           App. -- Houston [1st Dist.] 1991, writ den.) the court considered
           a post-divorce partition action much like Berry. The parties
           married before the employee began working, and divorced
           before retirement. In the partition action (filed after the employee
           had retired), the trial court found that the hypothetical retirement
           benefit earned as of the date of divorce was $449 per month. In
           the partition action, the employee argued that this was the
           maximum community claim. The appellate court rejected this
           argument, and affirmed the award to the non-employee of 30%
           of the actual monthly benefit of $1340. Phillips appears to
           construe Grier as now permitting the Louisiana approach when
           an employee divorces before retirement. (The appellate court
           noted that, in its view, "none of the post-divorce increases [in the
           pension benefit] were attributable to the husband's post-divorce
           continued employment." Id. at 505.)



2.   Defined Contribution Plans.

     a.    Separate Account for Each Employee. The other type of pension
           benefit is a defined contribution plan. Examples include profit-
           sharing plans, for example. In these plans, there is a separate
           account for each employee. The retirement benefit received is
           the annuity that can be purchased with the aggregate balance at


                            33
     the date of retirement.

b.   Defined Benefit Approach vs. Contribution Computation
     Approach. A present value computation is fairly simple for a
     defined contribution plan. If the plan is fully vested, the present
     value is the accrued account balance.

     The somewhat more complicated aspect of defined contribution
     accounts is the calculation of the community share if the parties
     married after the employee began accruing rights in the plan.
     One approach, of course, is a pro rata approach based on time.
     In other words, if the employee has been married for half the total
     time she has been accruing benefits under the plan, the present
     value would be 50% community property. A few courts have
     done this. See Alford v. Alford, 653 So.2d 133 (La. App. 1995).
     However, most courts, including recent Texas cases, have tried
     a different approach.

     In Marriage of Joiner, 755 S.W.2d 496 (Tex. App. -- Amarillo
     1988, no writ), the court considered a profit sharing plan the
     employee had been accruing rights in before marriage. The
     court concluded that the employee had a separate property claim
     to 20% of the account balance at divorce, because the account
     was 20% vested at the time of marriage. It would seem that,
     after Cearley v. Cearley, 544 S.W.2d 661 (Tex. 1976) this
     approach would be suspect.

     Three other recent cases have involved defined contribution
     plans. See Iglinski v. Iglinsky, 735 S.W.2d 536 (Tex. App. --
     Tyler 1987, no writ); Pelzig v. Berkebile, 931 S.W.2d 398 (Tex.
     App. -- Corpus Christi 1996, no writ); Hatteberg v. Hatteberg,
     933 S.W.2d 522 (Tex. App. -- Houston [1st Dist.] 1994, no writ).
     In all these cases, the trial courts applied the Taggart pro rata
     allocation approach based on time, and the courts of appeal
     reversed in each case.

     The courts of appeal emphasized that defined contribution
     accounts are different from defined benefit accounts and a
     different approach should be used to determine the community
     share. In each case, the appellate court merely subtracted the
     balance at the time of divorce form the account balance at the
     time of marriage; the difference was the community claim.


                      34
c.   Allocation Based Upon Contributions? These cases may not
     resolve all issues arising under defined contribution accounts,
     however. The issue in these cases seemed to be seen as
     whether to apply Taggart to defined contribution plans, and these
     three courts answered no. Even if one accepts that a pro rata
     allocation based on time should not be applied, a number of
     questions remain that were not clearly answered in these cases.
     If an allocation should not be made based on time, what about an
     allocation based on the relative amount of contributions during
     and before marriage? Some courts have used this type of
     approach for defined contribution accounts. See Marriage of
     Daniele, 854 S.W.2d 489 (Mo. App. 1993). (One might make an
     analogy to the way that military retirement benefits based on total
     points have been divided. See Bloomer, supra.)

d.   “Natural Enhancement” of Stock Approach. Even if one accepts
     the general principle that the separate property claim should be
     derived from the balance at the time of marriage, other issues
     remain. First, if some or all of the account was invested in stock
     that appreciated during marriage,          should this "natural
     enhancement" of the stock be credited to the separate estate?
     (Presumably this amount could be relatively simply calculated if
     the employee had invested the funds in a mutual fund that in its
     reports distinguishes between capital gains and income.) See
     White v. White, 521 N.W.2d 874 (Minn. App. 1994) (yes); Getter
     v. Getter, 627 N.E.2d 1043 (Ohio App. 1993) (yes).


e.   Increases Due to Income Accruing on Corpus. Of course, the
     account balance could also appreciate due to income accruing
     on the corpus. How should this income be characterized? Of
     course, income on separate property is community property in
     Texas. However, is this income accruing to the spouse? The
     income is accruing for the benefit of the spouse, but the fund may
     not be withdrawn until the employee retires or dies. See Iglinsky.
     Interest accruing on a trust of which a spouse is the beneficiary
     is not community property unless the spouse had the absolute
     right to withdraw the corpus and chose not to. See Long v. Long,
     542 S.W.2d 712 (Tex. Civ. App. -- Texarkana 1976, no writ);
     Lemke v. Lemke, 929 S.W.2d 662 (Tex. App. -- Ft. Worth 1996,
     writ den.). Is a defined contribution account like a trust?



                      35
     f.   Other States Treatment of Increases Due to Income. In states
          where income from separate property is separate, of course, this
          issue does not arise. Courts in other states have disagreed
          about the answer to this question. See Oldham, supra,
          §7.10[5][b]. Idaho, a community property state where income
          from separate property is community, has concluded that income
          accruing during marriage on a defined contribution account is
          community. See Maslen v. Maslen, 822 P.2d 982 (Idaho 1991).
          In contrast, in Minnesota, another state where income from
          separate property is divisible at divorce, a court has reached the
          opposite conclusion regarding the character of income accruing
          during marriage on premarital contributions to a defined
          contribution account. See White, supra. The court suggested
          that the separate claim would be calculated by determining what
          the balance in the account would have been as of the date of
          divorce if no contributions into the account had been made
          during marriage.

3.   Miscellaneous Pension Issues.

     a.   Maximum Pension Right Approach. Many pension rights have
          peculiar characteristics that may affect how a pension right might
          be characterized. For example, under some plans an employee
          earns a maximum pension right after a certain number of years
          of service. In Marriage of Henkle, 234 Cal. Rptr. 351 (Cal. App.
          1987) the employee was retired when the couple divorced. The
          couple was married for the last 6 of the 32 years the employee
          worked for the employer. The non-employee argued that the
          community claim to these defined benefit rights should be
          calculated pursuant to the Taggart fraction, or 6/32 of the
          benefits. The employee successfully argued that, because the
          maximum benefit was earned after 30 years of work, the last two
          years of work should be ignored for purposes of the Taggart
          fraction; the community claim was to 4/30 of the benefit.

          Under Cearley/Taggart, the court assumes that each month of
          employment is worth the same as any other month. Can this
          assumption ever be rebutted (other than by a Berry argument)?
          It was mentioned above that, if you can convince a court that time
          is not a fair way to allocate the community interest in the benefits,
          the court might use another way. See Bloomer, supra. Also, the
          court might use the pro rata approach, but may give certain


                           36
     periods more weight. For example, this has been done with
     "back-loaded" plans. See Shill v. Shill, 765 P.2d 140 (Idaho
     1988); Sims v. Sims, 358 So.2d 919 (La. 1978).

b.   Additional Pension Rights After Promotion.              Executives
     sometimes qualify for additional pension rights after a promotion.
     If an employee marries late in her career and receives such a
     promotion during marriage, should the pension be 100%
     community, or considered earned throughout the career? In
     Hudson v. Hudson, 763 S.W.2d 603 (Tex. App. -- Houston [14th
     Dist.] 1989, no writ), the court determined that the pension would
     be 100% community, although the point does not appear to have
     been contested.

c.   Early Retirement Incentive Payments. An increasing number of
     employees are given early retirement incentive payments. If an
     employee marries late in her career and then divorces shortly
     after receiving such a payment, how should the payment be
     characterized? This arose in Whorrall v. Whorrall, 691 S.W.2d
     32 (Tex. App.-- Austin, no writ). The court determined that the
     incentive payment should not be characterized like the other
     portion of the employee's regular defined benefit pension rights.
     The court characterized the right as 100% community property,
     but did not consider the question of whether a portion of the
     payment should be treated as lost post-divorce wages of the
     employee. See also, Marsh v. Wallace, 924 S.W.2d 423 (Tex.
     App. -- Austin 1996) (distinguishing between involuntary and
     voluntary military severance benefits). In other cases, some
     courts have treated early retirement incentives received after the
     cut-off date as the employee's separate property (see Mechana
     v. Lambert, 635 So.2d 747 (La. App. 1994); Boger v. Boger,
     405 S.E.2d 591 (N.C.App. 1991); Marriage of Frahm, 53 Cal.
     Rptr.2d 31 (Cal. App. 1996)) and others have not (see Marriage
     of Gram, 30 Cal. Rptr.2d 792 (Cal. App. 1994); Olivo v. Olivo,
     624 N.E.2d 151 (N.Y. 1993)).

     Regarding a post-divorce early retirement incentive involving
     defined benefit pension plan rights, a Texas court would have to
     decide whether Berry/Grier still require the community claim to
     be computed based on a fixed hypothetical early retirement
     benefit earned as of the date of divorce. If this is still the Texas
     rule, the non-employee spouse fairly clearly could not share in


                      37
     post-divorce early retirement incentives. If the community could
     share in such increases, how would the calculation be made?
     See Gram, supra (calculating the coverture fraction as if the
     employee had not taken early retirement).

d.   Deferred Accrual of Benefits. At times an employee must work
     for an employer for a certain specified period before the
     employee begins to accrue benefits. See Joiner, supra. For
     purposes of the Taggart formula, should these years of work
     before benefits begin to accrue be counted? In Holbrook v.
     Holbrook, 309 N.W.2d 343, 348 n.18 (Wis. 1981) the court
     ignored these years for purposes of the coverture fraction.

e.   Non-Employee Option on Deferred Payment Approach. When
     should the non-employee begin to share when defined benefit
     rights are divided under the deferred payment approach? Texas
     courts have not considered this question. Under the traditional
     Cearley/Taggart deferred payment approach, the non-employee
     did not begin to share until the employee retired (the coverture
     fraction is computed as of that date, and the community claim is
     computed based on actual retirement benefit). Some courts
     have concluded that the non-employee should be given the
     option to begin to receive the benefits on the date the employee
     first has the right to retire. See Marriage of Gillmore, 629 P.2d
     1 (Cal. 1981). Under this approach, if the non-employee
     chooses to receive the benefits early, the coverture fraction
     would be computed as of the date of first receipt (based on the
     hypothetical retirement benefit the employee would have
     received had retirement occurred on that date). The Retirement
     Equity Act permits (but does not require) such a right.

     Of course, the Texas approach may be different, if Texas would
     accept this view. It was discussed above that it is a bit unclear
     whether Berry/Grier now require, for calculating the value of the
     community portion of the pension benefit of a working employee,
     the use of the hypothetical pension benefit the employee had
     earned as of the date of divorce. If this is still required, after
     Grier, the benefit would be computed in that manner, not the
     manner the court did it in Gillmore.

     Some courts have endorsed this California approach (see
     Koelsch v. Koelsch, 713 P.2d 1234 (Ariz. 1986); Halverson v.


                     38
                        Halverson, 589 So.2d 1153 (La. App. 1991); Ruggles v.
                        Ruggles, 860 P.2d 182 (N.M. 1993); Gemma v. Gemma, 778
                        P.2d 429 (Nev. 1989)). Others have disagreed. See Board of
                        Trustees v. Gramman, 578 N.E.2d 371 (Ind. App. 1991);
                        Marriage of Oler, 451 N.W.2d 9 (Iowa App. 1989); VA. CODE
                        ANN. §20-107.3[6].

                 f.     Waiver of Rights in Marital Agreements. Can rights to a qualified
                        private pension plan be waived in a premarital agreement?
                        Courts have reached conflicting conclusions. CompareMarriage
                        of Rahn, 914 P.2d 463 (Colo. App. 1995) (yes) with Richards v
                        Richards, 648 N.Y.S.2d 589 (N.Y. App. Div. 1996) (no).

IV   CHECKLISTS, PREDICATES AND PRESENTATION OF PROOF IN PROPERTY
     CASES

     A.   INTRODUCTION.

          This section covers checklists, predicates and presentation of proof in property
          cases. Library references used in preparation of this article are “Valuing
          Valuation” presented by the Houston Family Law Inns of Court on November 20,
          1997; and “Family Law,” authored by AAML Fellow, Brian Webb and published
          by Knowles Law Book Publishing, Inc., P. O. Box 91104, Fort Worth, Texas
          76111, phone 800-299-0202; and “Predicates - Documentary and
          Demonstrative Evidence” by Howard Nations, State Bar of Texas - Ultimate
          Trial Notebook (1994).

     B.   CHECKLISTS

          1.     MARSHALING DATA.

                 Marshalling data on property should, if possible, take place in the initial
                 client interview. Property cases are document intensive and early
                 collection of documents is essential to a proper presentation of property
                 issues to the finder of fact.

                 a.     Potential Parties.

                        Parties to property cases are not limited to husband and wife
                        because of the problem lack of jurisdiction over non-parties for
                        the enforcement of orders and judgments. Consider the following
                        potential parties based upon the issues created in the case, to

                                         39
     wit:

     (1)    husband

     (2)    wife

     (3)    partner

     (4)    partnership

     (5)    corporation

     (6)    trustee

     (7)    conspirator

b.   Potential Witnesses.

     Potential witnesses in property issue cases run the gamit of
     trades, businesses, occupations and professions and generally
     fall into the following categories:

     (1)    husband

     (2)    wife

     (3)    partner

     (4)    corporate officer

     (5)    trustee / receiver

     (6)    accountant / auditor

     (7)    attorney

     (8)    family member

     (9)    appraiser

            (A)       real property

            (B)       personal property

                        40
            (C)   business

c.   Potential Documents.

     Potential documents in property cases include not only
     documentary evidence but dimonstrative evidence; and not only
     documents evidencing title but also documents referring to
     property; to wit:

     (1)          401K plans

     (2)          Agency agreements

     (3)          Airplane titles

     (4)          Annuities

     (5)          Appraisals

     (6)          Artwork provenances

     (7)          Audio recordings

     (8)          Balance sheets

     (9)          Banking records

     (10)         Bills of sale

     (11)         Boat titles

     (12)         Bonds

     (13)         Brokerage account records

     (14)         Certificate of title

     (15)         Charge account records

     (16)         Choses in action

     (17)         Corporate tax returns

                    41
(18)    Credit reports

(19)    Deeds

(20)    Deeds of trust

(21)    Defined benefit plans

(22)    Defined contribution plans

(23)    Disability plans

(24)    Employment agreements

(25)    Fiduciary tax returns

(26)    Financial statements

(27)    Financing statements

(28)    Gambling debts

(29)    Incentive plans

(30)    Income tax returns

(31)    Independent contractor agreements

(32)    Individual retirement accounts

(33)    Insurance policies

(34)    Insurance schedules of property

(35)   Joint venture agreements

(36)    Judgments

(37)    KEOGH plans

(38)    Lease agreements

(39)    Livestock titles

          42
(40)         Loan receivables

(41)         Mortgages

(42)         Motor vehicle titles

(43)         Non-compete agreements

(44)         Oil and gas agreements

       (A)   division orders

       (B)   royalty agreements

       (C)   working interest agreements

(45)         Partition agreements

(46)         Partnership agreements

(47)         Partnership tax returns

(48)         Passport records

(49)         Photographs

(50)         Post-marital agreements

(51)         Pre-marital agreements

(52)         Probate records

(53)         Professional association agreements

(54)         Profit and loss statements

(55)         Profit sharing plans

(56)         Promissory notes

(57)         Recreational vehicle titles

(58)         Safe deposit box records

               43
           (59)          Savings plans

           (60)          Securities

           (61)          Security agreements

           (62)          Severance agreements

           (63)          Social security benefits

           (64)          Spousal maintenance agreements

           (65)          Stock options

           (66)          Stocks

           (67)          Supervorship agreement

           (68)          Tenancy agreement

           (69)          Tax reports

                   (A)   Franchise

                   (B)   Quarterly declaration

                   (C)   Sales

                   (D)   Unemployment compensation

           (70)          Trust agreements

           (71)          Trusts

           (72)          Wills

           (73)          Workers’ compensation benefits

2.   DATA SOURCES .

     There are numerous sources of data, to wit:

     a.    Banks

                           44
           b.     Brokerage firms

           c.     Corporations

           d.     Deed records

           e.     IRS

           f.     Insurance companies

           g.     Internet

           h.     Judgment records

           i.     Livestock association

           j.     NASDAC

           k.     Plan administrations

           l.     Property records

           m.     SEC

           n.     Social Security Administration

           o.     Trust companies




C.   PREDICATES

     Various general predicates are required in the proof of property issues as
     distinguished from elements of proof on certain kinds of property such as
     businesses, real estate, jewelry and the like.

     1.    GENERAL PREDICATES .

           a.     Blackboards / Sketchpads.

                  i.     Admission

                         (a).    the blackboard / sketchpad drawing depicts a

                                  45
                   certain area, object or notation.


            (b).   the witness is familiar with that area, object or
                   notation and explains the basis for his or her
                   familiarity.

            (c).   in the witness’ opinion the blackboard / sketchpad
                   drawing is an accurate depiction of that area,
                   object or notation.

     ii.    Exclusion

            (a).   the probative value of the blackboard / sketchpad
                   illustration is outweighed by its prejudicial effect;

            (b).   the probative value of the blackboard / sketchpad
                   is outweighed by danger of confusion of the issues
                   or misleading the trier of fact; or

            (c).   the probative value of the blackboard / sketchpad
                   is outweighed by danger that the blackboard /
                   sketchpad will cause undue delay, waste of time,
                   or needless presentation of cumulative evidence.
                   FED. R. CIV. P. 403.

     iii.   Commentary

            Mid-Texas Development Co. v. McJunkin, 369 S.W.2d
            788 (Tex. Civ. App. - Dallas 1963, no writ) [“use of
            blackboard, not only in jury argument, but to help illustrate
            and make more meaningful the testimony of a witness is
            clearly permissible in Texas”]. Ordinarily, the permission
            or refusal of the use of a blackboard / sketchpad during
            counsel’s argument is a matter within the sound discretion
            of the trial court. Haycock v. Christie, 249 F.2d 501, 101
            App.D.C. 409 (1957).

b.   Business Records

     i.     Admission

            (a).   witness is the or other person with knowledge of

                     46
             the business filing system.

      (b).   the record was made in the ordinary course of
             business.

      (c).   the record was made at or near the time of the
             event in question.

             (i).     in the regular course of business, a person
                      with knowledge made the record or was
                      furnished with information for the record.

             (ii).    it was the regular practice of that business
                      activity to make such a record. FE D. R.
                      CIV. EVID. 803(6).

ii.   Exclusion

      (a).   Absence of proper sponsor. The Federal Rules of
             Evidence do not contain a provision for self-
             authentication of business records. Some state
             rules will waive extrensic evidence as a condition
             precedent when business records are
             accompanied by an affidavit.

      (b).   Records contain hearsay testimony. Where
             proper predicate is not shown for admissibility of
             sources, which are offers to prove the acts, events,
             or conditions recorded in the original business
             records that the exhibits perrport to summarize,
             the records are objectionable as hearsay.

      (c).   Predicate not fully developed - all elements must
             be proven for predicate to be complete.

      (d).   The underlying preparation of the records lacks
             trustworthiness. Factors to consider include:

             (i).     habits of precision of recordkeeping

             (ii).    whether others rely on the records

             (iii).   whether a duty exists to record accurately

                47
                   (iv).   whether improper motivation for making the
                           records existed.

     iii.   Commentary

            (a).   the source of information or the method or
                   circumstances of preparation must not indicate a
                   lack of trust worthiness.

            (b).   the burden is on the party against whom the
                   evidence is offered to show lack of
                   trustworthiness.

            (c).   the custodian’s personal knowledge of the
                   particular items or events that are the contents of
                   the particular record is not required.

            (d).   this rule does not require that the records be
                   prepared by the business which has custody of
                   them.

            (e).   Tex. R. Evid. 803 (6)


c.   Motion Pictures.

     i.     Admission.

            (a).   the operator was qualified to take a motion picture
                   film.

            (b).   the operator used certain equipment in good
                   working order to film the activity.

            (c).   the operator used proper procedures to film the
                   activity.

            (d).   the operator accoutns for the custody of the film
                   and the developed movie.

            (e).   the developed movie was a good reproduction of
                   the activity.


                     48
     ii.    Exclusion

            (a).   the probative value of the motion picture is
                   outweighed by its prejudicial effect; or

            (b).   the probative value of the motion picture is
                   outweighed by danger that the motion picture will
                   cause confusion of the issues or will mislead the
                   jury; or

            (c).   the probative value of the motion picture is
                   outweighed by danger that the motion picture will
                   cause undue delay, or needless presentation of
                   cummulative evidence. F ED. R. CIV. EVID. 403.

     iii.   Commentary

            (a).   motion pictures, whether in color or black and
                   white and whether with or without sound, are
                   admissible and are said to be treated the same as
                   pictures and x-rays.

            (b).   however, the predicate for motion pictures is more
                   akin to x-rays than still photographs because the
                   competency of the operator and machine must be
                   established.

            (c).   some trial attorneys prefer to present very detailed
                   testimony about the equipment, especially the lens
                   used and such technical matters as the speed of
                   the film and the lens aperture. A general
                   description of the equipment is sufficient.

            (d).   Tex. R. Evid. 901.

d.   Photographs

     i.     Admission.

            The fundamental elements are as follows:

            (a).   witness is familiar with the object, scene, etc. that
                   is depicted in the photograph and explains the

                     49
             basis for his familiarity.

      (b).   witness recognizes the object, scene, etc. that is
             depicted and testifies that the photograph is a
             “fair,” “accurate,” true,” or “good” depiction of what
             it purports to be at the relevant time.

      (c).   the predicate is laid by “yes” answers to these
             questions where conditions have not been
             materially changed between the time of the events
             in question and the time of the photographs.

      (d).   if the photograph is taken long after the events in
             question, a further precedent may be necessary in
             showing either:

             (i).    that there has been no substantial change
                     over time, or

             (ii).   explaining and identifying the changes.

      (e).   the differences must be identified and the
             testimony must identify the parts of the
             photographs which are irrelevant to the case.
             Remoteness in time alone, without changed
             conditions, does not affect admissibility.

ii.   Exclusion

      (a).   the probative value of the photograph is
             outweighed by its prejudicial effect: or

      (b).   the probative value of the photograph is
             outweighed by danger that the photograph will
             cause confusion of the issues or will mislead the
             jury; or

      (c).   the probative value of the photograph is
             outweighed by danger that the photograph will
             cause undue delay, or needless presentation of
             cumulative evidence. F ED. R. CIV. EVID. 403.

      (d).   if a photograph is merely calculated to arouse

                50
                   passion or create prejudice, it should be excluded.
                   (In condemnation case, posed photograph
                   showing carcasses of dead animals resulting from
                   a pipeline rupture had little relevance or probative
                   force and were properly inadmissible).

     iii.   Commentary

            (a).   the foundation witness, in addition to testimony
                   regarding accuracy, must state what the
                   photograph depicts.       Conflicts as to the
                   photograph’s accuracy in showing what is stated
                   do not render the photograph inadmissible
                   because correctness becomes a jury question.

            (b).   long delays simply go to the weight, not the
                   admissibility of the photograph if the changes are
                   fairly explained.

            (c).   photographs of a “substantially similar” object,
                   scene or condition are admissible if the
                   differences are explained.

            (d).   the witness need not have been present not made
                   the photograph.

            (e).   additional problems arise with posed
                   photographs, i.e., where places and objects have
                   been placed in position. If a photograph merely
                   portrays people’s positions as determined from
                   testimony, they may be admissible. This, of
                   course, places them in the category of illustrations
                   and most courts follow a restritive view of
                   photographs which merely conform to the
                   proponent’s witness testimony.

            (f).   Tex. R. Evid. 901.

e.   Physical Evidence: Articles and Objects.

     i.     Admission

            (a).   the object has a unique characteristic.

                     51
       (b).   the witness observed the characteristic on a
              previous occasion and identifies the exhibit as the
              object.

       (c).   as best as he or she can tell, the object is in the
              same condition as it was when he or she initially
              observed the object.

ii.    Chain of Custody

       (a).   the foundation for chain of custody must be laid
              during the testimony of each link in the chain:

       (b).   the witness initially received the object at a certain
              time and place.

       (c).   the witness safeguarded the object; the witness
              testifies to circumstances making it unlikely that
              substitution or tampering occurred.

       (d).   the witness ultimately disposed of the object
              (retention, destruction, or transfer to another
              person).

       (e).   as best he or she can tell, the exhibit is the object
              he or she previously handled and is in the same
              condition as it was when he or she initially
              received it.

iii.   Exclusion

       (a).   the probative value of the article or object is
              outweighed by its prejudicial effect; or

       (b).   the probative value of the article or object is
              outweighed by danger that the article or object will
              cause confusion of the issues or will mislead the
              jury; or

       (c).   the probative value of the article or object is
              outweighed by danger that the article or object will
              cause undue delay, or needless presentation of
              cumulative evidence. F ED. R. CIV. EVID. 403.

                52
           (d).   the article or object is not in the same condition as
                  it was when the witness initially received it and a
                  chain of custody cannot be established and it is
                  likely that substitution or tampering may have
                  occurred.

     iv.   Commentary

           (a).   the trial court has considerable discretion
                  regarding the degree to which “chain of custody”
                  must be established.

           (b).   if there is not evidence that an object offered is
                  either the same or in a state substantially similar to
                  the condition it was in at the time of the event in
                  question, then the predicate may include a “chain
                  of custody” and a showing of lack of opportunity for
                  abuse, changes, etc.

           (c).   when objects or articles can be brought into court
                  and exhibited, it is more satisfactory than a mere
                  description of them by witnesses that have
                  inspected them outside of court.
           (d).   Hayes v. Gainesville St. Ry. Co., 8 S.W.2d 491
                  (Tex. 1888) [“when objects or articles can be
                  brought into court and exhibited, it is more
                  satisfactory than a mere description by witnesses
                  that have inspected them outside of court.”];
                  Imperial Cas. & Indemn. Co. of Omaha, Neb. v.
                  Terry, 451 S.W.2d 303 (Tex. Civ. App. - Tyler
                  1970, no writ). [“if there is not evidence that an
                  object offered is the same or in a state
                  substantially similar to the condition it was in at the
                  time the event in question, then the predicate may
                  include a ‘chain of custody’ and a showing of lack
                  of opportunity for abuse, changes, etc.”].

f.   Summaries

     i.    Admission

           (a).   the proof(s) involve the contents of “voluminous
                  writings, recordings, or photographs” which

                    53
              “cannot collectively be examined in court.”

       (b).   the originals, or duplicates, are made available to
              opposing counsel for examination at a reasonable
              time and place.

       (c).   the person who prepared the chart or summary
              should be available in court to testify or explain it.

       (d).   there should be a reasonable guarantee of the
              accuracy of any summaries or charts.

ii.    Exclusion

       (a).   the summary is not an accurate representation of
              its underlying documents.

       (b).   the titles of the summaries should not themselves
              be either prejudicial or take an independent
              meaning.

iii.   Commentary

       (a).   under the Rule, the summaries themselves and not
              the underlying documents, be they in chart form or
              otherwise, are the evidence which the trier of fact
              may consider. Thus, so long as the summaries
              are based upon admissible documents which
              have been previously made available on
              reasonable terms, the underlying documents
              themselves need not be offered into evidence.

       (b).   counsel should disclose, not only underlying
              documents, but copies of all summaries/charts
              sufficiently in advance to either obtain stipulations
              regarding accuracy and admissibility or allow for
              a pretrial examination and rulings by the court.

       (c).   Lloyd v. United States, 226 F.2d 9 (5th Cir. 1955)
              (In tax litigation, the use of the terms “overstated,”
              “unreported” and “unpaid” in summary chart
              captions were questioned as conclusionary where
              the issue involved whether income or overstated,

                54
                  unreported or unpaid).

           (d).   the admissibility of summaries is a matter within
                  the discretion of the court. Baires v. United
                  States, 426 F.2d 833 (5th Cir. 1970).

           (e).   Tex. R. Evid. 1006.

g.   Tape Recordings.

     i.    admission

           (a).   the operator of the equipment was qualified.

           (b).   the operator recorded at a certain time and place
                  using proper procedures and equipment in good
                  working order.

           (c).   the tape is a good reproduction of the
                  conversation.

           (d).   the speakers must be identified.

           (e).   the statements were made without inducement.

           (f).   establish chain of custody (operator accounts for
                  the tape’s custody between the time of taping and
                  the time of trial) and that no changes, additions, or
                  deletions have been made.

     ii.   Exclusion

           (a).   the probative value of the tape recording is
                  outweighed by its prejudicial effect; or

           (b).   the probative value of the tape recording is
                  outweighed by danger that the tape recordings will
                  cause confusion of the issues or will mislead the
                  jury; or

           (c).   the probative value of the tape recording is
                  outweighed by daner that the tape recording will
                  cause undue delay, or needless presentation of

                    55
                   cumulative evidence. F ED. R. CIV. EVID. 403.

     iii.   Commentary

            (a).   the Texas Supreme Court has held that some of
                   the elements may be inferred and need not be
                   shown in detail. The court also held that specific
                   objections are required to preserve error in
                   improperly admitting recordings. Seymour v. R.
                   L. Gillespie, 608 S.W.2d 897 (Tex. 1980).

            (b).   the rule of optional completeness applies to tape
                   recordings introduced during trial. This rule
                   provides that the adverse party may at any time
                   introduce any other part or any other recorded
                   statement which ought in fairness to be
                   considered contemporaneously with it. FED. R.
                   CIV. EVID. 106.

            (c).   Cummings v. Jess Edwards, Inc., 445 S.W.2d
                   767 (Tex. App. - Corpus Christi 1969, writ refused
                   n.r.e.)

h.   Television Tapes.

     i.     Admission

            (a).   witness is familiar with the scene, etc. that is
                   portrayed on the television tape.

            (b).   witness explains the basis for his familiarity.

            (c).   witness recognizes the scene, etc. that is
                   portrayed on the television tape.

            (d).   witness testifies that the tape is a “fair,” “accurate,”
                   “true,” or “good” portrayal of the persons, objects,
                   devices, places, processes, etc. shown.

     ii.    Exclusion

            (a).   the probative value of the television tape is
                   outweighed by its prejudicial effect. FED. R. CIV.

                     56
              EVID. 403.

       (b).   the probative value of the television tape is
              outweighed by danger that the television tape will
              cause confusion of the issues or will mislead the
              jury; or


       (c).   the probative value of the television tape is
              outweighed by danger that the television tape will
              cause undue delay, or needless presentation of
              cumulative evidence. F ED. R. CIV. EVID. 403.

iii.   Commentary

       (a).   where an issue exists as to whether the tape was
              broadcast, and perhaps the extent of broadcast, it
              is necessary to present the testimony of a witness
              with knowledge as to these matters. Pritchard v.
              Downie, 326 F.2d 323, 326 (8th Cir. 1964).

       (b).   where the fact of broadcast is irrelevant to the
              proponent, (e.g., the tape is offered because it
              depicts a relevant scene) then authenticating
              testimony can be provided by any witness with
              knowledge as to fairness and accuracy of the
              depiction.

       (c).   Tex. R. Evid. 1001(b).

iv.    the above is all that is technically required to admit
       videotape. However, other predicates may be necessary
       (waivable by agreement) and one would be well served to
       be prepared to offer the following additional information
       should it be required by a Court:

       (a).   proof that the equipment operator was competent.

       (b).   the type and mechanics of the videotape
              equipment used and the nature of accessory,
              backup or other devices used in connection with
              the making of the tape.


                57
          (c).     the type, specifications and sensitivity of the
                   videotape used.

          (d).     in cases where the videotape is being used in a
                   manner similar to a movie camera, such as when
                   making a movie of a process or a machine in
                   operation or the scene of an accident, there should
                   be some proof regarding the type of lens used,
                   any distortions or exaggerations produced by the
                   type lens used, particularly if a wide-angle or
                   telephoto lens is employed, and a full explanation
                   of the techniques used.

          (e).     the type and amount of artificial lighting, if any,
                   used for the making of the tape.

          (f).     differences, if any, between the scene, device or
                   process shown in the videotape and the scene,
                   device or procees as it was at the time of the
                   events in question must be explained. Obviously,
                   similarity is required, and any differences should
                   be as minor as you can make them.

          (g).     a chain of custody will be a required element of
                   proof in the absence of an agreement. Of course,
                   in regard to depositions, the stenographic record
                   would tend to prove the verity of the videotape.

          (h).     if moving devices, processes or tests are shown,
                   the the speed of the videotape camera and
                   playback equipment should be shown, to
                   demonstrate that there is no material speeding up
                   or slowing down of the process, without full
                   explanation of the speed change. Slow motion or
                   stop motion is okay, but needs to be explained
                   and be relevant to the point to be made.

          (i).     any changes, editing, or deletions, if not done in
                   pre-trial or by agreement, should be explained or
                   the proof should show the absence of changes,
                   editing or deletions.

i.   Videotapes.

                     58
i.    Admission

      (a).   witness is familiar with the scene, etc. that is
             portrayed on the videotape and explains the basis
             for his familiarity.

      (b).   witness recognizes the scene, etc. that is
             portrayed on the videotape and testifies that the
             videotape is a “fair,” “accurate,” “true,” or “good”
             portrayal of the persons, objects, devices, places,
             processes, etc. shown.

ii.   the above is all that is technically required to admit
      videotape. However, other predicates may be necessary
      (waivable by agreement) and one would be well served to
      be prepared to offer the following additional information
      should it be required by a Court:

      (a).   proof that the equipment operator was competent.

      (b).   the type and mechanics of the videotape
             equipment used and the nature of accessory,
             backup or other devices used in connection with
             the making of the tape.

      (c).   the type, specifications and sensitivity of the
             videotape used.

      (d).   in cases where the videotape is being used in a
             manner similar to a movie camera, such as when
             making a movie of a process or a machine in
             operation or the scene of an accident, there should
             be some proof regarding the type of lens used,
             any distortions or exaggerations produced by the
             type lens used, particularly if a wide-angle or
             telephoto lens is employed, and a full explanation
             of the techniques used.

      (e).   the type and amount of artificial lighting, if any,
             used for the making of the tape.

      (f).   differences, if any, between the scene, device or
             process shown in the videotape and the scene,

               59
              device or process as it was at the time of the
              events in question must be explained. Obviously,
              similarity is required, and any differences should
              be as minor as you can make them.

       (g).   a chain of custody will be a required element of
              proof in the absence of an agreement. Of course,
              in regard to depositions, the stenographic record
              would tend to prove the verity of the videotape.

       (h).   if moving devices, processes or tests are shown,
              then the speed of the videotape camera and
              playback equipment should be shown, to
              demonstrate that there is no material speeding up
              or slowing down of the process, without full
              explanation of the speed change. Slow motion or
              stop motion is okay, but need to be explained and
              be relevant to the point to be made.

       (i).   any changes, editing, or deletions, if not done in
              pre-trial or by agreement, should be explained or
              the proof should show the absence of changes,
              editing or deletions.

iii.   Exclusion

       (a).   the probative value of the videotape is outweighed
              by its prejudicial effect; or

       (b).   the probative value of the videotape is outweighed
              by danger that the videotape will cause confusion
              of the issues or will mislead the jury; or

       (c).   the probative value of the videotape is outweighed
              by danger that the videotape will cause undue
              delay, or needless presentation of cumulative
              evidence. F ED. R. CIV. EVID. 403.

iv.    Commentary.

       (a).   the term “videotape” is included within the term
              “photograph” in FED. R. CIV. EVID. 1001.
              Therefore, the predicate for admission is the

                60
                           same.

                    (b).   in reard to videotaped depositions, “chain of
                           custody” is not a necessary element to establish a
                           foundation for admissibility as it is with other
                           videotapes because the stenographic record
                           tends to prove the verity of the videotape.

                    (c).   Tex. R. Evid. 1001(b).

     j.     Views

            i.      Admission

                    The foundational elements are as follows:

                    (a).   witness who is familiar with the place or object the
                           subject of the view and explains his familiarity.

                    (b).   witness recognizes the place or object the subject
                           of the view and testifies that the scene or object
                           the subject of the view is a place or object in issue
                           and is what it purports to be.

                    (c).   the place or object the subject of the view must
                           currently be in the same or substantially similar
                           condition as it was at the time in issue.


                    (d).   the view must be relevant to an issue in the case.

            ii.     Exclusion

                    (a).   the trial judge should control the ultimate decision
                           of allowing or disallowing the view. The judge has
                           broad discretion to allow or disallow the view even
                           where all parties consent to the view.

2.   VALUING VALUATION.

     The materials in Section V herein provide the sources for proof in the
     valuing of a business and for direct and cross examination of a business
     valuation expert.

                             61
D.   PROPERTY.

     The following types of property may or may not be subject to division depending
     upon federal and state constitutions, statutes and case law, to wit:

     1.     REAL ESTATE

            a.     description

            b.     type

            c.     location

            d.     value (equity / fair market value)

            e.     liens

            f.     income

            g.     taxes

            h.     expenses

            i.     partition

            j.     sale

            k.     estate in years

            l.     insurance

            m.     receivership

            n.     foreign realty*

            o.     domestic realty

            PRACTICE NOTE: If a court has in personam jurisdiction of the parties, it
            has the power to require the parties to execute the deed to the property.
            Allis v. Allis, 378 F.2d 721, 725-726 (5th Cir.), cert. denied, 389 U.S.
            953, 88 S.Ct. 337, 19 L.Ed. 363 (1967).


                                     62
2.   PERSONAL PROPERTY.

     Personal property is any property that is not real property and is
     unlimited in its categorization. Some common items of personalty
     encountered in divorces are:

     a.    Jewelry

     b.    Personal effects

     c.    Household furnishings

     d.    Motor vehicles

     e.    Boats

     f.    Airplanes

     g.    Cycles

     h.    Checking accounts

     i.    Savings accounts

     j.    Accounts with financial institutions

     k.    Certificates of deposit

     l.    Money market funds

     m.    Credit unions

     n.    Stocks

     o.    Bonds

     p.    Life insurance

     q.    IRA’s

     r.     KEOGH accounts

     s.     Retirement benefits

                            63
          t.     Safe deposit box contents

          u.     Livestock

          v.     Artwork / collections

          s.     Trusts, estate, and custodial assets

          t.     Sole proprietorships

          u.     General partnerships

          v.     Limited partnerships

          w.     Joint ventures

          x.     Closely held corporations

          y.     Professional practice

          z.     Goodwill in a professional practice

          aa.    Money judgments

          bb.    Life estates

          cc.    Workers compensation benefits

          dd.    Federal government benefits

          ee.    Degrees earned during marriage

          ff.    Membership in a voluntary association

E.   FACTORS CONSIDERED IN DIVIDING PROPERTY.

     1.   GENERAL.

          Except where otherwise provided by state constitution or statute the
          matrimonial court is given the equitable authority to divide the property
          in a manner that is just and right. The equity court has the broadcast
          discretion in executing that authority. Its discretionary division will be

                                  64
     overturned on appeal only upon a clear showing of abuse. Appellate
     courts generally indulge every reasonable presumption in favor of the
     trial court’s proper exercise of discretion because the trial court in a
     divorce case has the opportunity to observe the parties on the witness
     stand, determine their credibility, evaluate their needs and potentials,
     both social and economic. as the trier of fact, the court is empowered
     to use its legal knowledge and its human understanding and experience.
     Although many divorce cases have similarities, no two of them are
     exactly alike. Mathematical precision in dividing property in a divorce
     is usually not possible.

2.   PARTICULAR FACTORS

     a.     Future Need for Support

            The probable prospective need for support may be the most
            important factor. Carle v. Carle, 234 S.W.2d 1002 (Tex. 1950);
            Goren v. Goren, 531 S.W.2d 897 (Tex. App. - Houston [1 st. Dist.]
            1975, writ dism’d). [the probable prospective need for support
            has been said to be the most important factor]; Pickett v. Pickett,
            401 S.W.2d 846 (Tex. App. - Tyler 1966, no writ).

     b.     Fault in the Breakup of the Marriage

            In states allowing fault as a consideration in dividing and
            awarding the party not at fault a greater percentage because of
            such conduct, the court must allow reasonable discovery on the
            issue of fault in the breakup of the marriage. However, it is not
            mandatory that fault must be considered in all cases where a
            divorce is granted on fault grounds. Hooper v. Hooper, 403
            S.W.2d 215 (Tex. App. - Amarillo 1966, writ dism’d). However,
            the Supreme Court has stated that this does not mean that fault
            must be considered in all cases where a divorce is granted on
            fault grounds. Young v. Young, 609 S.W.2d 758 (Tex. 1980).

     c.     Disparity of Incomes or of Earning Capacities

            In considering the disparity of earning power between the
            spouses the court may look to the spouses’ respective business
            opportunities, capacities and abilities. In Re: Marriage of
            McCurdy, 489 S.W.2d 712 (Tex. App. - Amarillo 1973, writ
            dism’d).


                             65
d.   Spouses Capacities and Abilities

     A spouse’s mental capacity and abilities may be considered in
     the division of property because mental capacity and abilities
     have a direct correlation of the ability to obtain and retain
     employment. Murff v. Murff, 615 S.W.2d 696 (Tex. 1981);
     Eikenhorst v. Eikenhorst, 746 S.W.2d 882 (Tex. App. - Houston
     [1st Dist.] 1988, no writ).

e.   Benefits the Innocent Spouse Would Have Derived from
     the Continuation of the Marriage

     This factor is important because it could, for example, include
     medical benefits to which the spouse would have been entitled
     as a wife of a retired military officer. Hedtke v. Hedtke, 248 S.W.
     21 (Tex. 1923).




f.   Business Opportunities

     Business opportunities, capacities, and abilities of the parties
     may be relevant in the division of property because the spouse
     with a history of business opportunities has a better chance of
     recouping or recovering from an unequal division of property.
     Murff v. Murff, 615 S.W.2d 696 (Tex. 1981); In Re: Marriage of
     McCurdy, 489 S.W.2d 712 (Tex. App. - Amarillo 1973, writ
     dism’d).

g.   Education and Training

     Education and specialized training have a direct correlation to
     the ability to obtain and retain employment as well as the
     opportunity and ability to make money. Murff v. Murff, 615
     S.W.2d 696 (Tex. 1981); Cooper v. Cooper, 513 S.W.2d 229
     (Tex. App. - Houston[1st Dist.] 1974, no writ).

h.   Relative Physical Conditions

     A person’s physical condition usually affects their ability to obtain


                      66
     and retain employment. One spouse in excellent physical
     condition married to another spouse in poor physical condition
     should and most times does weigh in the judge’s decision on
     division of property. Murff v. Murff, 615 S.W.2d 696 (Tex. 1981);
     Hahne v. Hahne, 663 S.W.2d 77 (Tex. App. - Houston [14th
     Dist.] 1983, no writ).

i.   Relative Financial Condition and Obligations

     Pre marriage wealth or financial obligations affect the division of
     property because of the usual transfer of monies back and forth
     during the marital existence. Murff v. Murff, 615 S.W.2d 696
     (Tex. 1981); Horlock v. Horlock, 533 S.W.2d 52 (Tex. App. -
     Houston [14th Dist.] 1975, writ dism’d).

j.   Disparity of Ages

     Any combination of scenarios come to mind, to wit:

     i.     wage earner old - non-wage earner young

     ii.    wealthy spouse old - non-wealthy spouse young

     iii.   both spouses young

     iv.    both spouses old

     Murff v. Murff, 615 S.W.2d 696 (Tex. 1981)

k.   Size of Marital Estate

     The size of the marital estate can determine the percentage, if
     any, of disproportionate division of property. The larger the
     estate, the less disproportionate division of property. Wilkerson
     v. Wilkerson, 515 S.W.2d 52 (Tex. App. - Tyler 1974, no writ).

l.   Size of Non-Marital Estate

     Even though there may be a prohibition of divestiture of a
     spouse’s non-marital property, this does not prevent the trial
     court from taking into account the non-marital property of
     spouses when making a division of property. Murff v. Murff, 615


                      67
     S.W.2d 696 (Tex. 1981); Thomas v. Thomas, 603 S.W.2d 356
     (Tex. App. - Houston [14th Dist.] 1980, writ dism’d).

m.   Expected Inheritance of Spouses

     The expectations of an inheritance is a proper consideration in
     the property division. Whittenburg v. Whittenburg, 523 S.W.2d
     797 (Tex. App. - Austin 1975, no writ).

n.   Nature of Property

     The court should consider which party would benefit from a
     particular marital property asset. A unique chattel, especially
     beneficial to one party, should be awarded to that party. It should
     be reversible error in the division of property where a spouse is
     significantly deprived or adversely affected with respect to his/her
     business or means of income production. Goren v. Goren, 531
     S.W.2d 897 (Tex. App. - Houston [1 st Dist.] 1975, writ dism’d);
     Hooper v. Hooper, 403 S.W.2d 215 (Tex. App. - Amarillo 1966,
     writ dism’d); Wilson v. Wilson, 225 S.W.2d 236 (Tex. App. - Fort
     Worth 1949, no writ).

o.   Attorneys’ Fees

     The amount, size or award of attorneys’ fees is a factor to be
     considered in the division of property especially when the fees
     have been incurred due to the hiding, secreting, or other
     hypothecation of marital assets. Murff v. Murff, 615 S.W.2d 696
     (Tex. 1981); Carle v. Carle, 234 S.W.2d 1002 (Tex. 1950).

p.   Custody of Children

     The fact that a spouse is awarded custody of a child or children,
     in itself should justify an unequal division of property. Boriak v.
     Boriak, 541 S.W.2d 237 (Tex. App. - Corpus Christi 1976, writ
     dism’d). [the courts said that the fact that the father was awarded
     custody “in itself would justify an unequal division of the
     property”]; Young v. Young, 609 S.W.2d 758 (Tex. 1980) [care
     of adult children may also be considered].

q.   Reimbursement Between Estates



                      68
     Reimbursement between estates is a factor to consider in the
     division of property when money, property, time, talent and labor
     from one estate has been used or expended to financially benefit
     or enhance another estate and there has been no quid pro quo
     from the receiving estate. Harris v. Holland, 867 S.W.2d 86
     (Tex. App. - Texarkana 1993, no writ); Jensen v. Jensen, 665
     S.W.2d 107 (Tex. 1984); Vallone v. Vallone, 664 S.W.2d 455
     (Tex. 1982).

r.   Gifts to Spouse During Marriage

     Gifts between or to spouses during the marriage which have the
     effect of enhancing the non-marital estate and decreasing the
     marital estate should be considered in the division of property.
     Additionally, and in some states, a conveyance of property from
     a parent to a child (spouse of a marriage which is ending in
     divorce) is presumptively considered to have been conveyed as
     a gift. Thus, the property will be considered to be the separate
     property of the receiving spouse unless the petitioning spouse
     can rebut the presumption. Dorfman v. Dorfman, 457 S.W.2d
     417 (Tex. App. - Texarkana 1970, no writ); Kyles v. Kyles, 832
     S.W.2d 194 (Tex. App. - Beaumont 1992 no writ).

s.   Excessive Marital Property Gifts to Others

     A disproportionate division of property is justified when a spouse
     wrongfully spends a substantial amount of marital asset money
     on girlfriends, boyfriends and the like. In Re: Marriage of
     McCurdy, 489 S.W.2d 712 (Tex. App. - Amarillo 1973, writ
     dism’d); Morrison v. Morrison, 713 S.W.2d 377 (Tex. App. -
     Dallas 1986, writ dism’d).

t.   Wasting Marital Assets

     If a spouse is guilty of wasting, dissipating or grossly negligent
     management of the marital estate, the court may consider this
     factor in dividing the remaining marital estate. On the other hand,
     if a spouse, in good faith, merely makes an unwise investment of
     marital property resulting in losses to the marital estate ,this does
     not necessarily justify an unequal distribution of the remaining
     marital property. Reaney v. Reaney, 505 S.W.2d 338 (Tex. App.
     - Dallas 1974, no writ); Andrews v. Andrews, 677 S.W.2d 171


                      69
     (Tex. App. - Austin 1984, no writ).

u.   Out of State Property

     The purchase of property beyond the jurisdiction of the court is a
     proper consideration by the trial court in dividing the marital
     estate. Difficulty can be encountered in enforcing liens,
     judgments and receiverships absent in personam jurisdiction.
     Walker v. Walker, 231 S.W.2d 905 (Tex. App. - Texarkana 1950,
     no writ).




v.   Tax Consequences

     Unpaid tax liabilities are proper factors to be considered in
     making a division of property. Allowing a spouse an offset for
     future tax consequences in the event of sale of property awarded
     to that spouse in a divorce action is an abuse of discretion where
     the question whether the property would ever be subject to
     capital gains tax can only be answered by engaging in
     speculation or surmise. McCartney v. McCartney, 548 S.W.2d
     435 (Tex. App. - Houston [1 st Dist.] 1976, no writ); Cole v. Cole,
     532 S.W.2d 102 (Tex. App. - Dallas 1975, no writ), on remand
     568 S.W.2d 152 (Tex. App. - Dallas 1978, no writ); Benedict v.
     Benedict, 542 S.W.2d 692 (Tex. App. - Fort Worth 1976, writ
     dism’d); Harris v. Holland, 867 S.W.2d 86 (Tex. App. -
     Texarkana 1993, no writ); Freeman v. Freeman, 497 S.W.2d 97,
     99 (Tex. Civ. App. - Houston [14th Dist.] 1973, no writ); Simpson
     v. Simpson, 679 S.W.2d 39, 41 (Tex. App. - Dallas 1984, no
     writ).

w.   Credit for Temporary Alimony Paid

     Court ordered temporary payments which are paid during the
     pendency of the case may be considered by the court in the
     property division. Likewise, the failure of a spouse to make the
     temporary support payments as ordered by the court may also
     be taken into consideration. Schecter v. Schecter, 579 S.W.2d
     502 (Tex. App. - Dallas 1978, no writ); Edsall v. Edsall, 240
     S.W.2d 424 (Tex. App. - Eastland 1951, no writ); Jones v.

                      70
                  Jones, 699 S.W.2d 583 (Tex. App. - Texarkana 1985, no writ).

           x.     Insurance Proceeds

                  The proceeds of a life insurance policy which are purchased with
                  marital funds are generally held to be marital property. This
                  property is something like a chose in action which matures at the
                  death of the insured. This despite the fact that the policy has
                  named someone other than the insured’s spouse as the
                  beneficiary, the spouse is entitled as a creditor beneficiary to
                  reimbursement of the marital funds expended on the policy
                  during the spouse’s marriage to the deceased-insured. La v.
                  Lone Star Life Insurance Co., 01-91-00365-CV, 7/92, Houston
                  [1st Dist.], 1992.

           y.     Fraud

                  Fraud on the marital estate may give rise to a recovery in
                  recoupment to the marital estate. Schlueter v. Schlueter, 975
                  S.W.2d 584 (Tex. 1998).

           z.     Torts

                  Recoveries for marital torts may duplicate any disproportionate
                  division of property based upon fault and thus constitute “double
                  dipping.” Some recoveries in tort such as for pain, suffering,
                  mental anguish and emotional distress are recoveries to the
                  spouse’s separate estate as opposed to past lost wages, past
                  medical bills and past impairment of earning capacity. Schlueter
                  v. Schlueter, 975 S.W.2d 584 (Tex. 1998).

F.   TECHNIQUES FOR DIVISION OF PROPERTY.

     The division of property on divorce may be accomplished by any legal or
     equitable means appropriate under the circumstances of the case. There
     follows some of the techniques that may be employed by the court in the
     division of property.

     1.    PARTITION OR SALE OF PROPERTY

           The court has the duty to determine if the marital property is subject to
           partition in kind. If it determines it is, then it shall divide the marital


                                   71
     property between the parties. It is not subject to partition in kind, the
     court can order such property sold. Although the trial court cannot award
     the separate property of one spouse to the other spouse, where the
     property is owned in undivided interests between the marital estate and
     the non-marital estate of a spouse, the trial court may order the entire
     sold and partition the proceeds between the spouses. Hailey v. Hailey,
     331 S.W.2d 299 (Tex. 1960); Braswell v. Braswell, 476 S.W.2d 444
     (Tex. App. - Waco 1972, writ dism’d); Ellis v. Ellis, 225 s.W.2d 216
     (Tex. App. - San Antonio 1949, no writ).

2.   SALE OF HOMESTEAD

     The homestead may be ordered sold and its proceeds divided in order
     to partition the marital estate of the parties. But the court cannot order
     that the proceeds of the homestead be used for the purpose of paying
     unsecured creditors. McIntyre v. McIntyre, 722 S.W.2d 533 (Tex. App. -
     San Antonio 1986, no writ); Harrington v. Schuble, 608 S.W.2d 253
     (Tex. App. - Houston [14th Dist.] 1980, no writ); Posten v. Posten, 572
     S.W.2d 800 (Tex. App. - Houston [14th Dist.] 1978, no writ); Delaney v.
     Delaney; 562 S.W.2d 594 (Tex. App. - Houston [14th Dist.] 1978, writ
     dism’d).


3.   SETTING ASIDE HOMESTEAD

     a.     General.

            The trial court may award the use of the spouses’ homestead to
            either spouse or for the benefit of the children, whether the
            homestead is separate or marital property. While it is less
            common for the court to set aside the homestead to a spouse
            where there are no minor children, the court is clearly
            empowered to do so. Hedtke v. Hedtke, 248 S.W. 21 (Tex.
            1923); Girard v. Girard, 521 S.W.2d 714 (Tex. App. - Houston
            [1st Dist.] 1975, no writ); Bakken v. Bakken, 503 S.W.2d 315
            (Tex. App. - Dallas 1973, no writ); Villarreal v. Laredo National
            Bank, 677S.W.2d 600 (Tex. App. - San Antonio 1984, writ
            refused n.r.e.).

     b.     Limitations Upon Use of Homestead

            The court may set specific conditions or the occurrence of

                             72
          specified events (i.e. abandonment, remarriage, non-payment of
          related expenses, custody or minority of the children, etc.) which
          will cause a forfeiture of the former spouse’s right to the
          continued use and occupancy of the homestead. Kurtz v.
          Jackson, 859 S.W.2d 609 (Tex. App. - Houston [1 st Dist.] 1993,
          no writ).



     c.   Obligation to Make Payments, Etc.

          The court should clearly and precisely provide for the payment of
          the mortgage, taxes, insurance, maintenance and repairs, and to
          place specific obligations in regard thereto. Starkey v. Holoye,
          536 S.W.2d 438 (Tex. App. - Houston [14th Dist.] 1976, writ
          refused n.r.e.).

          Where the parties remain owners of an undivided interest, the
          spouse who has the right under the decree to exclusive
          occupancy of the property is entitled to reimbursement for funds
          paid on the lien indebtedness and improvements which enhance
          the value of the property. No offset is allowed for the value of the
          use of the property so long as it is occupied. Gilleland v.
          Meadows, 351 S.W.2d 656 (Tex. App. - Dalls 1961, no writ).
          However, the spouse who has the right to exclusive occupancy
          has the obligation to pay the ad valorem taxes. Miller v. Two
          Investors, Inc., 475 S.W.2d 610 (Tex. App. - Dallas 1971, writ
          refused n.r.e.); Berg v. Berg, 232 S.W.2d 782 (Tex. App. - Dallas
          1950, no writ).

     d.   Disposition of Proceeds

          The decree should further specify the exact manner and method
          of determining the disposition of the proceeds at the time of sale.
          Provisions should be made for reimbursement of any costs paid
          by one spouse where the decree placed the obligation upon the
          other spouse, perhaps with interest. Starkey v. Holoye, 536
          S.W.2d 438 (Tex. App. - Houston [14th Dist.] 1976, writ refused
          n.r.e.)

4.   SOLE PROPRIETORSHIP



                           73
     An interest in a going business may be divided as any other asset. The
     trial court has the power to divide the specific assets of the business
     between the parties or award the “going business” entity to one spouse.
     Hopf v. Hopf, 841 S.W.2d 898 (Tex. App. - Houston [14th Dist.] 1992).



5.   GENERAL PARTNERSHIP

     a.     General

            Where adopted, The Uniform Partnership Act is applicable to all
            partnerships, regardless of when formed. Under the Act, the
            legal concept of a partnership is that of an entity, and the
            partner’s only property right is his “interest in the partnership.”

     b.     Division of Partnership Interests

            Where the partner’s “interest in the partnership” is marital
            property, it is subject to division by the court in a divorce. It is
            generally preferred to award the non-partner spouse other
            property of equal value in exchange for the partnership interest.

            i.     The Extent of Property Rights of a Partner

                   The spouse-partner holds three separate property rights
                   in the partnership;

                   (a).    his rights in specific partnership property,

                   (b).    .his interest in the partnership; and

                   (c).    his right to participate in the management.

            ii.    Extent of Marital Property Rights of Partner’s Spouse

                   The marital property rights of a partner’s spouse are state
                   in section 28-A of the UP.

                   (a).    Rights in Specific Partnership Property

                           A partner’s right in specific partnership are not
                           marital property.

                             74
            (b).   Management

                   Section 28-A(3) states that a partner’s right to
                   participate in the management is not marital
                   property. Mundy v. Mundy, 653 S.W.2d 954 (Tex.
                   App. - Dallas 1983, no writ).

            (c).   Interest in Partnership

                   Only a “partner’s interest in the partnership” may
                   be marital property and thus subject to division by
                   a court under section 28-A(2). The term 11a
                   partner’s interest in the partnership” is defined by
                   the Act as “his share of the profits and surplus, and
                   the same is personal property for all purposes.”
                   §26. The Act recognizes that this may be held by
                   a non-partner; thus, it can be subject to division by
                   the court.

c.   Cannot Award Specific Partnership Assets.

     The divorce court cannot award specific partnership assets to
     the non-partner spouse.

d.   Effect of Award to Non-Partner Spouse

     Where the court divides the partner-spouse’s interest on the
     divorce of a partner, the non-partner spouse (to the extent of such
     spouse’s interest in the partnership) is regarded for purposes of
     the UP as an assignee and purchaser of such interest from the
     partner-spouse. §28-B(1)(a). The legal effect of the division of
     the partnership interest is to vest a proportional share of the
     marital interest in each party. Mundy v. Mundy, 653 S.W.2d 954
     (Tex. App. - Dallas 1983, no writ).

     i.     No management rights

     ii.    Entitled to receive profits

     iii.   Entitled to partnership records

                      75
          iv.    Liability

                 The assignee-spouse does not become personally liable
                 for partnership debts or to make contributions to
                 partnership.

          v.     Dissolution of Partnership

                 An award to a partner’s spouse of an interest in the
                 partnership does not of itself dissolve the partnership.
                 §27.

          vi.    Right to Surplus

                 In case of a dissolution of the partnership, the assignee-
                 spouse is entitled to receive his or her share of the
                 surplus in accordance with the interest awarded in the
                 divorce. §27(d).

6.   LIMITED PARTNERSHIPS

     a.   General

          The Uniform Partnership Act is applicable to limited partnerships
          “except insofar as the statutes relating to such partnerships are
          inconsistent herewith.” Horn v. Builders Supply Company of
          Longview, 401 S.W.2d 143 (Tex. App. - Tyler 1966, writ refused
          n.r.e.); Park Citys Corp. v. Byrd, 534 S.W.2d 668 (Tex. 1976).

     b.   Division of Divorce

          A limited partner’s interest in the partnership is personal
          property. The interest of the limited partner in the partnership is
          assignable and is subject to division on divorce.

          The non-partner spouse who is a awarded all or part of the
          limited partner’s interest in the partnership upon divorce
          becomes an assignee for purposes of the UP.


7.   JOINT VENTURES



                             76
     The courts have encountered difficulty in classifying a joint venture.
     Thus, it has been stated that it is a partnership, is not a partnership, is
     a legal entity in the nature of a partnership, and is a legal entity distinct
     from a partnership. Legal writers have encountered the same difficulty.
     Rice v. Lambert, 408 S.W.2d 287 (Tex. App. - Corpus Chrisit 1966, no
     writ); Champion v. D’Yarmett, 293 S.W. 587 (Tex. App. - Amarillo 1927,
     writ ref’d); Brown v. Cole, 291 S.W.2d 704 (Tex. 1956); Tex. Co. Grain
     v. Happy Wheat Growers, Inc., 542 S.W.2d 934 (Tex. App. - Amarillo
     1976, no writ).

     The elements of a joint venture are: (1) mutual right of control, (2)
     community interest, (3) agreement to share profits as principals, and (4)
     agreement to share losses, costs or expenses. Coastal Plains
     Development Corp. v. Micrea, Inc. 572 S.W.2d 285 (Tex. 1978);
     Chandler v. Herndon, 450 S.W.2d 703 (Tex. App. - Corpus Christi
     1970, writ refused n.r.e.); Holcombe v. Lornio, 79 S.W.2d 307 (Tex.
     1935) [has been described as a leading case in determining whether a
     joint venture exist].

     It has been held that a joint venture is governed by the same rules as
     partnerships. Thus, marital interest in a joint venture may be treated like
     marital interest in a partnership. Weatherford v. Lee, 364 S.W.2d 730
     (Tex. App. - San Antonio 1963, writ refused n.r.e.).

8.   CLOSELY HELD CORPORATIONS

     a.     General

            As a general rule, the underlying assets of a corporation are not
            divisible by the court. Only the shares of stock in the corporation,
            acquired since marriage, may be divided. Thomas v. Thomas,
            738 S.W.2d 342 (Tex. App. - Houston [1 st Dist.] 1987, no writ).
            There is an exception to this rule if the court finds that the
            corporate entity has been used by a spouse as an alter ego.



            The trial court may partition the shares in a closely held
            corporation between the husband and wife, even though the
            award results in a minority interest in one spouse and the other
            spouse retains control of the corporation, although the courts
            have generally said it is not wise to award individual interests in


                              77
             a going business between parties who are “already
             antagonistic.” Braswell v. Braswell, 476 S.W.2d 444 (Tex. App. -
             Waco 1972, writ dism’d); Matter of Marriage of Trujillo, 580
             S.W.2d 873 (Tex. App. - Texarkana 1979, no writ).

      b.     Alter Ego

             The theory of alter ego is applied in order to achieve an
             equitable result. In a divorce case, it is used as a device to
             cause corporate assets acquired since marriage to be included
             within the community estate.

             The legal fiction of corporate entity may be disregarded where
             the fiction is used by a spouse as a means of perpetrating fraud
             upon the other spouse, or is relied upon to justify wrong. The
             unity of a spouse with the corporate entity must be such that the
             separateness of the corporation has ceased and an adherence
             to the fiction of the separate existence of the corporation would
             under the particular circumstances, sanction a fraud or promote
             an injustice. Lifshutz v. Lifshutz, 61 S.W.3d 511(Tex. App. - San
             Antonio 2001, pet. denied); Castleberry v. Branscombe, 721
             S.W.2d 270 (Tex. 1986); Zisblatt v. Zisblatt, 693 S.W.2d 944
             (Tex. App. - Fort Worth 1985, writ dism’d).

9.    PROFESSIONAL PRACTICE

      Generally, the assets of a professional practice of one spouse are of no
      particular benefit to the other spouse and are of much greater value in
      the hands of the professional. Hanson v. Hanson, 672 S.W.2d 274
      (Tex. App. - Houston [14t h Dist.] 1984, writ dism’d w.o.j.); Goren v.
      Goren, 531 S.W.2d 897 (Tex. App. - Houston [1 st Dist.] 1975, writ
      dism’d). Any disposition of such assets, whether by partition or sale,
      would have an adverse affect on the professional practice and the
      professional spouse’s earning capacity.

      A professional education degree earned during marriage is not divisible
      upon divorce. Frausto Frausto, 611 S.W.2d 656 (Tex. App. - San
      Antonio 1980, writ dism’d)

10.   GOODWILL

      a.     General


                             78
     Goodwill may represent a valuable asset of the business.
     Goodwill is generally understood to mean the advantages that
     accrue to a business on account of its name, location, reputation
     and success. The fact that the goodwill of a business was
     created by or resulted from years of hard work and business
     effort on the part of only one or two of the several partners does
     not necessarily render the goodwill of the business personal to
     them. The value of the “goodwill” of a business depends upon
     the fixed and favorable consideration of customers arising from
     an established and well known and well conducted business.
     Taormina v. Culicchia, 335 S.W.2d 569 (Tex. App. - El Paso
     1962, writ refused n.r.e.).

b.   Goodwill of Professional Practice

     In Texas, the goodwill of a professional practice is not marital
     property subject to division on divorce where it does not possess
     value or constitute an asset separate and apart from the
     individual’s ability to practice as a professional. Nail v. Nail, 486
     S.W.2d 761 (Tex. 1972).

     In Finn v. Finn, 658 S.W.2d 735 (Tex. App.-- Dallas 1983, writ
     ref’d n.r.e.), the court announced a two-pronged test to determine
     whether the goodwill attached to a professional practice is
     subject to division upon divorce. First, goodwill must be
     determined to exist independently of the personal ability of the
     professional spouse. Second, if such goodwill is found to exist,
     then it must be determined whether that goodwill has a
     commercial value in which the marital estate is entitled to share.


     In Rathmell v. Morrison, 732 S.W.2d 6 (Tex. App.-- Houston
     [14th Dist.] 1987, no writ), it was held that the trial court in valuing
     the insurance companies should have excluded the value of the
     husband’s personal goodwill, but could consider goodwill not
     attributable to the husband.

     Goodwill in a professional corporation is a part of the property to
     be taken into consideration on divorce. Geesbreght v.
     Geesbreght, 570 S.W.2d 427 (Tex. App.-- Fort Worth 1978, writ
     dism’d). In Geesbreght, the Fort Worth Court of Civil Appeals
     distinguished the holding in Nail when faced with an ownership


                       79
             interest in the professional corporation in which the husband
             owned a 50% interest. The corporation employed ten full-time
             and 50 to 100 part-time physicians to fulfill its obligations to
             furnish emergency services at eight different hospital locations.

             The issues of whether a professional corporation has
             goodwill, apart from the individual goodwill of the
             professionals who own the corporation, is a question of
             fact. Simpson v. Simpson, 679 S.W.2d 39 (Tex. App.--
             Dallas 1984, no writ) (for case on remand, see 727
             S.W.2d 662 (Tex. App.-- Dallas 1987, no writ).


11.   FOREIGN PERSONALTY

      The trial court has the power and authority to dispose of personalty
      located outside of Texas as long as it has in personam jurisdiction over
      the spouse who owns or controls the property. Moor v. Moor, 63 S.W.
      346 (Tex. App. 1901, writ ref’d).

12.   MONEY JUDGMENT

      a.     General

             The court may be justified in dividing property in a manner other
             than “in kind” when due consideration is given to such matters as
             the nature and type of particular property involved, and the
             relative conditions, circumstances, capabilities, and experience
             of the parties. In Re: Marriage of Jackson, 506 S.W.2d 261
             (Tex. App. - Amarillo 1974, writ dism’d).

             The trial court may utilize a money judgment to achieve an
             equitable division of the estate assets in kind, this method should
             be used instead of a money judgment. Hanson v. Hanson, 672
             S.W.2d (Tex. App. - Houston [14th Dist.] 1984, writ dism’d).

      b.     Terms of Payment

             The court may order either party to pay a cash sum to the other,
             even if there is no cash in marital property to be divided. Thomas
             v. Thomas, 603 S.W.2d 356 (Tex. App. - Houston [14th Dist.]
             1980, writ dism’d); Garrett v. Garrett, 534 S.W.2d 381 (Tex. App.


                             80
           - Houston [1 st Dist.] 1976, no writ); In Re: Marriage of Jackson,
           506 S.W.2d 261 (Tex. App. - Amarillo 1974, writ dism’d);
           Brunnell v. Brunnell, 494 S.W.2d 621 (Tex. Civ. App. - Dallas
           1973, no writ).

           A trial court should set the term for payment of the cash judgment
           for as short a period as possible without imposing a serious
           hardship on the party responsible to pay the judgment. Hanson
           v. Hanson, 672 S.W.2d 274 (Tex. App. - Houston [14th Dist.]
           1984, writ dism’d).

      c.   Security for Payment

           The trial court should provide security for money judgments which
           are granted to achieve an equitable division of a marital estate,
           unless there is some compelling reason to do otherwise.Hanson
           v. Hanson, 672 S.W.2d 274 (Tex. App. - Houston [14t h Dist.]
           1984, writ dism’d); Murff v. Murff, 601 S.W.2d 116 (Tex. App. -
           Dallas 1980), rev’d on other grounds 615 S.W.2d 696 (Tex.
           1981).

           However, a trial court’s failure to provide security for a money
           judgment does not automatically constitute an abuse of
           discretion. Wren v. Wren, 702 S.W.2d 250 (Tex. App. - Houston
           [ 1st Dist.] 1985, writ dism’d).


      d.   Execution of Promissory Note

           The trial court may order a party to execute a promissory note
           under threat of contempt if the party fails to do so. Kidd v. Kidd,
           584 S.W.2d 552 (Tex. App. - Austin 1979, no writ).

      e.   Settlement of Breach of Contract Action

           The trial court may not issue a clarifying order which alters or
           modifies the original decree when the divorce decree is
           unambiguous as to the division of settlement proceeds awarded
           in breach of contract action. Pierce v. Pierce, 850 S.W.2d 675
           (Tex. App. - El Paso 1993).

13.   APPOINTMENT OF RECEIVER, TRUSTEE, OR COMMISSIONER


                            81
      a.    General

            In the division of the estate of the parties in a divorce case, the
            trial court in its discretion may enlist the aid of a trustee, receiver,
            or a commissioner to effectuate the terms and provisions of its
            judgment, the court may even do so in the absence of an
            application to make certain that the provisions of the judgment
            are fully complied with. Hailey v. Hailey, 331 S.W.2d 299 (Tex.
            1960).

            Note that the cases holding that appointment of a receiver is a
            drastic remedy, that good cause must be shown for appointment
            of a receiver, and that a receiver may be appointed only where
            the property is in danger of being lost, removed, or materially
            injured are all limited to circumstances where the appointment of
            a receiver is sought as a temporary order before judgment.
            Readheimer v. Readheimer, 728 S.W.2d 872 (Tex. App. -
            Houston [1 st Dist.] 1987, no writ(.




      b.    No Bond Required

            In a divorce case the court, as a matter of discretion, may
            dispense with the necessity of a bond. Posten v. Posten, 572
            S.W.2d 800 (Tex. App. - Houston [14th Dist.] 1978, no writ).

14.   EQUITABLE LIEN

      a.    General

            The trial court has the power to impress an equitable lien upon
            marital property awarded to one spouse to secure a money
            payment ordered to be made to the other spouse. Ex Parte
            McKinley, 578 S.W.2d 437 (Tex. App. - Houston [1 st Dist.] 1979,
            no writ).

            A lien expressly created in the decree of divorce to secure the
            division of property is considered to be an equitable lien, does


                              82
     not owe its existence to any statute and can stand independent
     of any statutory recording requirements at least as to the parties
     to the divorce. Day v. Day, 610 S.W.2d 195 (Tex. App. - Tyler
     1980, writ refused n.r.e.).

b.   Judgment Lien Distinguished

     A judgment lien exists only by virtue of statute and, therefore, is
     created only by compliance with the law governing such liens.
     Consequently, before a money judgment can ripen into a lien, the
     abstract of judgment must be recorded and indexed in the proper
     county, as required by statute. Day v. Day, 610 S.W.2d 195 (Tex.
     App. - Tyler 1980, writ refused n.r.e.).

c.   Lien on Homestead

     A spouse may be entitled to a lien payment based on the terms
     of a marital property agreement which allows the other spouse to
     remain living in the house free of the lien, until such time as
     he/she may remarry or cohabited with another person. Knatz v.
     Jackson, 859 S.W.2d 609 (Tex. App. - Houston [1 st Dist.] 1993,
     no writ).

     In Texas, it is clear that homestead property is exempt from a
     money judgment in a court ordered division, where the trial court
     elects not to create an express lien. Ealy v. Ealy, 616 S.W.2d
     420 (Tex. App. - Texarkana 1981, writ dism’d); Spence v.
     Spence, 455 S.W.2d 365 (Tex. App. - Houston [14th Dist.] 1970,
     writ refused n.r.e.).

     A lien may be placed upon a spouse’s homestead to secure the
     payment of the amount awarded to the other spouse for that
     spouse’s homestead interest. Wierzchula v. Wierzchula, 623
     S.W.2d 720 (Tex. App. - Houston [1 st Dist.] 1981, no writ).

     Also, the trial court may place an equitable lien on the homestead
     to secure equitable rights of reimbursement. Eggemeyer v.
     Eggemeyer, 623 S.W.2d 462 (Tex. App. - Waco 1981, writ
     granted), affirmed, 554 S.W.2d 137 (Tex. 1977), appeal after
     remand, 623 S.W.2d 462 (Tex. App. - Waco 1981, writ dism’d).

     The decree of divorce must expressly award a lien on the
     homestead interest. It has been held that even though the


                      83
             divorce judgment named the husband as trustee and ordered
             him, as trustee, to pay the wife a monthly sum “for her equity in
             the home, household furniture and fixtures,” no lien attached by
             the award. Ealy v. Ealy, 616 S.W.2d 420 (Tex. App. - Texarkana
             1981, writ dism’d).

      d.     Lien on Separate Property

             The trial court may place an equitable lien on the separate
             property with the right to foreclosure and sell if the judgment is not
             paid to secure a judgment based on the community right to
             reimbursement. Dakan v. Dakan, 83 S.W.2d 620 (Tex. 1935).

             The overwhelming majority of cases hold that an equitable lien
             may be imposed on the separate property of a spouse to secure
             the payment of a money judgment as part of the other spouse’s
             interest in the total property of the parties. Buchan v. Buchan,
             592 S.W.2d 367 (Tex. App. - Tyler 1979, writ dism’d).

15.   PROPERTY PURCHASED IN NAME OF THIRD PARTIES

      It is the general rule of resulting trusts that where one person buys
      property and pays for it with his own funds and takes title in the name of
      another, a trust results in favor of the person whose money was used in
      making the purchase. The one furnishing the money is the equitable
      owner of the property and the named grantee is a mere trustee and
      holds the property for the benefit of the person who paid the purchase
      money. A resulting trust for purchase money must arise at the time of
      passage of title. Cohrs v. Scott, 338 S.W.2d 127 (Tex. 1960).

      Likewise, where it is shown that marital property funds of a marriage are
      used to pay for the purchased property and title is taken in the name of
      a third person, a resulting trust arises in favor of the marital estate. First
      State Bank of Carbon v. Thurman, 12 S.W.2d 146 (Tex. Comm’n. App.
      1929).

      Where a resulting trust is claimed, the burden of proof is upon the one
      claiming the trust. Bell v. Smith, 532 S.W.2d 680 (Tex. App. - fort Wroth
      1976, no writ).

      Where a spouse uses marital property funds to purchase property and
      takes title in the name of a third party, a trust results to the marital estate.
      There is no requirement of showing fraud or intent to deceive the other


                                84
      spouse, although active fraud is often present. The recovery is not
      based on the fiduciary duty of one spouse to the other; instead it only
      must be shown (1) that marital funds were used to make the purchase
      and (2) there was no intent for the actual ownership to vest in the third
      party. Turner v. Dinwiddie, 276 S.W. 144 (Tex. App. - Houston 1925, no
      writ).

16.   FRAUDULENT TRANSFERS OF PROPERTY

      a.     General

             During marriage, each spouse has the sole management,
             control, and disposition of (1) his or her separate property; and
             (2) of the marital property that he or she would have owned if
             single, including but not limited to personal earnings, revenue
             from separate property, recoveries for personal injuries, and the
             increase and mutations of, and the revenues from, all property
             subject to his or her sole management, control, and disposition.
             However, the authority of a spouse to deal with the marital
             property subject to his or her sole management, control, and
             disposition is subject to limitations. There must not be fraud. As
             to what constitutes fraud, the authorities speak of “actual fraud”
             and “constructive fraud.”

             i.     Actual Fraud

                    To sustain a cause of action for actual fraud, the
                    complaining spouse has the burden of showing that the
                    transaction was made with the primary purpose of
                    depriving such spouse from having the use and enjoyment
                    of the assets comprising the transaction. Actual fraud
                    involves dishonesty of purpose or intent to deceive.
                    Horlock v. Horlock, 533 S.W.2d 52 (Tex. App. - Houston
                    [14th Dist.] 1975, writ dism’d); Land v. Marshall, 426
                    S.W.2d 841 (Tex. 1968); Archer v. Griffith, 390 S.W.2d
                    735 (Tex. 1964).

             ii.    Constructive Fraud

                    Constructive fraud is the breach of some legal or
                    equitable duty, which, irrespective of moral guilt, the law
                    declares fraudulent because of its tendency to deceive
                    others, to violate confidence, or to injury public interest.
                    Constructive fraud does not require an intent to defraud;

                             85
            instead it is an equitable doctrine employed by the courts
            to rectify an injury resulting from the breach of a fiduciary
            relationship. Archer v. Griffith, 390 S.W.2d 735 (Tex.
            1964); Carnes v. Meador, 533 S.W.2d 365 (Tex. App. -
            Dallas 1975, writ refused n.r.e.).

            A trust relationship exists between the husband and the
            wife as to that portion of the marital property controlled by
            the managing spouse. For that reason, any unfair transfer
            of marital property or rights by a spouse outside of the
            marital estate would be a constructive fraud. Murphy v.
            Metropolitan Life Insurance Company, 498 S.W.2d 278
            (Tex. App. - Houston [14th Dist.] 1973, writ refused n.r.e.);
            Brownson v. New, 259 S.W.2d 277 (Tex. App. - San
            Antonio 1953, writ dism’d).

b.   Gifts to Third Parties

     Courts have set aside any gift of marital property funds as a
     constructive fraud on the other spouse if the gift is capricious,
     excessive, or arbitrary. Hartman v. Crain, 398 S.W. 2d 387 (Tex.
     App. - Houston 1966, no writ); Carnes v. Meador, 533 S.W.2d
     365 (Tex. App. - Dallas 1975, writ refused n.r.e.).

c.   Transfers to Paramours

     There are no circumstances concerning a gift, transfer or other
     disposition of marital property in which the transaction is
     scrutinized more closely than in transactions between a spouse
     and his or her paramour.

     The courts have taken a dim view toward gifts by the husband to
     “strangers” of the marriage, particularly of the female variety.
     Spruill v. Spruill, 625 S.W.2d 694 (Tex. App. - El Paso 1981,
     writ dism’d).

d.   Fraudulent Concealment and Dissipation

     Where a spouse has been defrauded by the managing spouse’s
     wrongful disposition of the marital property, the aggrieved
     spouse is not confined to a recovery of the property, but may hold
     the managing spouse personally liable for the loss in damages.
     Swisher v. Swisher, 190 S.W.2d 382 (Tex. App. - Galveston


                     86
     1945, no writ).

     The excessive loss or capricious dissipation of marital assets by
     the managing spouse is presumptively fraudulent. In such cases,
     the managing spouse has the burden to establish that the loss
     and dissipation of the marital assets were not an abuse of
     managerial powers. Hartman v. Crain, 398 S.W.2d 387 (Tex.
     App. - Houston 1966, no writ); Reaney v. Reaney, 505 S.W.2d
     338 (Tex. App. - Dallas 1974, no writ).


e.   Remedies

     i.     Constructive Trust

            A constructive trust is an equitable remedial concept
            imposed by law to prevent unjust enrichment resulting
            from unconscionable conduct. It may be imposed where
            actual fraud is apparent or where the conduct of one is so
            violative of good conscience that equity may deem it to
            be constructive fraud. Fraud, either actual or constructive,
            is a basic element before a constructive trust should be
            imposed. May v. Little, 473 S.W.2d 632 (Tex. App. - El
            Paso 1971, writ refused n.r.e.).

            The violation of a fiduciary duty may also give rise a
            constructive trust as constituting constructive fraud. Fitz-
            Gerald v. Hull, 237 S.W.2d 256 (Tex. 1951).

            A constructive trust is imposed by law because the
            person holding the title to property would profit by a wrong
            or would be unjustly enriched if he were permitted to keep
            the property. Omohundro v. Matthews , 341 S.W.2d 401
            (1960); Meadows v. Bierschwale, 516 S.W.2d 125 (Tex.
            1974).

            The rule is that a trust relationship exists between the
            husband and wife as to that portion of the marital estate
            controlled by the managing spouse. For that reason any
            unfair transfer of marital property by a spouse to one
            outside of the marital estate would be constructive fraud.
            Such a transfer will be set aside and a constructive trust
            may be imposed upon the property for the benefit of the
            marital estate.

                       87
             ii.     Money Judgment

                     Upon a suit for divorce, one spouse may recover a money
                     judgment against the other spouse for loss or damage
                     resulting from the abuse of managerial powers in
                     connection with the division of the estate of the parties.
                     Belz v. Belz, 667 S.W.2d 240 (Tex. App. - Dallas 1984,
                     writ refused n.r.e.).

17.   CONSTRUCTIVE TRUSTEE

      The trial court may appoint either spouse a trustee to safeguard or
      receive money, benefits or other property awarded to the other spouse.
      Typically this is necessary in the case of retirement benefits where the
      husband receives the entire benefit payment and is ordered to pay the
      wife a portion thereof upon receipt. The husband is appointed as
      trustee of the wife’s portion. Ex Parte Gorena, 595 S.W.2d 841 (Tex.
      1979).

      A constructive trust may be imposed in favor of the wife regarding the
      joint purchase of residence prior to marriage, when title was taken in the
      husband’s name only. A constructive trust is the formula through which
      the conscience of equity finds expression. Andrews v. Andrews , 677
      S.W.2d 171 (Tex. App. - Austin 1984, no writ).

18.   DEBTS AND ENCUMBRANCES

      The “estate of the parties” to be divided by the court almost invariably
      includes assets and liabilities. The power to divide necessarily includes
      the power to order one of the parties to pay such debts or liabilities.
      Goggin v. Goggin, 738 S.W.2d 375 (Tex. App. - Corpus Christi 1987,
      no writ); Janik v. Janik, 634 S.W.2d 323 (Tex. App. - Houston [14th Dist.]
      1982, no writ).

      However, further factors must be considered: (1) if the spouses are
      jointly liable, the creditor may still seek satisfaction from the other
      spouse; and (2) in most instances that which is a “marital liability” is also
      a separate liability of the contracting, indebted, or tortious spouse.

      a.     Debts Owned to Third Persons

             The division of debts and liabilities must be done in
             subordination to the rights of the spouses’ creditors. Contractual


                               88
             obligations between spouses and creditors cannot be altered by
             decree of divorce. Broadway Drug Store v. Trowbridge, 435
             S.W.2d 268 (Tex. App. - Houston [14th Dist.] 1968, no writ).

      b.     Disposition of Exempt Property

             Unsecured creditors have no interest in the disposition of the
             exempt property of husband and wife, and cannot satisfy their
             claims against such property after partition in the decree of
             divorce. Klein v. Klein, 370 S.W.2d 769 (Tex. App. - Houston
             1963, no writ).

      c.     Disposition of Non-Exempt Property

             The decree of divorce may not prejudice the rights of creditors to
             subject non-exempt marital property to the payment of marital
             debts. Dorfman v. Dorfman, 475 S.W.2d 423 (Tex. App. -
             Texarkana 1970, no writ).


      d.     Right of Indemnity

             The decree of divorce should make provisions for indemnity and
             hold harmless when one spouse discharges an indebtedness set
             aside to the other spouse. Walker v. Walker, 527 S.W.2d 200
             (Tex. App. - Fort Wroth 1975, no writ).

      e.     Right to Reimbursement

             In the case where a marital estate debt has been paid by the sale
             of separate property of a spouse, that spouse is entitled to
             reimbursement. Graham v. Graham, 836 S.W.2d 308 (Tex. App.
             - Texarkana 1992, no writ).

19.   TAX LIABILITIES

      In the disposition of property upon divorce, the matter of tax liability is an
      element for consideration. The imposition of liability for the discharge
      of the obligation (affecting only the rights of the parties, one against the
      other) should be considered in the property division. Able v. Able, 725
      S.W.2d 778 (Tex. App. - Houston [14th Dist.] 1987, writ refused n.r.e).

      a.     Tax is Not a Debt


                               89
            A provision in the decree of divorce requiring one spouse to pay
            “all marital estate debts” does not include a potential income tax
            obligation. And the court cannot relieve a spouse of personal
            liability to the taxing authority in a decree of divorce. Brooks v.
            Brooks, 515 S.W.2d 730 (Tex. App. - Houston 1974, writ refused
            n.r.e.); Able v. Able, 725 S.W.2d 778 (Tex. App. - Houston [14th
            Dist.] 1987, writ refused n.r.e.); Highland Park Independent
            School Dist. v. Republic Insurance Co., 162 S.W.2d 1056 (Tex.
            App. - Dallas 1942) rev’d on other grounds, 171 S.W.2d 342 (
            Tex. 1943).

            Likewise, ad valorem tax is not a “debt” in the ordinary sense of
            the word; although it is a liability and obligation. Blair v.
            Commissioner, 300 U.S. 5 (1937); McCartney v. McCartney,
            548 S.W.2d 435 (Tex. App. - Houston [1 st Dist.] 1976, no writ).

      b.    Liability for Tax Assessments

            With respect to marital estate income, federal income tax liability
            follows ownership. In the determination of ownership, state law
            controls. Each spouse is individually liable for the income tax on
            one-half of the marital estate income for the year of divorce, and
            for prior years during the marriage. If joint returns have been
            filed, each spouse remains liable for the entire tax due for the
            years of each joint return. Blair v. Commissioner, 300 U.S. 5
            (1937); McCartney v. McCartney, 548 S.W.2d 435 (Tex. App. -
            Houston [1 st Dist.] 1976, no writ).

      c.    Payment and Reimbursement

            The decree of divorce should clearly establish, as between the
            parties, the responsibility for payment of any potential tax
            liabilities. Provision should be made for indemnity and
            reimbursement in the event one spouse is required to any tax
            assessment assumes by the other spouse. Cole v. Cole, 532
            S.W.2d 102 (Tex. App. - Dallas 1975, no writ); Walker v. Walker,
            527 S.W.2d 200 (Tex. App. - Fort Worth 1975, no writ); Gaulding
            v. Gaulding, 256 S.W.2d 684 (Tex. App - Dallas 1953, no writ).

20.   BENEFICIAL INTERESTS IN INSURANCE POLICIES

      The proceeds of a life insurance policy which were purchased with
      marital estate funds was held to be marital property. Court held this

                             90
      property to be something like a chose in action which had matured at the
      death of the insured. Thus, despite the fact that the policy had named
      someone other than the insured’s spouse as the beneficiary, she was
      entitled as a creditor beneficiary to reimbursement for the marital estate
      funds expended on the policy during her marriage to the deceased. La
      v. Lone Star Life Insurance Co. 01-91-00365-CV, 7/30/92, Houston [1 st
      Dist.] 1992.

      Also, a spouse is entitled to compensation from the settlement of a
      personal injury accident when that settlement involved money damages
      to compensate the injured spouse for lost wages. If the petitioning
      spouse has made a claim for a portion of these benefits, the spouse
      who received the settlement has the burden of proving that none of the
      funds constitute payment for lost wages or earning capacity during the
      marriage. Kyles v. Kyles, 832 S.W.2d 194 (Tex. App. - Beaumont 1992,
      no writ).

21.   RETIREMENT BENEFITS

      The courts have recognized that pension and retirement benefits have
      become an increasingly significant part of the consideration earned for
      military, governmental, and private services, sometimes being the
      principal asset accumulated by the marital estate. Cearley v. Cearley,
      544 S.W.2d 661 (Tex. 1976); Taggart v. Taggart, 552 S.W.2d 422 (Tex.
      1977); Berry v. Berry, 647 S.W.2d 945 (Tex. 1983).

22.   BANKRUPTCY AND DIVORCE

      The increase in bankruptcies in the U.S., and particularly in Texas, have
      given rise to the question of how bankruptcy effects the distribution of
      property when joined by a divorce action. The recent U.S. Supreme
      Court case, Farrey v. Sanderfoot, 111 S.Ct. 1825, 114 L.Ed.2d 337
      (1991), dealt with such a conflict and set forth the following guidelines.

      This Wisconsin case involved a home which the couple had held title to
      in joint tenancy, each holding a one-half undivided interest. In the
      divorce, the husband was given title to the property, the house and the
      real estate, and ordered to pay the wife $29,208.44 as her share of the
      property. Before the husband made payment, he attempted to avoid the
      debt by filing for bankruptcy pursuant to §522(f) (1) of the Bankruptcy
      Code.

      In addressing the issue of whether a debtor may avoid a lien in this


                              91
                   manner under §522(f)(1), the Supreme Court held that such may be
                   done only if the debtor possessed the interest before the lien attached.
                   Id.,111 S.Ct. at 1829. Furthermore, whether the debtor possessed the
                   interest at some point before the lien attached is a question to be
                   determined by state law. Id., 111 S.Ct. at 1830. Since the lien did not
                   attach to the husband’s pre-existing interest until after the decree of
                   divorce, under Wisconsin law, the husband could not avoid the lien. The
                   lien had attached to his fee simple created as a result of the decree,
                   which has also created the wife’s lien. Id., 111 S.Ct. at 1831.

V   VALUATION
    B.     Sources of Valuing Assets
    This checklist is intended to provide information regarding various sources for
    determining the value of assets. Some of the sources may not provide admissible
    evidence of value, but may help the parties to reach an agreement regarding the value
    of an asset.

           1.      Real Estate
                   a.     Certified Commercial or Residential Appraisers
                   b.     Real Estate Agents or Brokers
                   c.     Client

           2.      Automobiles, Planes, Boats
                   a.   “Blue Books”

                          i.       N.A.D.A. Official Used Car Guide (actually an “orange
                                   book”)
                          ii.      Kelly Blue Book online www.kbb.com (includes
                                   motorcycles)
                          iii.     John Smale’s Family Boats home page
                                   www.familyboats.com.au/
                          iv.      Centric BicycleLINK Blue Book
                                   www.bicyclelink.com/bluebook/index.html

                   b.     Used car dealers and brokers

                   c.     Client

                   d.     Local auctioneers


                                           92
3.   Manufactured Homes

     a.    Dealers and brokers

     b.    www.mobilehome.net/seller.html is an online advertiser of
           manufactured homes that also provides price quotes through E-
           mail

4.   Businesses

     a.    Certified Business Appraiser

           i.       Confirm that the appraiser has courtroom experience
           ii.      Confirm that the appraiser has experience with evaluating
                    the type of business in question (ie. law firm, food service
                    business, etc.)

     b.    A Certified Public Accountant with experience in evaluating
           business

     c.    Broker who specializes in the sale of the type of business in
           question

     d.    Other individuals who have previously bought and sold
           businesses of the type in question

     e.    Client


5.   Retirement Benefits
     a.    Human Resources employees with the employer
     b.    Plan Administrators
     c.    An Actuary with experience evaluating retirement benefits
     d.    A Certified Public Accountant with experience evaluating
           retirement benefits
     e.    Discuss the various assumptions that the Actuary or Certified
           Public Accountant routinely makes and determine how they may
           impact your client before choosing the Actuary or CPA


                             93
6.    Intellectual Property and Trade-Marks, Names or Secrets
      a.    Find an attorney who specializes in this type of property
            i.       Have the attorney explain the valuation issues
            ii.      Have the attorney direct you to valuation experts

7.    Animals and Livestock
      a.    Regional or national organizations for the breed or type of animal
            in question
            (many of these organizations may be contacted online)
      b.    Local breeders and trainers

8.    Crops and Timber
      a.    Local publications of prices
      b.    Client
      c.    Other individuals who buy and sell crops and timber

9.    Household Items
      a.    Auctioneers specializing in estate sales
      b.    Client
      c.    Resale dealers



10.   Art, Jewelry and Collectibles
      a.    Organizations of persons who collect the type of items in
            question
      b.    Dealers, especially those specializing the items in question
      c.    Auctioneers
      d.    Client
      e.    Other collectors

11.   Club Memberships
      a.    The club (by laws)


                               94
                   b.     Client


VI   PROPERTY AGREEMENTS

     Property agreements are covered by Texas Family Code, Title 1 [Husband and Wife],
     Subtitle B [Property Rights and Liabilities], Chapter 5 [Marital Property], Subchapter
     C [Property Agreements §5.41-5.56 [new §§4.001-4.106] and Texas Probate Code,
     Part 3, Community Property with Right of Survivorship §§451-462.

     A.     REFERENCE MATERIAL

            Oldham, J. Thomas - “Texas Marital Property Rights”, [3rd ed.], Chapter 19 -
            Paying Party, p.p. 496-539; Simpson & Tindall’s Texas Family Code
            Annotated, Lawyer’s Coop Publishing, 1996 Edition [Red Cover]; Kazen’s
            Practical Texas Family Code, YBY Publications, P O Box 1582, Santa Teresa
            NM 88008 (1996 Edition); State Bar of Texas Fam. L. Prac. Man., Chapter 48.
            A generous thanks to Harry Tindall for the Disposition Tables used to recodify
            Title I of the Texas Family Code and to Richard Orsinger of San Antonio, Texas,
            to use and reprint his excellent article on characterization.

     B.     UNIFORM PREMARITAL AGREEMENT ACT

            Texas Family Code sections on this Act are boldly printed.

            1.     DEFINITIONS [OLD §5.41, NEW §4.001].

                   a.     In this part:

                          (i).     “Premarital agreement” means an agreement between
                                   prospective spouses made in contemplation of marriage
                                   and to be effective on marriage.

                          (ii).    “Property” means an interest, present or future, legal or
                                   equitable, vested or contingent, in real or personal
                                   property, including income and earnings.

                   b.     This section contemplates the broadest possible definition of
                          property, but does not embrace “living together” agreements or
                          arrangements where there is not contemplation of marriage.

                   c.     Pre-act agreements were impliedly validated by the passage of
                          TEX. CONST. art. XVI, §15 amendment relating to separate and
                          community property of husband and wife. Beck v. Beck, 814
           S.W.2d 745 (Tex. 1991), cert. denied, 117 L. Ed. 2d 494, 112 S.
           Ct. 1266 (1992).

2.   FORMALITIES [OLD §5.42, NEW §4.002]

     a.    A premarital agreement must be in writing and signed by both
           parties. It is enforceable without consideration.

     b.    While the agreement must be in writing and signed by both
           parties, there is no formal requirement of a notary
           acknowledgment. See TEX. FAM. CODE ANN. §5.54 for similar
           post-martial provisions. In a pre UPAA case, the Texas
           Supreme Court held in Williams v. Williams, 569 S.W.2d 867,
           871 (Tex. 1978) that mutual promises to marry, subsequently
           performed, provide valid consideration for a pre-marital
           agreement.

     c.    The only “consideration” for the agreement is that there must be
           a marriage, formal [ceremonial] or informal [common law].

     d.    As in all contracts, both parties must have the capacity to
           contract.




3.   CONTENT [OLD §5.43, NEW §4.003]

     a.    Parties to a premarital agreement may contract with respect to:

           (i)     the rights and obligations of each of the parties in any of
                   the property of either or both of them whenever and
                   wherever acquired or located;

           (ii)    the right to buy, sell, use, transfer, exchange, abandon,
                   lease, consume, expend, assign, create a security
                   interest in, mortgage, encumber, dispose of, or otherwise
                   manage and control property;

           (iii)   the disposition of property on separation, marital
                   dissolution, death, or the occurrence or nonoccurrence of
                   any other event;


                            96
     (iv)     the modification or elimination of spousal support;

     (v)      the making of a will, trust, or other arrangement to carry
              out the provisions of the agreement;

     (vi)     the ownership rights in and disposition of the death
              benefit from a life insurance policy;

     (vii)    the choice of law governing the construction of the
              agreement; and

     (viii)   any other matter, including their personal rights and
              obligations, not in violation of public policy or a statute
              imposing a criminal penalty.

b.   The Right of a child to support may not be adversely affected by
     a premarital agreement.

     Cross reference Texas Probate Code §59A [Contracts
     Concerning Succession]

c.   The “grocery list” of matters listed in old §5.43, new §4.003 is not
     exclusive; and, other matters not in violation of public policy or
     any statute imposing a criminal penalty may be included.

d.   Obligations of a party relating to a child may not be impaired.

e.   Case examples relating to this section are as follows:

     (i).     Homestead rights may be waived. Williams v. Williams,
              supra.

     (ii)     Provision for income from all separate property to remain
              separate property precluded creation of community
              property. Dokmanovic v. Schwarz, 880 S.W.2d 272 (Tex.
              App.-- Houston [14th Dist.] 1994, no writ).

     (iii)    Future earnings may be partitioned between persons
              about to marry. Winger v. Pianka, 831 S.W.2d 853 (Tex.
              App.-- Austin 1992, writ denied).

     (iv)     “Excess” income was separate property. Scott v. Scott,
              805 S.W.2d 835 (Tex. App.-- Waco 1991, writ denied).

                       97
           (v)      Earnings from separate property were separate property
                    although personal earnings were not so included. Dewey
                    v. Dewey, 745 S.W.2d 514 (Tex. App.-- Corpus Christi
                    1988, writ denied).

           (vi)     Personal earnings were to be separate property, upheld.
                    Huff v. Huff, 554 S.W.2d 841 (Tex. Civ. App.-- Waco
                    1977, writ dism’d w.o.j.).

           (viii)   Agreement of intent to annually partition or exchange
                    community property was not, in and of itself, a partition or
                    exchange. Bradley v. Bradley, 725 S.W.2d 504, 504
                    (Tex. App.-- Corpus Christi 1987, no writ).

           (ix)     Agreements are construed according to contract law with
                    question of whether contract is ambiguous determined as
                    a matter of law by the court and the interpretation thereof
                    is a fact issue. Coker v. Coker, 650 S.W.2d 391, 393
                    (Tex. 1983).

4.   EFFECT OF MARRIAGE [OLD §5.44, NEW §4.004]

     a.    A premarital agreement becomes effective on marriage.

           Cross reference Texas Business and Commerce Code §26.01
           [Promise or Agreement must be in writing] which requires an
           agreement arising out of “nonmarital conjugal cohabitation” be in
           writing and signed by the party charged with the obligation.

     b.    However, a premarital agreement of the first marriage is
           inapplicable to the parties’ later remarriage to each other.
           Marshall v. Marshall, 735 S.W.2d 587 (Tex. App.-- Dallas 1987,
           writ ref’d n.r.e.).

5.   AMENDMENT OR REVOCATION OF AGREEMENT [OLD §5.45, NEW §4.005]

     a.    After marriage, a premarital agreement may be amended or
           revoked only by a written agreement signed by the parties. The
           amended agreement or the revocation is enforceable without
           consideration.




                             98
     b.    Because of such tales about “tearing up” or “burning it in the
           fireplace”, any amendment or revocation of the agreement must
           be in writing.

6.   ENFORCEMENT [OLD §5.46, NEW §4.006]

     a.    A premarital agreement is not enforceable if the party against
           whom enforcement is sought proves that:

           (i)    that party did not execute the agreement voluntarily; or

           (ii)   the agreement was unconscionable when it was executed
                  and, before execution of the agreement, that party:

                  (A)    was not provided a fair and reasonable disclosure
                         of the property or financial obligations of the other
                         party;

                  (B)    did not voluntarily and expressly waive, in writing,
                         any right to disclosure of the property or financial
                         obligations of the other party beyond the
                         disclosure provided; and

                  (C) did not have, or reasonably could not have had, an
                  adequate knowledge of the property or financial
                  obligations of the other party.

     b.    An issue of unconscionability of a premarital agreement shall be
           decided by the court as a matter of law.

     c.    The remedies and defenses in this section are the exclusive
           remedies or defenses, including common law remedies or
           defenses.

           These conditions must be proven to avoid enforcement.

     d.    Whether an agreement was entered into voluntarily is a question
           for the trier of fact.

           PRACTICE NOTE: Videotaping the execution of the agreement will
           help dispose of any claim of involuntariness.




                           99
e.   “Unconscionability” is determined at the time of the execution of
     the agreement. Hartz v. Hartz, 248 Md. 47, 234 A.2d 865
     (1967).

f.   The test of “unconscionability” is drawn from the Uniform
     Marriage and Divorce Act (UMDA) §306. The standard of
     unconscionability is used in commercial law under Texas
     Business and Commerce Code §17.45(5) which defines
     “unconscionability” as:

     “...an act practice which, to a consumer’s detriment, takes
     advantage of the lack of knowledge, ability, experience, or
     capacity of the consumer to a grossly unfair degree.”

     PRACTICE NOTE: For a family law application, change
     “consumer” to “prospective spouse” [premarital] or “spouse”
     [postmarital].

g.   Under UMDA §306 “the court may look to the economic
     circumstances of the parties resulting from the agreement and
     any other relevant evidence such as conditions under which the
     agreement was made, including the knowledge of the other
     party.”

h.   Under § 5.46(a)(2)(A) “A fair and reasonable disclosure of the
     property or financial obligations of the other party” is usually
     accomplished by production of the following documents:

     (i)      tax returns

     (ii)     financial statements

     (iii)    appraisal reports

     (iv)     bank disclosure statements

     (v)      life insurance policies

     (vi)     cash flow statements

     (vii)    profit and loss statements

     (viii)   credit card balances


                       100
     (ix)   titles to and liens on property

i.   Under §5.46(a)(2)(B) a written waiver, involuntarily and expressly
     made, must be made prior to the execution of the premarital
     agreement waiving any right to disclosure of property or financial
     obligation beyond that already made.

     PRACTICE NOTE:           Sometimes attorneys overlook this
     requirement. While there are no Texas cases construing this
     provision, the statute is very clear on this point.

j.   Under §5.46(a)(2)(C) and in addition to (A) and (B) above, the
     proponent of unenforceability must also show that the proponent
     “did not have, or reasonably could not have had, an adequate
     knowledge of the property or financial obligations of the other
     party.”

     PRACTICE NOTE: Depending on the length and depth of the
     relationship this could be a considerable hurdle for the
     proponent, especially if the contesting spouse has been
     “exposed” to the resisting spouse’s estate.

k.   Under §5.46(b) the issue of unconscionability is decided by the
     court, as a matter of law.

     PRACTICE NOTE: Some courts will withhold making this
     determination until after the finder of fact, usually a jury,
     determines the other elements of unenforceability.

l.   Case examples relating to this section are as follows:

     (i)    Whether the agreement is “fair” or “unfair” is immaterial;
            unconscionability is the legal stand. Chiles v. Chiles, 779
            S.W.2d 127 (Tex. App.-- Houston [14th Dist.] 1989, writ
            denied).

     (ii)   Signing the agreement the day before the wedding does
            not in and of itself invalidate the agreement. Williams v.
            Williams, 720 S.W.2d (Tex. App.-- Houston [14th Dist.]
            1986, no writ).




                     101
           (iii)   Summary judgment is a proper procedure in upholding
                   such agreement. Grossman v. Grossman, 799 S.W.2d
                   511 (Tex. App.-- Corpus Christi 1990, no writ).

7.   E NFORCEMENT IN THE EVENT OF A VOID MARRIAGE [OLD §5.47, NEW
     §4.007]

     a.    If a marriage is determined to be void, an agreement that would
           otherwise have been a premarital agreement is enforceable only
           to the extent necessary to avoid an inequitable result.

     b.    This section give the court discretion in the event the marriage is
           voided.




     c.    A case example relating to this section is as follows:

           This section is consistent with Davis v. Davis, 521 S.W.2d 603
           (Tex. 1975) which held that a good faith putative spouse is
           entitled to the same property right as a legal spouse.

     d.    See also 46 ALR 3d 1403 annotation “Enforcement of
           antenuptial contract or settlement conditioned upon marriage,
           where marriage was subsequently declared void.”

8.   LIMITATIONS OF ACTIONS [OLD §5.48, NEW §4.008]

     a.    Any statute of limitations applicable to an action asserting a
           claim for relief under a premarital agreement is tolled during the
           marriage of the parties to the agreement. However, equitable
           defenses limiting the time for enforcement, including laches and
           estoppel, are available to either party.

     b.    Under §5.48 limitations on claims of unenforceability of the
           agreement is tolled during the marriage.

     c.    Equitable defenses such as laches and estoppel are available.

           PRACTICE NOTE : Many times the parties will “abandon” the
           agreement only to claim enforceability/unenforceability at a later
           time. Such conduct raises the equitable defenses.

                           102
     9.    APPLICATION AND CONSTRUCTION [OLD §5.49, NEW §4.009]

           a.     Sections 5.41 through 5.50 of this subchapter shall be applied
                  and construed to effect their general purpose to make uniform
                  the law with respect to the subject of these sections among
                  states enacting them.

           b.     This provision states as a general purpose that these provisions
                  [§§5.41-5.48] be construed consistently per the Uniform Acts.



     10.   SHORT TITLE [OLD §5.50, NEW §4.010]

           a.     This part may be cited as the Uniform Premarital Agreement Act.

           b.     These sections may be cited as UPAA.

C.   OTHER PROPERTY AGREEMENTS

     Family Code sections on this Act are in bold.

     The provisions of F.C. §§5.51-5.56 [new §§ 4.101-4.106] serve the same
     purpose as the UPAA but relate to partitions and exchanges between a
     married Texas couple. Also the same definitions, formalities, and enforcement
     provisions apply.

     1.    PROPERTY DEFINED [OLD §5.51, NEW §4.101]

           a.     In this part:

                  (i)     “Premarital agreement” means an agreement between
                          prospective spouses made in contemplation of marriage
                          and to be effective on marriage.

                  (ii)    “Property” means an interest, present or future, legal or
                          equitable, vested or contingent, in real or personal
                          property, including income and earnings.

     2.    PARTITION OR EXCHANGE OF COMMUNITY PROPERTY [OLD §5.52, NEW
           §4.102]



                                  103
     a.   At any time, the spouses may partition or exchange between
          themselves any part of their community property, then existing or
          to be acquired, as they may desire. Property or a property
          interest transferred to a spouse by a partition or exchange
          agreement becomes his or her separate property.

     b.   By Constitutional amendment in 1948, spouses were permitted
          to partition or exchange property. This statute codifies that
          amendment.


     c.   Case examples relating to the section are as follows:

          (i)     The shift in the burden of proof is procedural for post-
                  marital agreements and applies to pre-statute
                  agreements. Blonstein v. Blonstein, 831 S.W.2d 468
                  (Tex. App.-- Houston [14th Dist.] 1992, writ denied). See
                  also, Pearce v. Pearce, 824 S.W.2d 195 (Tex. App.-- El
                  Paso 1991, writ denied).

          (ii)    A premarital agreement that contemplated future
                  partitions as written, held: property not partitioned
                  Bradley v. Bradley, 725 S.W.2d 503 (Tex. App.-- Corpus
                  Christi 1987, no writ).

          (iii)   In a pre UPAA case, the Texas Supreme Court held in
                  Hilley v. Hilley, 342 S.W.2d 565, 568 (Tex. 1961) that
                  separate property cannot be converted to community
                  property, but the reverse can occur by gift.

          (iv)    A forfeiture provision relating to community property is
                  invalid because it attempted to create separate property
                  in a manner not provided for by the Texas Constitution or
                  Texas Family Code. McBride v. McBride, 797 S.W.2d
                  689, 692 (Tex. App.-- Houston [14th Dist.] 1990, writ
                  denied).

3.   AGREEMENTS BETWEEN SPOUSES CONCERNING INCOME OR PROPERTY
     DERIVED FROM SEPARATE PROPERTY [OLD §5.53, NEW §4.103]

     a.   At any time, the spouses may agree that the income or property
          arising from the separate property then owned by one of them, or


                          104
           which may thereafter be acquired, shall be the separate property
           of the owner.

     b.    This section codifies the 1980 Constitutional Amendment
           allowing income from separate property to be separate property.

     c.    A case example relating to this section is as follows:

           (i)     An agreement for income from separate property to be
                   separate property signed before the 1980 amendment is
                   valid under the doctrine of “implied ratification”), Beck v.
                   Beck, 814 S.W.2d 745 (Tex. 1991), cert. denied, 117 L.
                   Ed. 2d 494, 112 S. Ct. 1266 (1992).

4.   FORMALITIES

     a.    A partition or exchange agreement must be in writing or signed
           by both parties.

     b.    TEX. CONST. art XVI § 15's requirement of a “written instrument”
           is codified in this section.

     c.    Case examples of this section are as follows:

           (i)     Listing property as separate property on joint tax return
                   does not constitute a partition agreement. Collins v.
                   Collins, 752 S.W.2d 636 (Tex. App.-- Fort Worth 1988,
                   writ ref’d).

           (ii)    Agreement does not require judicial approval. Patino v.
                   Patino, 687 S.W.2d 799 (Tex. App.-- San Antonio 1985,
                   no writ).

           (iii)   Verbal agreement does not comply with requirements.
                   Recio v. Recio, 666 S.W.2d 645 (Tex. App.-- Corpus
                   Christi 1984, no writ); Miller v. Miller, 700 S.W.2d 941,
                   951 (Tex. App.-- Dallas 1985, writ ref’d n.r.e.)

5.   ENFORCEMENT [OLD §5.55, NEW §4.105]

     a.    A partition or exchange agreement is not enforceable if the party
           against whom enforcement is sought provides that:


                            105
     (i)     that party did not execute the agreement voluntarily; or

     (ii)    the agreement was unconscionable when it was executed
             and, before execution of the agreement, that party:

             (A)    was not provided a fair and reasonable disclosure
                    of the property or financial obligations of the other
                    party;

             (B)    did not voluntarily and expressly waive, in writing,
                    any right to disclosure of the property or financial
                    obligations of the other party beyond the
                    disclosure provided; and

             (C)    did not have, or reasonably could not have had, an
                    adequate knowledge of the property or financial
                    obligations of the other party.

b.   An issue of unconscionability of a partition or exchange
     agreement shall be decided by the court as a matter of law.

c.   The remedies and defenses in this section are the exclusive
     remedies or defenses, including common law remedies or
     defenses.

d.   The wording is identical to §5.45 except for the enforcement of
     the word “premarital” with “partition or exchange”.

e.   Case examples of this section are as follows:

     (i)     This section applies to “income from separate property”
             agreements. Daniel v. Daniel, 779 S.W.2d 110 (Tex.
             App.-- Houston [1st Dist.] 1989, no writ).

     (ii)    Standard of enforcement is that in effect at time of
             divorce. Daniel v. Daniel, supra.

     (iii)   Agreement was not voluntary where evidence revealed
             that husband was hiding parties’ child at the time.
             Matthews v. Matthews , 725 S.W.2d 275 (Tex. App.--
             Houston [1st Dist.] 1986, writ ref’d n.r.e.).




                     106
          (iv)   Issue of “unconscionability” must be addressed on a
                 case-by-case basis with focus on “circumstances” rather
                 than the “disproportionate effect” of agreement. Fanning
                 v. Fanning, 828 S.W.2d 135, 145 (Tex. App.-- Waco
                 1992), aff’d in part, rev’d in part on other grounds, 847
                 S.W.2d 225 (Tex. 1993).

6.   PARTITION OR EXCHANGE AGREEMENTS: RIGHTS OF CREDITORS ,
     RECORDATION. [OLD §5.56, NEW §4.106]

     a.   A provision of a partition or exchange agreement made under
          this subchapter is void with respect to the rights of a preexisting
          creditor whose rights are intended to be defrauded by it.

     b.   A partition or exchange agreement made under this subchapter
          may be recorded in the deed records of the county in which a
          party resides and in the county in which the real property affected
          is located. An agreement, partition, or exchange agreement
          made under this subchapter is constructive notice to a good faith
          purchaser for value or a creditor without actual notice only if the
          instrument is acknowledged and recorded in the county in which
          the real property is located.

     c.   Any agreement which intentionally defrauds creditors is void.
          This is consistent with the Texas Fraudulent Transfers Act.

     d.   Recordation is recommended because agreements get lost over
          time and attorneys do not like to maintain such agreements
          indefinitely.

          PRACTICE NOTE: The agreement and videos of the signing of the
          agreement should be kept by the parties in a safe or safe
          deposit box.

7.   SUMMARY

     a.   The burden of proof is on the opponent of an agreement to
          challenge and statutorily prove its unenforceability to the trier of
          fact.

     b.   In all instances, the “unconscionability” of the agreement is
          decided by the court.


                          107
           c.     “Living together” agreements are not covered by the Texas
                  Family Code but are covered by the Texas Business and
                  Commerce Code §26.01.

           d.     “Consideration” is not a requirement for validity of all
                  agreements.

           e.     Capacity to contract is required in all instances.

           f.     Almost anything can be covered in the agreement, except
                  binding parent-child agreements.

           g.     Tearing up or burning the agreement does not revoke it.

           h.     Videotaping the signing of the agreement will aid or assist the
                  trier of fact on the question of whether the agreement was
                  voluntarily signed.

           i.     “Unconscionability” is determined at the time of the signing of the
                  agreement.

           j.     A “fair and reasonable disclosure of property or financial
                  obligations” is best handled by production of tax returns, financial
                  statements, and other documents indicating value of property or
                  liability thereon.

           k.     An express written waiver is necessary before signing the
                  agreement beyond that property or liability already disclosed.

           l.     Whether the agreement is “fair” or “unfair” is immaterial.
                  Unconscionability is the standard.

           m.     Limitations are tolled during marriage but are subject to
                  equitable defenses such as laches and estoppel.


D.   Marital Agreement - Litigation

     The Texas Uniform Premarital Agreement Act is a modified version of the
     Uniform Premarital Agreement Act, a uniform statute that has been enacted in
     a number of states.

     When planning for litigation over a premarital agreement, you should consider
     the following questions-to-be-answered checklist:

                                  108
1.   IS THE AGREEMENT THE PRODUCT OF AN ARMS-LENGTH
     TRANSACTION OR AN EQUAL BARGAINING POSITION?

     a.   What were and are the mental capacity, intelligence, education
          and age of the parties?

     b.   What were and are the mental and physical health of the parties?

     c.   What experience do the parties have in life generally, as well as
          in specific business or financial matters?

     d.   How many marriages has each party had? Has one party been
          through this before while this is a first marriage for the other?

     e.   What are the personality traits or characteristics of the parties?
          Who is the dominant force in the relationship and who is the
          weaker personality?

2.   WHAT WAS THE STATUS OF THE PARTIES BEFORE THE
     AGREEMENT WAS SIGNED AND AT THE TIME OF
     ENFORCEMENT?

     a.   Was either party unemployed or regularly employed in an
          income-producing capacity?

     b.   Did either party demand, ask, volunteer, or suggest that one
          party abandon employment in whole or in part? Why?

     c.   Was either party receiving or paying alimony, spousal support,
          or child support?

     d.   Did either party demand, ask, volunteer, or suggest that alimony,
          spousal support, or child support be abandoned? Why?

     e.   Was either party in school?

     f.   Did either party demand, ask, volunteer, or suggest that
          education be abandoned? Why?

     g.   How long did the parties know each other before they signed the
          agreement and were married?




                          109
h.   Did either of the parties abandon statutory or common law rights
     in former marriages or prior separation agreements because of
     the present relationship or possible marriage? What was given
     up and why?

i.   Was there a history of physical or mental abuse before the
     agreement was requested and signed?

j.   Which party asked for or proposed the idea of a prenuptial
     agreement?

k.   Was the support of children from former marriages discussed?

l.   Did the parties discuss the desire to have children of their own?

m.   What were the initial reasons given by the person asking for the
     prenuptial agreement? How do they compare with the factors
     considered in the agreement?

n.   When, where, and on what occasion did the parties discuss the
     agreement before it was signed?

o.   Did the parties talk to anyone (aside from attorneys) about the
     contemplated or signed agreement, such as friends, relatives,
     business associates or partners, clergy, or counselors? When
     and where?

p.   How were the household and daily living expenses handled? If
     there were two incomes, did one or both go into a joint or
     individual checking account and was one or both used for
     accumulating assets through investments or savings?

q.   Were any IRA's set up before or after the agreement was
     signed?

r.   Were any contributory pension or profit sharing plans set up
     before or after the agreement was signed?

s.   Was there any property owned jointly before the agreement was
     signed? Was it later transferred to either party individually before
     or after the agreement was signed?




                     110
     t.   Was there a joint checking account before or after the agreement
          was signed?

     u.   Were oral or written promises (apart from the agreement) ever
          made before or after the agreement? (Consider birthday,
          anniversary, or Valentine's Day cards, love notes or apology
          letters, statements made at parties or statements in the nature of
          "Don't worry, if anything ever happens, I'll take care of you, no
          matter what the agreement says.")

3.   WAS THERE ADEQUATE LEGAL REPRESENTATION FOR BOTH
     PARTIES?

     a.   Did each party have a lawyer of his or her own choice?

     b.   How were the lawyers selected?

     c.   Did the lawyers share office space or were they located in the
          same building or on the same floor? If so, was that a
          coincidence?

     d.   Did the lawyers meet with both clients separately or together
          before the agreement was in draft or in final form?

     e.   Did each lawyer participate in the drafting of the agreement?

     f.   Was there more than one working draft? Were any copies
          marked up by the parties or the lawyers?

     g.   Are you endangering your client's rights by representing him or
          her now if you did so at the time of the agreement? If you have
          to testify, consider all your options in favor of your client's well-
          being.

     h.   Who paid the fees of both lawyers and from what checking
          accounts were the checks drawn?

     i.   If the lawyers rendered a written bill, was it in the name of one or
          both of the parties? Do time records show the name of one or
          both parties?




                          111
     j.   Did the drafting lawyers issue letters to the clients disclaiming the
          enforceability of the agreement or did they do so verbally?
          (Beware of the problem of privileged communication.)

     k.   Where and when was the agreement signed by the parties?
          Were the drafting lawyers present?

     l.   Who witnessed the signing of the agreement? Were there any
          notable emotions such as fear, joy, sadness or anger?

     m.   Did both parties get signed copies of the agreement? When?

     n.   Were any transfers of property made by the parties' subsequent
          acts or deeds contrary to the agreement? Were the lawyers
          consulted?

     o.   Did the lawyers fully, completely, and openly explain to the parties
          every aspect of the agreement before it was signed? Did they
          explain the effects it would have on the parties' future rights.

     p.   Did the lawyers request and receive financial documents such as
          tax returns, financial statements and stock valuations?

4.   WAS THERE FULL AND COMPLETE DISCLOSURE BEFORE THE
     AGREEMENT WAS SIGNED?

     a.   Was all financial information regarding income, expenses,
          assets and liabilities attached to the agreement?

     b.   Did the income disclosures include averages over several
          years?

     c.   Were the assets properly valued, as they would be in a divorce
          disclosure? Were the assets valued at cost, market, or book, or
          any of the other valuation methods?

     d.   How do the current valuations compare to what they were before
          the agreement was signed?

     e.   Was the duty to inform rather than the right to know really
          explained to the parties?




                          112
f.   Were any backup documents, such as old tax returns or financial
     statements, offered or shown to the parties or their lawyers? Did
     either party or lawyer choose not to examine them?

g.   Were potential future assets or obligations disclosed?

h.   Was life insurance, revocable or irrevocable, ever disclosed,
     discussed or promised before or after the agreement was
     signed?

i.   Were medical benefits ever abandoned through either the loss
     of employment or remarriage? Was the cost of the loss of
     benefits considered and disclosed before or after the agreement
     was signed?

j.   Were pension benefits with or without the right of survivorship
     discussed and disclosed before or after the agreement was
     signed?

k.   Were the rights and elections under social security law
     discussed and disclosed before or after the agreement was
     signed?

l.   Were the federal and state income, estate and gift tax
     consequences discussed and disclosed before or after the
     agreement was signed? (For example, if a joint tax return would
     save one party large sums of money each year, was that fact
     disclosed and negotiated in the waiver of certain rights? Was
     the potential tax liability in a joint return for taxes, interest and
     penalties discussed and disclosed?)

m.   Did either party divest themselves of property or property rights
     immediately before the agreement was signed, so that--in the
     nature of a fraudulent conveyance--it did not have to be
     disclosed?

n.   Was the response to a request for backup documents
     cooperative, dilatory or nonexistent?

o.   Were the parties made aware of the existence or availability of
     any relevant documents such as partnership agreements,
     corporate returns and documents, trust agreements, trade
     agreements or estate inventories?


                     113
     p.   Was either party ever made aware of assets not owned by the
          other party but in which he or she had a beneficial interest?

     q.   Did either party decline or neglect to pursue available
          opportunities to investigate the other party's income or assets?

     r.   Did the parties share the same account?

5.   WAS EITHER PARTY PRESSURED TO SIGN THE AGREEMENT
     THROUGH UNDUE INFLUENCE, DURESS, OR COERCION?

     a.   Was either party threatened in any way, such as illegal or social
          extortion or embarrassment?

     b.   Were there any threats or acts of withholding money if the
          agreement was not signed, or refusal to go to a "friendly" lawyer?

     c.   Was abandonment ever threatened?

     d.   Was physical abuse ever used or threatened?

     e.   Were mental or psychological pressures ever made or
          threatened?

     f.   Were there threats to cancel the wedding unless the agreement
          was signed?

     g.   When, where, and with whom did acts of coercion, duress, or
          undue influence take place?

     h.   Was financial nonsupport of children ever threatened or carried
          out for failure to sign the agreement?

     i.   Were sexual acts ever withheld or forced for failure to sign the
          agreement?

6.   WAS THERE LEGAL CONSIDERATION OR ADEQUATE
     CONSIDERATION FOR THE WAIVER OF STATUTORY OR
     COMMON LAW RIGHTS IN THE AGREEMENT ITSELF?

     a.   What was received?

     b.   What was paid or promised?

                          114
     c.   When and where was it received or paid?

     d.   How was it received or paid?

     e.   What is the relationship between what was waived and what was
          received?

     f.   Were documents required to be executed after the agreement
          was signed, such as a will, deed or trust? Were they actually
          drawn and executed?

     g.   Were documents required under the agreement executed and
          subsequently revoked such as a will, life insurance policy,
          assignment of pension benefits or trust?

     h.   Were transfers of property or assets by or to a third party
          contemplated? What was to be transferred, by whom, to whom,
          and when?

7.   PROVING SPOUSE UNDERSTOOD AGREEMENT AT TIME OF
     EXECUTION

     Q.   Did you direct ____________ [surviving spouse's attorney] to
          draw up an antenuptial agreement prior to your marriage to
          ____________ [decedent]?

     A.   Yes.

     Q.   Did you ask ____________ [decedent] to prepare a schedule of
          assets for this antenuptial agreement?

     A.   Yes.

     Q.   Did you prepare a schedule of your own assets for this
          agreement?

     A.   Yes.

     Q.   At the meeting on (date), attended by yourself, your future
          husband, ____________ [decedent], and the two attorneys, did
          you have an opportunity to read the complete antenuptial
          agreement which your attorney had prepared?



                        115
A.    I don't remember whether I read through the entire agreement.

Q.    You were given a copy of the agreement, weren't you?

A.    Yes, I had a copy of it.

Q.    Well, did you just thumb through it then, or read it in any way?

A.    I simply don't remember.

Q.    When did you receive your copy of the agreement?

A.    My attorney handed it to me after we had sat down.

Q.    And it just remained in your lap or in your hands throughout the
      entire meeting?

A.    No, I referred to it from time to time to keep up with what was
      being said.

[Counsel hands witness the antenuptial agreement]

Q.    I show you now ____________ [plaintiff's or defendant's] Exhibit
      _____, and ask you if this is the antenuptial agreement which you
      had your attorney prepare and which you referred to at the
      meeting on (date).

A.    It is.

Q.    Did you sign the agreement at the meeting on (date)?

A.    Yes.

Q.    Did you at the time of the signing of this antenuptial agreement
      understand what an antenuptial agreement was?

A.    I had a vague idea; I know I had previous experience with them.

Q.    What was your understanding of the significance of an
      antenuptial agreement at that time?

A.    An antenuptial agreement is a document which two people draw
      up to protect their interests.


                      116
     Q.    Their financial interests?

     A.    Yes.

     Pitcher, Waiver of Spousal Rights in Estate of Deceased Spouse, 7
     P.O.F.2d 443.

8.   PROVING SPOUSE HAD ADEQUATE TIME TO CONSIDER TERMS
     OF ANTENUPTIAL AGREEMENT PRIOR TO EXECUTION

     Q.    When you signed the antenuptial agreement on (date), did you
           feel rushed?

     A.    I'm not sure what you mean.

     Q.    Did you feel you needed more time to understand the provisions
           and implications of the agreement?

     A.    I'm still not sure what you are asking.


     Q.    Did you at any time during the meeting ask for a delay in signing
           the agreement so that you could examine it closely?

     A.    No.

     Q.    You felt that it could be signed at that meeting?

     A.    Yes.

     Q.    So you didn't disagree with the agreement at that time?

     A.    I don't recall whether I had any specific disagreements.

     Q.    But you did sign it that day, did you not?

     A.    Yes, I did.

     Q.    And you can't now tell the court whether you had any specific
           disagreements prior to signing the document?

     A.    I don't recall any.



                            117
Pitcher, Waiver of Spousal Rights in Estate of Deceased Spouse, 7 P.O.F.2d
443.

9.    CONSCIONABILITY - DEFINITION

             a.     Uniform Premarital Agreement Act.
                    The Uniform Premarital Agreement Act defines
                    unconscionability by reference to Section 306 of the
                    Uniform Marriage and Divorce Act which provides that the
                    standard of unconscionability is that standard used in
                    commercial law where its meaning includes protection
                    against one-sidedness, oppression or unfair surprise.

                    (1)    The unconscionability standard includes:
                           (a)   Overreaching;
                           (b)   Concealment of assets; and


                           (c)    Sharp dealing not consistent with the
                                  obligation of marital partners to deal fairly
                                  with each other.

                           Uniform Premarital Agreement Act 9B U.C.A. 10.

                    (2)    To determine conscionability the court may look to:
                           (a)    The economic circumstances of the parties
                                  resulting from the agreements;

                           (b)    Any other relevant evidence such as:
                                  (i)    The conditions under which the
                                         agreement was made;

                                  (ii)   Knowledge of the other party.

             b.     Texas Business and Commerce Code § 2.302.
                    The Texas Business and Commerce Code makes it
                    possible for the courts to police against contracts or
                    contract clauses which the courts find unconscionable. As
                    noted in the comment to Section 2.302, the principle is
                    one of prevention of oppression and unfair surprise.

                    (1)    Oppression.



                            118
                                          The agreement "leaves a post-divorce economic
                                          situation that is unjustly disproportionate," i.e., one-
                                          sidedness. Lewis v. Lewis, 748 P.2d 1362 (1988).

VII   FRINGE BENEFITS OF EMPLOYMENT.
      Texas generally applies the inception of title approach (See §II p. 1 herein) to
      characterize acquisitions over time. The only exception to this rule appears to be
      defined benefit pensions. See Taggart, supra. Unfortunately, the court has never
      expressly discussed the scope of this exception.

      A.    Long-Term Employment Agreements.

            Divorces involving spouses with long-term employment agreements have
            arisen in states that generally apply the pro rata allocation approach. In these
            states, if a spouse divorces before the end of the term of the contract, courts
            have concluded that compensation due after divorce is for post-divorce efforts
            and is therefore the employee's separate property. See Garfein v. Garfein, 93
            Cal. Rptr. 714 (Cal. App. 1971); Marriage of Anderson, 811 P.2d 419 (Colo.
            App. 1990). See generally Oldham, supra, sec. 7.13. (Of course, if for salary
            cap or other reasons the contract payments extend over a period longer than
            the spouse's playing career, it is conceivable that the community could have a
            claim to some portion of these payments even under a pro rata analysis.)

            Under inception of title, it would seem clear that the contract payments due after
            divorce would be community property. The question would be how to calculate
            the reimbursement award for the post-divorce efforts needed to earn the
            payments. Such a calculation might not be identical to a pro rata calculation.
            For example, assume an athlete signs a long-term generous contract during
            marriage, and further assume his skills have eroded during marriage. Possibly
            the reimbursement award in this instance would be calculated based on the
            value of the athlete's services as of the time of divorce, which presumably might
            be significantly less than the contract rate.

            If the employee received some kind of signing bonus, the treatment may also
            differ based on whether a pro rata approach is used or inception of title. Under
            a pro rata approach, to characterize the bonus a court might apportion the
            signing bonus over the life of the contract. In inception of title states, the bonus
            would seem to be all community property (if received during marriage),
            regardless of whether the marriage ends before the expiration of the contract.

      B.    Bonuses.




                                            119
     Key employees frequently receive periodic bonuses for services. A
     characterization question arises if the spouse divorces before the bonus is
     received. Like a number of marital property issues involving employment
     benefits, the question presented is what period of services is being
     compensated by the bonus. Is the bonus intended to induce the employee to
     be a better employee in the future, is the bonus intended to reward past efforts,
     or both? The characterization question therefore may be strongly fact-driven.
     If the bonus is intended to reward future efforts, the bonus received after divorce
     should be the employee's separate property. If the bonus is intended to reward
     past services, a post-divorce bonus might be partially community. See, for
     example, Schanck v. Schanck, 717 P.2d 1 (Alaska 1986); Preis v. Preis, 649
     So.2d 593 (La. App. 1994); Lineberger v. Lineberger, 399 S.E.2d 786 (S.C.
     App. 1990). Cf. Marriage of Nelson, 222 Cal. Rptr. 790 (Cal. App. 1986)
     (holding that the bonus was not community property because the employee had
     no vested right to it before divorce). Similarly, a bonus received during
     marriage could be separate property if it was intended to compensate
     premarriage services. See Moore v. Moore, 192 S.W.2d 929 (Tex. Civ. App.
     -- Ft. Worth 1946, no writ).

     It is now the custom of some large law firms in Texas to give a law student a
     bonus when the student commits to come to work for them. This commitment
     is made in the fall; the job does not begin until the next summer. If the student
     marries in the spring, is the bonus separate or community property? What
     services, if any, are being compensated?

C.   Restricted Stock and Stock Options.

     Key employees also receive stock options and/or restricted stock. The key
     similarity between these two types of compensation is that the employee's right
     to receive the compensation is contingent upon the employee remaining
     employed for a certain specified period (unless the employee dies). Once the
     specified period lapses, the benefits are said to vest. Please note:

     1.     Reference is made to articles on stock options by Todd Franks,
            “Division of Stock Options on Divorce”, 11 Am. J. Fam. L. 119 (1997)
            and Lindsay Short and Sharon Cammack, 1996 Adv. Fam. Course, at
            II-7, 8 & 11.

     2.     Under a stock option, typically the employee is given the right (but
            doesn't have the obligation) to purchase the company's stock from the
            company at the market price on the date of grant. The option becomes
            exercisable at a specified period in the future, but only if the employee
            is still employed by the company on the date of exercise.

                                    120
3.   Restricted stock is bought by the employee at a very favorable price (or
     given to the employee), but the employee doesn't have the right to sell
     it until a certain specified period expires. If the employee quits before
     that point, the stock must be returned to the company.



4.   Vested benefits (such as unrestricted stock or exercisable stock
     options) received during marriage for services are fairly simple to
     characterize. They normally would be considered 100% community
     (unless they would be considered to be compensation for a period of
     employment before marriage). See Myklebust v. Myklebust, 605
     S.W.2d 397 (Tex. Civ. App. -- Houston [14th Dist.] 1980), rev'd on other
     grounds, 615 S.W.2d 187 (Tex. 1981). (This assumes that the stock,
     once purchased with the options, could be freely traded. If the stock
     would be still subject to some restrictions after exercise, questions
     similar to those discussed below could arise. See Marriage of Walker,
     265 Cal. Rptr. 32 (Cal. App. 1989).) The more complicated question
     involves how to characterize benefits that are not vested at divorce.

5.   Some courts other than Myklebust, supra, have stated that options
     received during marriage are community. See Demler v. Demler, 836
     S.W.2d 696 (Tex. App. -- Dallas 1992, no writ). This case did not state
     whether the options were exercisable at divorce. No Texas court has yet
     expressly discussed how to treat options that are unexercisable at
     divorce.

6.   How might a Texas court handle unexercisable options? Courts in other
     states have taken a number of different approaches. Some courts have
     held that an unexercisable option is not divisible at divorce. See Hann
     v. Hann, 655 N.E.2d 566 (Ind. App. 1995). However, in these states
     unvested rights are not divisible, a rule not consistent with Texas law.

7.   In Echols v. Auston, Inc., 529 S.W.2d 840 (Tex. Civ. App. -- Austin
     1975, writ ref., n.r.e.) the court focused on whether the employee had a
     vested right to the option as of the date of divorce. Note, however, that
     Echols was decided before Cearley, supra.

8.   Many courts agree that, to characterize unexercisable options, it is very
     important to try to determine what period of service is being
     compensated by the options. For example, one court has said that, if
     the options were granted to induce an employee not to start a competing
     company and to work for the employer, such options would be all

                            121
      community, even if unexercisable at divorce. See Marriage of Short,
      890 P.2d 12, 16 (Wash. 1995). Although options almost always require
      the employee to continue to work for the employer, this does not
      necessarily mean that the options are intended to compensate post-
      divorce services. For example in Marriage of Miller, 915 P.2d 1314,
      1318-19 n.7 (Colo. 1996) the court stated that "there is a distinction
      between conditioning the receipt of benefits on the employee remaining
      in the employ of the employer and providing benefits in consideration of
      the performance of future services."

9.    Some courts have concluded that unexercisable stock options are 100%
      marital property. See Smith v. Smith, 682 S.W.2d 834 (Mo. App. 1984);
      Chen v. Chen, 416 N.W.2d 661 (Wis. App. 1987); Goodwyne v.
      Goodwyne, 639 So.2d 1210 (La. App. 1994); Pascale v. Pascale, 660
      A.2d 485 (N.J. 1995); DeJesus v. DeJesus, 620 N.Y.S.2d 704 (N.Y.
      Sup. 1994). Indeed, in Goodwyne the court concluded that options
      granted after divorce were 100% marital because the options rewarded
      efforts during marriage.

10.   Other courts have suggested different approaches. In Green v. Green,
      494 A.2d 721 (Md. App. 1985) the court suggests valuing the options as
      of the date of divorce. See also, Richardson v. Richardson, 659
      S.W.2d 510 (Ark. 1983).

11.   A number of other courts, concluding that options are intended to
      compensate the employee for a period of service, have applied some
      type of pro rata allocation. To these courts, the percentage of the
      options that are marital is calculated by determining the time being
      compensated during marriage before the cut-off date and dividing that
      by the total period being compensated.

12.   So, for example, in Marriage of Hug, 201 Cal. Rptr. 676 (Cal. App.
      1984) the court determined that the employee was being compensated
      for the period of time from the time he began working with the company
      until the exercise date. So, the fraction that would be community was the
      portion of that period (before the cut-off date) the employee was
      married.

13.   In Nelson v. Nelson, 222 Cal. Rptr. 790 (Cal. App. 1986), the court
      applied a different type of pro rata formula. Here the court determined
      that the options were intended to compensate the employee for the
      period between the date of grant and the date of exercisability. So, as
      in Hug, the community percentage would be the portion of that period

                             122
      (before the cut-off date) the employee was married. Some other courts
      have also applied a pro rata allocation of some kind. See Salstrom v.
      Salstrom, 404 N.W.2d 848 (Minn. App. 1987); In re Frederick, 578
      N.E.2d 612 (Ill. App. 1991).

14.   If a court applies a pro rata allocation, it may want to keep in mind that
      the options may become exercisable earlier than expected, for example
      if the employee retires, dies, or the company is taken over. See Garcia
      v. Mayer, 920 P.2d 522 (N.M. App. 1996).

15.   Although restricted shares are similar to stock options, courts have not
      always applied an identical approach when considering restricted
      shares. For example, Miller, supra, involved both stock options and
      restricted shares. Both were granted during marriage but were
      unvested at divorce. Regarding the options, the Colorado Supreme
      Court remanded for a determination about what services the options
      were intended to compensate. In contrast, apparently because the
      employee already owned the restricted shares at divorce, the court
      concluded that these were 100% marital property, even though they
      were still restricted (and required continuing employment to remove the
      restrictions). A number of other courts have also treated restricted stock
      as 100% marital property, even though still restricted at divorce. See
      Mestayer v. Williams, 569 So.2d 1102 (La. App. 1990); Camp v.
      Camp, 580 So.2d 553 (La. App. 1991); McGinnis v. McGinnis, 22
      Fam. L. Rep. (BNA) 1310 (Ky. App. 1996). In contrast, one case has
      treated such restricted shares as in part compensation for post-divorce
      work. See Klingenberg v. Klingenberg, 675 A.2d 551 (Md. App. 1996).

16.   So, given these cases from other states, how might a Texas court deal
      with unexercisable options at divorce? It seems clear that a Texas court,
      under inception of title, would have to conclude that the options are
      community property. If the options are considered compensation only
      for services during marriage, the options then fairly clearly would be
      100% community property. (Remember the statement from Miller,
      supra, that there is a distinction between conditioning benefits on
      remaining in the employ of the employer and the benefits being
      compensation for future post-divorce services.)


17.   However, what if the court determines that the options are intended to
      compensate for post-divorce services? Some means of calculating a
      reimbursement award would be needed. How could this be done?
      Unfortunately, there is as yet no guidance about how to do this. James

                             123
      Loveless has argued that, due to the treatment in Joiner of unvested
      profit-sharing plan rights, Joiner would be authority for the argument that
      an unexercisable stock option is a mere expectancy to which the
      community should have no claim. See 1997 Marriage Dissolution
      Institute materials, at page G-25. (He does "urge caution when citing
      Joiner for this proposition." Id.)

18.   To the extent that the community has a claim to the options, how would
      this work? Options generally are not transferable, and would have to be
      exercised by the employee. The decree would have to address a
      number of questions, such as (:) who would decide when to exercise the
      options--would all the community options have to be exercised at the
      same time, or could the non-employee choose to exercise some at a
      time when the employee did not want to exercise any; (ii) how would the
      community claim be computed--for example, is the community claim the
      premium at the time of exercise, or the profit generated by the purchase,
      if the employee keeps the shares for a period after exercise; (iii) how do
      tax consequences fit in--should the community claim be reduced for
      taxes due; and (iv) if funds need to be provided to exercise the options,
      who needs to provide the funds?

19.   In Smith v. Smith, 682 S.W.2d 834 (Mo. App. 1984), the court
      considered all the options 100% marital property. The employee was
      given the right to choose when to exercise the options. The employee
      was ordered to give the non-employee notice 30 days before any such
      exercise. The non-employee had to provide 50% of the funds necessary
      to exercise the options, or forfeit those rights. Tax consequences were
      shared.

20.   In Goodwyne v. Goodwyne, 639 So.2d 1210 (La. App. 1994) the court
      reduced the community claim by the amount of tax due. In Nelson v.
      Nelson, supra, the court reduced the community claim by 20% for taxes;
      if the actual tax due exceeded 20%, the employee should receive a
      credit for that. In Chen, supra, the court also deducted from the marital
      claim all tax due.

21.   In Marriage of Walker, 265 Cal. Rptr. 32 (Cal. App. 1989) the court
      awarded de facto control over a certain number of options to the non-
      employee. The non-employee was given the right to instruct the
      employee when to exercise the options. Once the non-employee did
      this, and paid the cost of exercise, the stock was to be delivered to the
      non-employee.


                             124
       D.   Vacation Time.

            Divorcing spouses frequently have accumulated vacation time or sick leave
            during marriage. Although I could find no Texas discussion of this issue, courts
            in other states have considered it, to-wit:

            1.       One court concluded that vacation time was not a divisible asset
                   because it could not immediately be converted to cash by the employee.
                   In re Lorenz, 194 Cal. Rptr. 237 (Cal. App. 1983). This seems to be
                   inconsistent with the analysis applied in pension cases, where rights to
                   be enjoyed after divorce are considered marital property even though
                   they cannot be converted to cash immediately.

            2.     A Maryland court also concluded that vacation benefits should not be
                   included in the marital estate. In this case, the spouse would receive
                   cash for all vacation time not taken when the employee quit or retired.
                   The court determined that such a cash payment would be unlikely,
                   however, since most people take all of their vacation time as it becomes
                   available. Thomasian v. Thomasian, 556 A.2d 675 (Md. App. 1989).

            3.     A majority of courts have determined that the portion of vacation time
                   accumulated during marriage does create a marital claim, particularly
                   if the employee has the right to receive cash upon termination of
                   employment for unused vacation time. Schober v. Schober, 692 P.2d
                   267 (Alas. 1984); Lesko v. Lesko, 457 N.W.2d 695 (Mich. App. 1990);
                   Bortnick v. Young, 16 Fam. L. Rep. (BNA) 1459 (D.C. Super. 1990); In
                   re Nuss, 18 Fam. L. Rep. (BNA) 1312 (Wash. App. 1992); In re Sheffer,
                   802 P.2d 817 (Wash. App. 1990); In re Gonzalez, 214 Cal. Rptr. 634
                   (Cal. App. 1985). These courts emphasize that the rights are valuable
                   rights accumulated during marriage due to efforts. A New York decision
                   permitted the non-employee to share in the vacation benefits only if, as,
                   and when the employee received a cash payment in lieu of the vacation
                   time. Grund v. Grund, 17 Fam. L. Rep. (BNA) 1530 (N.Y. Sup. 1991).

VIII   RETIREMENT PLANS

       A.   FILL OUT A FACT SHEET FOR EACH RETIREMENT PLAN: IF THIS
            INFORMATION IS OBTAINED THROUGH THE DISCOVERY REQUEST TO
            THE COMPANY, THEN REFERENCE THE DISCOVERY ON THIS FACT
            SHEET

            1.     Participant


                                          125
     a.    Name (P or R):

     b.    SS#:

     c.    DOB:

     d.    Current address:

     e.    Attorney for Participant:

     f.    Position(s) held during entire employment and the date of each
           position:
     g.    Date of employment:

     h.    Place of employment:

     i.    Employee I.D. No.:

     j.    Date termination of employment (if any):

     k.    Beginning date of participation in the plan:

     l.    Date of termination of participation in the plan (if any):

     m.    Is the Participant currently receiving benefits?

     n.    If not, dates upon which Participant becomes eligible to receive
           benefits (in other words, when is Participant vested to receive
           benefits):

     o.    Employment status of Participant: hourly, salaried, active, laid-off,
           retired, other:


2.   Alternate Payee

     a.    Name (P or R)
     b.    SS#:

     c.    DOB:

     d.    Current address:



                            126
     e.      Attorney for Alternate Payee:

     f.      Alternate Payee's beneficiaries upon Alternate Payee's death:



3.   Facts

     a.      Date of Marriage:

     b.      Date of Divorce:

     c.      Date of Valuation:

     d.      How is the plan to be divided? (BE SURE TO INCLUDE FOR
             EACH ANY AMOUNT IN ADDITION TO THE PERCENTAGE
             AWARDED IN THE DECREE)

             Benefit to Participant:

             Benefit to Alternate Payee:

     e.      Page number and section (if applicable) in decree for retirement
             division:


4.   The Plan

     NOTE: Inquire about all retirement programs available to the employee.

     a.      Complete name of the Plan:

     b.      Circle whether the plan is a Defined Contribution Plan or Define
             Benefit Plan

     c.      Name of Plan Administrator:

     d.      Address of Plan Administrator:
     e.      Telephone AND fax numbers of Plan Administrator:




                             127
f.   Name of Plan Sponsor:
g.   Address of Plan Sponsor:

h.   Telephone AND fax numbers of Plan Sponsor:

i.   Name of Plan Trustee:

j.   Address of Plan Trustee:

k.   Telephone AND fax numbers of Plan Trustee:

l.   Address for parties to keep the Plan Administrator informed of
     current address:
     _______________________________________________
     ____

m.   Will the Plan Administrator or any department look at the QDRO
     for pre-approval? Y / N

n.   How long does the pre-approval process generally take?

o.   Address to submit QDRO for PREVIEW:

p.   Address to send certified copy of QDRO after filing with the
     court:

q.   Does a prior QDRO related to the Participant exist?

r.   If plan is a defined benefit plan:

     What is the Participant's current accrued benefit under the plan
     as of the anticipated date of divorce?
     ________________________. Request a statement of the
     Participant's benefits!!!

     Does the plan have preretirement survivorship coverage? If yes,
     does the employer pay for it? Y / N. If the employer does not
     pay for it, then the employee does, so find out how much it costs.
     (We will need to allocate this cost in the QDRO to either the
     Alternate Payee or the Participant). Be sure to inquire if it is a
     one-time cost and, if not, how frequently does it have to be paid
     for, etc.



                     128
             Can an Alternate Payee designate a beneficiary or
             beneficiaries? Y / N If yes, how may can the Alternate Payee
             designate?
             Has the Participant made any elections regarding the plan? Y /
             N
             If so, what elections and when were they made?
             Has the qualified joint and survivor annuity been waived? If so,
             ask for a copy of the written, signed document doing same--there
             must be a written document.

             Have the plan's funding levels been met? Y / N (The point of
             this questions is to alert us if the plan is in any financial trouble.)

             If the plan is a defined contribution plan:

             What is the Participant's total account balance as of the last
             valuation date? (Remember that a Participant's account may be
             made up of several subaccounts, such as the pretax account,
             after-tax account, and matching employer contribution account.)
             ______________ Request a statement of the Participant's
             account(s).

             What is the Participant's total account balance as of the date this
             questionnaire is filled in? (Remember that a Participant's
             account may be made up of several subaccounts, such as the
             pretax account, after-tax account, and matching employer
             contribution account.)          ________________ Request a
             statement of the Participant's account(s).

             Is there a life insurance contract that's part of the plan? Y / N

             Can an Alternate Payee designate a beneficiary or
             beneficiaries? Y / N If yes, how many can the Alternate Payee
             designate?

5.   To Do

     a.      Obtain authorization from the Participant early in the case by
             having Participant sign a release.

     b.      Obtain a copy of the formal plan document.




                              129
           c.     Obtain a copy of the summary plan description or employee
                  booklet.

           d.     Obtain a copy of the summary annual report.

           e.     Ask the Plan Administrator if the company uses a standard
                  format for QDROS and also ask if you can have a copy of the
                  Plan Administrator's checklist, used for determining if the QDRO
                  qualifies (which may be the plan's procedures for QDROs--they
                  must have a procedure for QDROs under ERISA rules). If so,
                  request copies. Make sure the copy is current before the final
                  draft is submitted for preapproval!

           f.     Statement of accrued benefits, which may require a written
                  request and a copy of a release signed by the Participant.

           g.     Internal Revenue Form 5500.

     Person who completed this questionnaire:

     Name:
     Address:

     Telephone:
B.   FACT SHEET FOR THE PLAN

     1.    Employee Information

           a.     The employee's name is:
           b.     Position(s) held during entire employment and the date of each
                  position:
           c.     Date of employment:

           d.     Employee I.D. No. (if one):

           e.     Date of termination of employment (if any):

           f.     Beginning date of participation in the plan:

           g.     Date of termination of participation in the plan (if any):

           h.     Is the employee currently receiving benefits?



                                  130
     i.   If not, dates upon which employee becomes eligible to receive
          benefits:

     j.   Is the employee vested in any benefits at this time? Y / N If so,
          how much of the benefits are vested?

     k.   Employment status of employee: hourly, salaried, active, laid-off,
          retired, or other:

2.   The Plan

     a.   Complete name of the Plan:

     b.   Circle whether the plan is a Defined Contribution Plan or Defined
          Benefit Plan

     c.   Name of Plan Administrator:

     d.   Address of Plan Administrator:

     e.   Telephone AND fax numbers of Plan Administrator:

     f.   Name of Plan Sponsor:

     g.   Address of Plan Sponsor:

     h.   Telephone AND fax numbers of Plan Sponsor:

     i.   Name of Plan Trustee:

     j.   Address of Plan Trustee:

     k.   Telephone AND fax numbers of Plan Trustee:

     l.   Address for parties to keep the Plan Administrator informed of
          current address:

     m.   Will the Plan Administrator or any department look at the QDRO
          for pre-approval? Y / N

     n.   How long does the pre-approval generally take?

     o.   Address to submit QDRO for PREVIEW:


                          131
p.   Address to send certified copy of QDRO after filing with the
     court:

q.   Does a prior QDRO related to the employee exist?

r.   If plan is a defined benefit plan:

     What is the employee's current accrued benefit under the plan as
     of [INSERT THE ANTICIPATED DATE OF DIVORCE]

     Please send the most current statement of the employee's
     benefits AND any other information helpful to determining the
     value on the above date.

     For preretirement survivorship coverage: Does the employer
     pay for it? Y / N. If the employer does not pay for it, then how
     much does the coverage cost the employee?
     $________________. Does the employee have to elect the
     coverage, or is it built into the plan?

     If the employee has to elect the coverage, what is the procedure
     for doing so?

     Can an Alternate Payee designate a beneficiary or
     beneficiaries? Y / N

     If yes, how many can the Alternate Payee designate?

     Has the employee made any elections regarding survivorship
     rights? Y/N

     If so, what elections and when were they made?

     Can such elections be changed? Y / N

     Have any annuities been waived? Y / N

     If yes, was the spouse's consent in writing received by the plan?
     Y/N

     Is the plan a single life annuity plan? Lump Sum Value? or
     Period of Years?
     Have the plan's funding levels been met?


                     132
     If the plan is a defined contribution plan:

     What is the employee's total account balance as of the last
     valuation date, including subaccounts, such as the pretax
     account, after-tax account, and matching employer contribution
     account? $_____________. Please send the most recent
     statement(s) of the employee's account(s).

     What is the employee's total account balance as of the date this
     questionnaire is filled out, including subaccounts, such as the
     pretax account, after-tax account, and matching employer
     contribution
     account? $____________. Please send the most recent
     statement(s) of the employee's account(s).

     Is there a life insurance contract that is part of the plan? Y / N

     Can an Alternate Payee designate a beneficiary or
     beneficiaries? Y / N

     If yes, how many can the Alternate Payee designate?

     Are any survivor benefits available? If so, what are they and how
     are they to be elected?

     Has the employee made any elections regarding survivorship
     benefits? Y / N

     If so, what elections and when were they made?

     Can such elections be changed? Y / N

     i.     If a defined contribution plan, will/can the Alternate Payee
            have voting rights?

     ii.    If a defined contribution plan, will/can the Alternate Payee
            have theright to direct investments?
     iii.   If a defined contribution plan, is life insurance part of the
            plan?      Y / N

t.   Employee's retirement date under the plan: ______________
     This is typically the date that the employee can commence



                     133
      his/her accrued benefit under the plan on an unreduced basis
      (normally age 65).

u.    When is the employee vested?

v.    What are the Plan's rules regarding Alternate Payee's benefits
      if Alternate

      Payee dies before receiving all of his/her benefits?

w.    What are the Plan's rules regarding the employee's death before
      an Alternate

      Payee receives all Alternate Payee's benefits before the
      employee begins to receive benefits?




x.    What are the Plan's rules regarding the employee's death before
      an Alternate

      Payee receives all Alternate Payee's benefits after the employee
      begins to receive benefits?

y.    Alternate benefits:

      i.     What alternate benefits are available and what reduction
             occurs for each benefit available?

      ii.    When does the employee make the election as to the
             alternate benefits?

      iii.   Can the Participant's election be changed? Y/N

z.    Collateral benefits available (i.e. medical insurance plans, fringe
      benefits, etc.):

aa.   Are there any outstanding loans vs. the plan: Y / N         If yes,
      the current outstanding loan amount is:

bb.   Will loans be available in the future? Y / N



                      134
     cc.   Does remarriage of the employee affect any area of the Plan?

     dd.   Does returning to work affect the Plan?

     ee.   Are there any benefits available in the future?

           i.     Cost of living increases? Y / N

           ii.    Early retirement subsidies? Y / N

           iii.   Benefits resulting from Plan amendments? Y / N

     ff.   Is benefit or account balance available for immediate
           distribution per QDRO? Y / N If not, when?

     gg.   Are any portions of benefit or account balance available for non-
           taxable direct distributions?

     hh.   When is the earliest the Alternate Payee can receive benefits?


     ii.   What is the latest the Alternate Payee may have to wait to
           receive benefits?

     jj.   Will the Plan Sponsor agree to a distribution prior to the "earliest
           retirement date?"

3.   Please send the following:

     a.    The formal plan document.

     b.    A copy of the summary plan description or employee booklet.

     c.    A copy of the summary annual report.

     d.    Your procedures regarding QDROs.

     e.    Your model QDROs.

     f.    A copy of Internal Revenue Form 5500.

4.   Please provide any other information that you think would be
     helpful.

                           135
          Person who completed this questionnaire:

          Name:

          Address:

          Telephone:




C.   FACT SHEET FOR THE ATTORNEY

     1.   The Plan

          a.      Is the Plan a governmental or church plan? Yes or No

                  If yes, ERISA does not apply. See the Plan for specific
                  instructions. In some plans, there may be an antialienation
                  clause, making a motion to clarify the only way to ensure an
                  Alternate Payee's right to receive the benefit awarded.

          b.      Participant's retirement date under the Plan:
                  ________________ This is typically the date that the
                  Participant can commence his/her accrued benefit under the
                  Plan on an unreduced basis (normally age 65).

          c.      Determine the Plan benefits as of a specific date/specific
                  circumstances:

                  1)    When is Participant vested?

                  2)    Alternate Payee's death:

                        a)     Before beginning to receive benefits, then

                        b)     After receiving benefits, then

                        c)     The Alternate Payee's beneficiary(ies) is/are:

                  3)    Participant's death:

                                 136
     a)     Before beginning to receive benefits, then

     b)     After receiving benefits, then

     c)     The Participant's beneficiary(ies) is/are:

4)   Survivor benefits:

     a)     What survivor benefits are available and what
            reduction occurs for each benefit available?

     b)     When does the Participant make the election
            as to the survivor benefits?

     c)     Has the Participant made any elections? Y/N If
            yes, what elections has he/she made?

     d)     Can the P's election be changed? Y / N

     e)     Have the survivor annuities been waived? Y       /
            N

            If yes, you should investigate the procedures for
            revocation of the waiver and accomplish that
            revocation.

5)   Amount of actuarial reduction            for   the   early
     commencement of benefits:

6)   Alternate benefits:

     a)     What alternate benefits are available and what
            reduction occurs for each benefit available?

     b)     When does the Participant make the election
            as to the alternate benefits?

     c)     Can Participant's elections be changed? Y / N

7)   Collateral benefits available (i.e. medical insurance
     plans, fringe benefits, etc.):




             137
     8)     Are there any outstanding loans vs. the plan? Y / N
            If yes, the current outstanding loan amount is:

     9)     Will loans be available in the future? Y / N

     10)    Does remarriage of the Participant affect any area of
            the Plan?

     11)    Does returning to work affect the Plan?

     12)    If a defined contribution plan, will/can the Alternate
            Payee have voting rights?

     13)    If a defined contribution plan, will/can the Alternate Payee
            have the right to direct investments?

     14)    If a defined contribution plan, is life insurance part of
            the plan? Y / N

d.   Determination of benefits available in the future:

     1)     Cost of living increases:

     2)     Early retirement subsidies:

     3)     Benefits resulting from Plan amendments:

e.   Property interests:

     1)     Calculation of community and separate property
            interest in Plan benefits:
     2)     Were benefits accruing before the marriage? Y / N

f.   Is benefit and account balance available for immediate
     distribution per QDRO? Y / N If not, when?

g.   Are any portions of benefit and account balance available for
     non-taxable direct distributions?

h.   When is the earliest the Alternate Payee can receive benefits?

i.   What is the latest the Alternate Payee may have to wait to
     receive benefits?

                     138
                        j.      Will the Plan Sponsor agree to a distribution prior to the "earliest
                                retirement date"?


                2.      Other considerations:

                        a)      Is the goal to divide the monthly benefit of a defined benefit plan
                                or to divide the actuarial value?

                        b)      What consideration, if any, should be given to early retirement
                                subsidies?

                        c)      In a defined contribution plan, how should you handle
                                contributions due but not yet allocated?

                        d)      Will the Plan Sponsor agree to a distribution prior to the "earliest
                                retirement date?"

                        e)      If the Participant has made any elections regarding survivorship
                                rights which are bad for your client's interest, consider having
                                them revoked. Such a revocation must be in writing to the Plan
                                before the Plan can do anything!

                        f)      If there is a QDRO in place for a previous Alternate Payee, then
                                address if there is enough money left for your client!


      D.        Closing the Property

Action                                                                                  Date
Needed                                                                               Completed

1.   Documents to be Submitted to the Court:

     A.     Final Decree of Divorce/Agreement Incident to Divorce

_________         a.    Copy provided to opposing party's attorney                         ________

________          b.    Certified copy ordered                                             ________

________                c.      Certified copy mailed to client                            ________

________                d.      Copy served on defaulting party                            ________

________                e.      Copy filed with Child Support Office                       ________



                                                   139
________             f.      Certified copy recorded with County Clerk's office            ________

________             g.      Other:________________________                                ________

      B.     Order Withholding from Earnings for Child Support

________             a.      Copy provided to opposing party's attorney                    ________

________             b.      Certified copy provided to client                             ________

________             c.      Copy served on defaulting party                               ________

________             d.      Request filed with District Clerk for service
                             of order on obligor's employer

________             e.      Certified copy served on obligor's employer                   ________

________             f.      Other:________________________                                ________

      C.     Qualified Domestic Relations Order

________             a.      Review checklist for preparation of QDRO set
                             out in section M herein                                       ________

________             b.      QDRO pre-approval letters mailed to each Plan
                             Administrator                                                 ________

________             c.      Certified copy of QDRO served on each Plan
                             Administrator                                                 ________

________             d.      Confirmation of qualification of QDRO received
                             from each Plan Administrator                                  ________

Action                                                                                    Date
Needed                                                                                 Completed
________             e.      If QDRO rejected by Plan Administrator, file Motion
                             in Aid and Clarification to clarify and/or correct QDRO       ________

________             f.      Other:________________________                                ________

      D.     Family Relationship Information Sheet

________             a.      Completed and signed by Attorney for Petitioner               ________

________             b.      Filed with Court                                              ________

________             c.      Other:________________________                                ________

2.    Miscellaneous Real Estate Documents:

      A.     Special Warranty Deed


                                                140
________           a.       Original executed by proper party
                            (and properly notarized)                                  ________

________           b.       Original filed with County Clerk's Office and
                            receipt obtained                                          ________

________           c.       Recorded original/copy mailed to client                   ________

________           d.       Other:________________________                            ________

      B.   Quitclaim Deed

________           a.       Original executed by proper party
                            (and properly notarized)                                  ________

________           b.       Original filed with County Clerk's Office and
                            receipt obtained                                          ________

________           c.       Recorded original/copy mailed to client                   ________

________           d.       Other:________________________                            ________

      C.   Real Estate Lien Note

________           a.       Original executed by proper party                         ________

________           b.       Original/copy mailed to client                            ________

________           c.       Original/copy provided to opposing party's attorney       ________

________           d.       Other:________________________                            ________


Action                                                                               Date
Needed                                                                            Completed

      D.   Deed of Trust

________           a.       Original executed by proper party
                            (and properly notarized)                                  ________

________           b.       Original filed with County Clerk's Office
                            and receipt obtained                                      ________

________           c.       Recorded original/copy mailed to client                   ________

________           d.       Other:________________________                            ________

      E.   Deed of Trust to Secure Assumption

________           a.       Original executed by proper party


                                               141
                              (and properly notarized)                               ________


________           b.         Original filed with County Clerk's Office and
                              receipt obtained                                       ________

________           c.         Recorded original/copy mailed to client                ________

________           d.         Notify superior lien holders of existence of
                              inferior lien and request notice of default of
                              superior lien(s)                                       ________

________           e.         Other:________________________                         ________

      F.   Transfer of Lien

________           a.         Original executed by proper party
                              (and properly notarized)                               ________

________           b.         Original filed with County Clerk's office and
                              receipt obtained                                       ________

________           c.         Recorded original/copy mailed to client                ________

________           d.         Other:________________________                         ________

      G.   Assignment of Escrow Funds Letter

________           a.         Original executed by proper party                      ________

________           b.         Original mailed to mortgage company with copy of
                              Special Warranty Deed                                  ________

________           c.         Copy mailed to client                                  ________

Action                                                                              Date
Needed                                                                           Completed

________           d.         Other:________________________                         ________

      H.   Notice of Assignment of Homeowner's Policy with cover letter
           to insurance carrier                                                      ________

      I.   Assignment of Utility Deposits

________           a.         Original executed by proper party                      ________
________           b.         Copy mailed to gas, water, electric, cable and
                              phone company with cover letter                        ________

________           c.         Original given to client                               ________



                                                  142
________              d.       Other:________________________                                 ________


3.    Sale of Real Estate

      A.     Facilitate and monitor the sale of real estate

________              a.       Establish reminder system                                      ________

________                       (1)      Client monitor for a remarriage, death,
                                        cohabitation, etc., which would trigger
                                        the sale requirement                                  ________

________                       (2)      Create a reminder for required listing
                                        or sale date                                          ________

________              b.       Check official records (for example, to determine
                               whether there has been a marriage)                             ________

      B.     Review and obtain execution of real estate listing agreement

________              a.       If being sold by both parties in accordance with
                               terms of decree, have both parties sign
                               listing agreement                                              ________

________              b.       Insure that the property is kept in sellable condition         ________

________              c.       Verify compliance with all other applicable terms of
                               the decree (such as showing the property to prospective
                               buyers or periodic inspections to make certain that the
                               property is being kept sellable)                               ________

________              d.       Assist or arrange for appraisals                               ________

________              e.       Notify lenders concerning real estate payment provisions

Action                                                                                       Date
Needed                                                                                    Completed

                      and request notification in the event of a default in payment           ________

      C.     If disposition of real estate results in a taxable event:

________              a.       Insure that copies of all relevant documents will be
                               provided to client or to you                                   ________

________              b.       Aid in the determination of client's tax basis                 ________

________              c.       Recommend that client seeks advice from
                               tax attorney/C.P.A.                                            ________



                                                  143
      D.    Satisfaction and discharge of liens

________             a.       Refer specifically to paragraph and document
                              number in decree and document number of other
                              instrument creating the lien                                    ________

________             b.       Promptly record the release of lien or other instrument
                              satisfying the lien                                             ________

________             c.       Especially for registered property, include a copy of the
                              instrument for return to you with information marked            ________

4.    Miscellaneous Transfer Documents

      A.    Certificates of Title - Vehicles

                     a.       Obtain executed original title or executed power
                              of attorney to transfer motor vehicle form from
                              opposing party's attorney                                       ________

                     b.       Original(s) given to client                                     ________

________             c.       Other:________________________                                  ________

      B.    Seller, Donor, or Trader's Affidavit/Application for Certificate of
            Title - Vehicle

                     a.       Original(s) given to client                                     ________

________             b.       Other:________________________                                  ________

      C.    Letter to automobile insurance carrier                                            ________

      D.    Irrevocable Stock or Bond Power

________             a.       Original given to client with instructions                      ________

Action                                                                                       Date
Needed                                                                                    Completed

________             b.       Other:________________________                                  ________

      E.    Assignment of Interest - For Business

________             a.       Original given to client                                        ________

________             b.       Other:________________________                                  ________



                                                  144
       F.   Assignment of Interest - For Financial Accounts
________           a.       Original given to client

________            b.      Other:________________________                           ________

       G.   Assignment of Interest - For Partnership/Joint Venture

________            a.      Original given to client

________            b.      Other:________________________                           ________

       H.   Assignment of Interest - Miscellaneous

________            a.      ______________________________                           ________

       I.   Special Power of Attorney

________            a.      Original given to client

________            b.      Other:________________________                           ________

       J.   Operating Trust Agreement for Jointly Owned Property After Divorce

________            a.      Copy provided to opposing party's attorney               ________

________            b.      Copy provided to client                                  ________

________            c.      Other:________________________                           ________

       K.   Collateral Pledge Agreement

________            a.      Original filed with County Clerk's office                ________

________            b.      Copy provided to client                                  ________

________            c.      Other:________________________                           ________

       L.   Transfer of Nonrealty Assets


Action                                                                              Date
Needed                                                                           Completed

________            a.      Assist client in preparing and filing necessary

                            instruments and documents                                ________

________                    (1)      Assist client in executing and filing
                                     vehicle certificates of title                   ________


                                                145
________                      (2)      Prepare and have executed stock powers,
                                       change of beneficiaries or other indices
                                       of ownership                                             ________

________             b        Assist in the physical transfer of property,
                              such as household items                                           ________

                     c        Prepare and send appropriate correspondence
                              concerning nonrealty property transfers                           ________

5.    Insurance

      A.     Insure that required medical, hospitalization and dental insurance
             coverage is retained or obtained

________             a.       Review all policies

________             b.       Write to insurance carrier requesting notification of
                              change in coverage, beneficiary, etc.                             ________

________             c.       Communicate with insurance carrier concerning
                              provisions of the decree

________             d.       Set up necessary monitoring systems
________             e.       COBRA notice letter for continued coverage mailed
                              to insurance carrier                                              ________

________             f.       Health insurance letter for direct payment of benefits
                              to sole managing conservator mailed to insurance
                              carrier

      B.     Insure that required life insurance is retained or obtained

________             a.       Review all policies                                      ______

________             b.       Obtain change of beneficiary forms; complete and
                              send to insurance carrier



Action                                                                                       Date
Needed                                                                                    Completed

                     c.       Write insurance company requesting notification of
                              noncompliance with decree and/or restrictions to
                              changes in beneficiaries




                                                    146
6.    Custody and Payment of Support

      A.     Implement shared custody arrangement

________             a.       Prepare and send appropriate letters to schools,
                              doctors, day care centers and other necessary parties        ________

________             b.       Insure equal access to confidential information              ________

________             c.       Inform child care providers of joint parenting               ________

      B.     Provide names of persons to mediate or arbitrate conflicts

________             a.       With the client's permission, contact the mediator           ________

________                      (1)     Provide the mediator with a copy of relevant
                                      portions of the decree                               ________

________                      (2)     Put mediator in contact with client                  ________

      C.     Instruct client concerning payment of alimony or support

________             a.       Instruct client regarding due dates, address where
                              to send payments and proper notations on payments            ________

________             b.       Establish reminder system regarding any future lump
                              sum payments                                                 ________

7.    Tax Matters

      A.     Obtain all relevant documentation, or copies thereof, for preparation
             of returns and tax planning

                     a.       Provide copies of past filed returns to client or
                              accountant                                                   ________

________             b.       Supply all documents concerning tax basis,
                              deductible items, etc., to client or accountant              ________

      B.     Communicate directly with accountant concerning decree                        ________

      C.     Advise client regarding dependency exemptions

________             a.       Explain the Multiple Support Declaration form, federal
Action                                                                                    Date
Needed                                                                                 Completed

                              form 2120, and any comparable state forms                    ________

________             b.       Instruct client to maintain records regarding child
                              support                                                      ________


                                                 147
________           c.       Instruct client to maintain records regarding all monies
                            paid during each calendar year for the child's needs for
                            use in determining who provided how much for child's
                            support                                                        ________

      D.   Communicate with client concerning tax effect of decree

________           a.       Advise client of the necessity to reinvest proceeds
                            from certain sales of the homestead to avoid tax               ________

________           b.       Work with client's C.P.A. or accountant or advise
                            client to obtain qualified tax advisor                         ________

      E.   Assist client concerning federal W-4 form and any comparable
           state form                                                                      ________

      F.   Obtain and divide tax refunds or credits

________           a.       Assist in preparing tax returns                                ________

________           b.       Review returns before execution by client                      ________

      G.   Determine deductibility or adjustment to basis relating to
                  attorney's fees and costs

________           a.       Review all time records and related documentation              ________

________           b.       Provide written communications dealing with tax
                            deductible portion of attorney's fees and costs and
                            adjustment of tax basis                                        ________

      H.   Provide tax deductibility or adjustments to tax basis allocation on
           periodic billings

________           a.       Prepare separate letters concerning tax deductibility
                            and basis adjustment                                           ________

________           b.       Provide any other written material to aid client
                            (e.g. billing statements and records)                          ________

      I.   Tax exemption for child(ren) - IRS Form 8332

________           a.       Original signed by opposing party                              ________

Action                                                                                    Date
Needed                                                                                 Completed

________           b.       Original given to client                                       ________

________           c.       Other:________________________                                 ________



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8.    Payment of Indebtedness

      A.     Provide payor with payment books, payment detail, etc.                       ________

      B.     Communicate with creditors, requesting notification of default               ________

________             a.       Prevent initiation of suit if there is default with
                              appropriate communication                                   ________

________             b.       In case of default, prevent assets from being lost by
                              taking appropriate action                                   ________

9.    Change of Name

      A.     Assist client in changing public records, driver's license,
             social security, etc.                                                        ________

      B.     Obtain multiple certified copies of decree as needed by client               ________

10.   Military Retirement/Survivor's Benefit Plan

      A.     Documents to be executed by opposing party:

________             a.       Agreement to Name Former Spouse Beneficiary
                              Under the Armed Services Survivor Benefit Plan              ________

________             b.       Survivor Benefit Plan Election Statement for Former
                              Spouse Coverage - Form 20-237                               ________

________             c.       Survivor Benefit Plan Election Change Form 20-238           ________

      B.     Documents to be executed by client:

________             a.       Request for Former Spouse Payments from Retired Pay         ________

________             b.       Letter requesting survivor Benefit Plan Election            ________

      C.     Documents to be executed by attorney:

________             (a)      Certification of Finality of Court Order Under the
                              Provisions of Title 10, U.S. Code, Section 1408             ________

________             (b)      Letter requesting Survivor Benefit Plan Election            ________

Action                                                                                   Date
Needed                                                                                Completed




                                                  149
11.   Civil Service Retirement

      A.     Documents to be executed by client:

________             a.       Application for Apportionment of Retirement Benefits
                              Under Public Law 95-366                                           ________

      B.     Documents to be executed by attorney:

________             a.       Notice letter to office of Personnel Management
                              requesting direct payments                                        ________

12.   Follow-up Communications

      A.     Review of file to determine items to be returned to client                         ________

      B.     Prepare appropriate letter explaining provisions of decree
             and detailing items returned and/or explain same in conference
             with client                                                                        ________

      C.     Letter to client advising that other legal services may be needed,
             wills, etc.                                                                        ________

      D.     Prepare necessary finalization of communications relative to
             final bill

________             a.       Write letter to client with final billing                         ________

________             b.       Send copy of bill to opposing party through counsel
                              (if opposing party is to pay)                                     ________

________             c.       Create a reminder system regarding payment                        ________

13.   Checklist for Preparation of Qualified Domestic Relations Order

      A.     Is the document in the form of an order to be signed by the Court?

      B.     Does the document clearly appear to be a judgment, decree, or order (including approval of
             a property settlement agreement)?

      C.     Does the order clearly appear to relate to the provision of child support, alimony payments,
             or marital property rights to a spouse, former spouse, child or other dependent of a
             Participant?

      D.     Does the order clearly appear to be made pursuant to a state domestic relations     l   a   w
             (including a community property law)?

      E.     Does the order clearly appear to create or recognize the existence of an Alternate Payee's
             right, or assign to an Alternate Payee the right to receive all or portion of a Participant's
             accounts?



                                                   150
     F.      Does the order clearly specify the name and last known mailing address (if any)       of the
             Participant?

     G.      Does the order clearly specify the name and mailing address of each Alternate Payee covered
             by the order?

     H.      Does the order clearly specify the amount or percentage of the total of the vested portions of
             a Participant's accounts to be paid to each Alternate Payee or the manner in which such
             amount or percentage is to be determined?

     I.       Does the order clearly specify the manner and times at which such amount or       percentage
     will be paid to each Alternate Payee?

     J.      Does the order clearly specify the account or plan to which it applies?

     K.      Is it clear that the order requires payment in a lump sum or installments?

     L.      Is it clear that the times of payment are permissible under the terms of the Plan?

     M.      Is it clear that the percentage described in item No. 8 is 100% or less?

     N.      Is it clear that the order does not require the payment of benefits to an Alternate Payee which
             are required to be paid to another Alternate Payee under another order previously
             determined to be a qualified domestic relations order?

IX   Military and Civil Service Retirement Benefits

     A.      Military Members

             1.      Active Duty Member

                     The retired pay of an active duty service member is clearly subject to
                     division by the divorce Court. In preparing for trial, the attorney for each
                     party should plan to put into evidence the following information:
                     a.       The service member’s PEBD (“Pay Entry Base Date”)

                     b.       The date of the parties’ marriage

                     c.       The service member’s pay grade (rank) at divorce

                     d.       The number of months (or years and months) the service
                                member has been on active duty at the time of divorce
                              (longevity)




                                                 151
     e.     The number of months (or years and months) the parties have
            been married while the service member has been on active duty
            at divorce

     f.     The service member’s base pay at divorce

     g.     Your calculation (percentage and/or dollar amount), based upon
            the above, of the community estate’s interest in the service
            member’s retired pay at divorce subject to being divided by the
            Court

     h.     Compliance with the Soldier’s and Sailor’s Civil Relief Act
            (SSCRA). 50 App. USCA §§3501 et. seq.

     i.     The service member’s retired pay will be annually affected by
            Cost Of Living Adjustments (COLA), if you represent the service
            member’s spouse

     Most of this information is available on the service member’s Leave and
     Earnings Statement (LES). You should therefore introduce at least the
     most current LES into evidence. It is recommended, however, that you
     also prepare an exhibit of your own creation, in addition to introducing
     one or more LES’s, which summarizes your contentions and have your
     client testify to those calculations.

2.   Retired Active Duty Member

     When a retired active duty member is involved, you do not have as much
     to prove and the various benchmarks which go into determining the
     community estate’s interest in the retired pay is fixed. Thus, in this
     instance, all you need to ensure is in the record are the following:
     a.     The service member’s PEBD (“Pay Entry Base Date”)

     b.     The date of the parties’ marriage

     c.     The number of months (or years and months) the service
            member has been on active duty at the time of retirement
            (longevity)

     d.     The number of months (or years and months) the parties had
            been married while the service member was on active duty at the
            time of his retirement


                            152
     e.     The service member’s current retired pay

     f.     Your calculation (percentage and/or dollar amount), based upon
            the above, of the community estate’s interest in the service
            member’s retired pay subject to being divided by the Court

     g.     The service member’s retired pay will be annually affected by
            COLA’s, if you represent the service member’s spouse

     It is not necessary to prove compliance with the Soldier’s and Sailor’s
     Civil Relief Act (SSCRA) when the service member is not on active duty
     since that is the only category of service member it protects. You should
     ensure, however, that the record clearly reflects that the service member
     is retired at the time the divorce was filed and/or finalized and that
     compliance with the SSCRA is therefore not applicable to this
     proceeding.
     Although not a necessary element of proof, it is nevertheless suggested
     that, as part of your “routine” evidentiary proof, you also include the
     service member’s pay grade (rank) at the time of retirement.

3.   Reserve Component/National Guard Member

     a.     The service member’s PEBD (“Pay Entry Base Date”) and
            Reserve Anniversary Date
     b.     The date of the parties’ marriage

     c.     The service member’s pay grade (rank) at divorce

     d.     Both the:

            i.     Number of months (or years and months) the service
                   member has accrued for pay purposes duty at the time of
                   divorce (longevity); and
            ii.    Number of retirement points the service member has
                   earned or accumulated a the time of divorce
     e.     Both the:

            i.     Number of months (or years and months) the parties have
                   been married while the service member has been in the
                   active reserves at divorce; and


                            153
            ii.    Number of retirement points the service member has
                   earned or accumulated during then parties’ marriage at
                   the time of divorce
     f.     The service member’s base pay at divorce

     g.     Your calculation (percentage and/or dollar amount), based upon
            the above, of the community estate’s interest in the service
            member’s retired pay at divorce subject to being divided by the
            Court (choose the correct “retirement point” formula or using the
            “time” formula, depending on which best suits your client’s
            situation)
     h.     Compliance with the SSCRA if the reserve component member
            is then on active duty; otherwise, compliance is not applicable

     I.     The service member’s retired pay will be annually affected by
            COLA’s, if you represent the service member’s spouse

4.   Retired Reserve Component/National Guard Member

     When a retired reserve component member is involved, as with a retired
     active duty service member, you do not have as much to prove since he
     is already retired and the various benchmarks which go into determining
     the community estate’s interest in the retired pay is fixed. Thus, in this
     instance, you need to ensure the following is in the record:

     a.     The service member’s PEBD (“Pay Entry Base Date”) and
            Reserve Anniversary Date
     b.     The date of the parties’ marriage

     c.     Both the:

            i.     Number of months (or years and months) the service
                   member has accrued for pay purposes at the time of
                   divorce (longevity); and
            ii.    Number of retirement points the service number has
                   earned or accumulated at the time of his retirement (the
                   number upon which his retired pay is based)
     d.     Both the:




                            154
            i.     Number of months (or years and months) the parties have
                   been married while the service member has been in the
                   active Reserves at the time of his retirement; and
            ii.    Number of retirement points the service member has
                   earned or accumulated during the parties’ marriage at the
                   time of divorce
     e.     The service member’s current retired pay

     f.     Your calculation (percentage and/or dollar amount), based upon
            the above, of the community estate’s interest in the service
            member’s retired pay at divorce subject to being divided by the
            Court (choose the correct “retirement point” formula or using the
            “time” formula, depending on which best suits your client’s
            situation.)
     g.     The service member’s retired pay will be annually affected by
            COLA’s, if you represent the service member’s spouse

     As noted above it is not necessary to prove compliance with the SSCRA
     when the service member is retired. As a precaution, however, ensure
     that the record clearly reflects that the service member is retired at the
     time the divorce was filed and/or finalized and that compliance with the
     SSCRA is therefore not applicable to this proceeding.

     Although not a necessary element of proof, it is nevertheless suggested
     that as part of your “routine” evidentiary proof that you also include the
     service member’s pay grade (rank) a the time of his retirement.


5.   Military Retirement Apportionment Request

     Pursuant to the terms of the Uniformed Services Former Spouses’
     Protection Act, 10 U.S.C. § 1408, as amended, enclose the following
     documentation
     a.     An Application for Direct Payments from a Member’s United
            States (Branch of Service) Retirement Pay, Form DFAS-IN
            FORM 0-1767
     b.     A copy of the [Decree of Divorce and/or Domestic Relations
            Order for (Military Retirement)] that has been certified within the
            last 90 days
     c.     A Certification of Finality of Court Order executed by me

                            155
                  d.          A copy of the parties’ Marriage Certificate

                  e.          Address and telephone number

B.        Civil Service Retirement Benefits

     1.      Two Federal Retirement Systems
             a.        Civil Service Retirement System (CSRS)

                       i.        Statutory Authority - 5 U.S.C. §8301 et seq.

             b.        Federal Employees Retirement System (FERS)

                       i.        Statutory Authority - 5 U.S.C. §8401 et seq.

             c.        No Federal Preemption

     2.      Benefits Available
             a.        CSRS

                       i.        Retirement Annuity
                       ii.       Lump Sum Benefits
                       iii.      Survivor Annuities
                       iv.       Thrift Savings Plan



             b.        FERS

                       i.        Basic Retirement Annuity
                       ii.       Lump Sum Benefits
                       iii.      Survivor Annuities
                       iv.       Thrift Savings Plan

             c.        Protection for Spouses and Former Spouses - Both Systems

                       i.        Will not pay lump sum credit without notification of spouse
                                 and others of application for lump sum credit
                       ii.       Transfers, loans, and changes in election under Thrift Plan
                                 require notice and waiver



                                             156
           iii.   Survivors annuities are provided unless waived by both
                  spouses

3.   Division of Retirement Benefits and Direct Payments
     a.    Court can award up to 100% of the benefit
     b.    Notice of award to Office of Personnel Management (OPM) of the
           Executive Director is required and applies only to payments made
           subsequent to receipt of notice of the decree
     c.    Express direct payment provisions are necessary

4.   Survivor Benefits for Former Spouses

     a.    CSRS

           i.     Survivor Annuity for Former Spouse

                  A.    Election of Survivor Benefit
                  B.    A Court Order
                  C.    5 Years of Service
                  D.    Maximum Annuity for Former Spouse - 55% of
                        Gross Annuity
                  E.    Commencement Date of Former Spouse Annuity is
                        determined by the decree, order or agreement but
                        cannot commence before death of employee
                        spouse or before the 1st day of the 2nd month after
                        OPM receives notice and required documents.
                  F.    Termination Date
                        (i).   In accordance with decree, order of
                               agreement
                        (ii).  Death of former spouse or
                        (iii). Remarriage of former spouse prior to age 55
                  G.    Decree is not effective to a survivor annuity that has
                        previously been waived
                  H.    “Former Spouse” is a term of art
                  I.    Division of survivor annuity between former spouse
                        and current spouse is possible
           ii.    Lump Sum Credit

                  A.    No survivor annuity for former spouse if employee
                        spouse separates from service with fewer than 5
                        years of service

                               157
                  B.     If former spouse is designated beneficiary, former
                         spouse may receive decreased former employee’s
                         lump sum credit
     b.    FERS

           i.     Basic Survivor Annuity
                  A.     Election of benefit for former spouse is required
                  B.     Court order is required
                  C.     Required years of service - 10 years
                  D.     Maximum annuity - generally 50% of gross annuity
                         (i).   Supplemental annuity may be available
                  E.     Commencement date - same as CSRS
                  F.     Termination date - generally same as CSRS
                  G.     Decree is ineffective where there has been a prior
                         waiver
                  H.     “Former Spouse” is a term of art
                  I.     Division of survivor benefits between former spouse
                         and current spouse is possible
           ii.    Lump Sum Survivor Benefit
                  A.   Court order is required
                  B.   Eighteen months of service prior to employee’s
                       death is required
                  C.     Notice to OPM of decree - applies to payments
                         after notice and required documents are received

           iii.   Thrift Savings Plan
                  A.      Election of benefit for former spouse is required
                  B.      Court order is required
                  C.      Eighteen months of service prior to employee’s
                          death is required
                  D.     May be available to former spouse of a deceased
                         former employee who died is entitled to an
                         immediate or deferred annuity under FERS basic
                         annuity
                  E.     Commencement date - same as CSRS
                  F.     Termination date - same as CSRS
                  G.     Decree is ineffective where there has been a prior
                         waiver

5.   Drafting Enforceable Decrees


                              158
a.   General Rules Regarding Court Orders
     i.    Definitional section of regulations apply to CSRS and
           FERS
           A.      Civil Service Retirement System (CSRS) - The
                   retirement system for federal employees described
                   in Subchapter III of Chapter 83 of Title 5 of the
                   United States Code
           B.     Federal Employees Retirement System (FERS) -
                  The retirement system for federal employees
                  described in Chapter 84 of Title 5 of the United
                  States Code
           C.     Court Order - Any judgment or property settlement
                  issued by or approved by any court of any state, the
                  District of Columbia, the Commonwealth of Puerto
                  Rico, Guam, The Northern Marianna Islands, or the
                  Virgin Islands, or any Indian Court in connection
                  with, or incident to, the divorce, annulment of
                  marriage, or legal separation of a federal employee
                  or retiree
           D.     Court Order Acceptable For Processing - A court
                  order meeting the requirements of 5 C.F.R. Part
                  8383 to affect an employee annuity, a refund of
                  employee contributions, or to award a former
                  spouse survivor annuity. These requirements are
                  discussed in detail hereafter
           E.     Employee - An employee or member covered by
                  CSRS or FERS

           F.     Employee Annuity - The reoccurring payments
                  under CSRS or FERS made to a retiree.
                  “Employee annuity” does not include payments of
                  accrued and unpaid annuity after the death of a
                  retiree under 5 U.S.C. 8342(g) or 5 U.S.C. 8424(h)
           G.     ERISA - The Employees Retirement Income
                  Security Act, 29 U.S.C. 1001 et seq.

           H.     Former Spouse - The term may have two
                  definitions. In connection with a court order affecting
                  an employee annuity or a refund of employee
                  contributions, it is the living person whose marriage

                       159
     to an employee has been subject to a divorce,
     annulment of a marriage, or legal separation
     resulting in a court order. In connection with a court
     order awarding a former spouse survivor annuity, it
     is a living person who was married for at least nine
     months to an employee or retiree who performed at
     least 18 months of civilian service creditable under
     FERS, and whose marriage to the employee or
     retiree was terminated prior to the death of the
     employee or retiree.
I.   Former Spouse Survivor Annuity - A recurring
     benefit under CSRS or FERS, or the basic
     employee death benefit under FERS as described
     in 5 C.F.R. Part 843, (the lump sum payment equal
     to 50% of the final annual pay rate of the employee
     plus $15,000), that is payable to a former spouse
     after the employee’s or retiree’s death

J.   Gross Annuity - The amount of monthly annuity
     payable after reducing the self only annuity to
     provide survivor annuity benefits, if any, but before
     any other deduction. Note that unless the court
     order specifically provides otherwise, a gross
     annuity is also interpreted to include the lump sum
     payments made to the retiree under 5 U.S.C.
     8343(a) or 5 U.S.C. 8420(a).
K.   Member - A member of Congress covered by
     CSRS or FERS
L.   Net Annuity - The amount of monthly annuity after
     deducting from the gross annuity any amounts that
     are [1] owed by the retiree to United States, [2]
     deducted for health benefit premiums under 5
     U.S.C. §8906 and 5 C.F.R. 891.401 and 891.401,
     [3] deducted for life insurance premiums under 5
     U.S.C. §8714(a)(d), [4] deducted for medical
     premiums, [5] properly withheld for federal income
     tax purposes, if the amounts withheld are not greater
     than they would be if the retiree claimed all
     dependents to which he or she is entitled, or [6]
     properly withheld for state income tax purposes, if
     the amounts withheld are not greater than they would


          160
             be if the retiree claimed all dependents to which he
             or she was entitled. Note that unless the court order
             expressly provides otherwise, net annuity also
             includes any lump sum payments made to the
             retiree under 5 U.S.C. §8343(a) or §8420(a).

      M.     Reduction to Provide Survivor Benefits - The
             reduction required by 5 U.S.C. §8339(j)(4) or
             §8419(a)
      N      Refund of Employee Contributions - A payment of
             the lump sum credit to a separated employee under
             5 U.S.C. §8342(a) or §8424(a). A refund of
             employee contributions does not include lump sum
             payments under 5 U.S.C. §8342(c) through (f), or 5
             U.S.C. §§8424(d) through (g).
      O.     Retiree - A former employee or member who is
             receiving recurring payments under CSRS or FERS
             based on his or her services as an employee. Note
             that retiree does not include a person receiving an
             annuity only as a current spouse, former spouse,
             child or person with an insurable interest.

      P.     Self Only Annuity - The recurring payments to a
             retiree who has elected not to provide a survivor
             annuity to anyone. Note that unless the court order
             expressly provides otherwise, a self only annuity
             includes any lump sum payments made to the
             retiree under 5 U.S.C. §8343(a) OR §8420(a).
      Q.     Separated Employee - A former employee or
             member who has separated from a position in the
             federal government covered by CSRS or FERS,
             who is not currently employed in such a position,
             and who is not a retiree

ii.   Anti-Alienation Provisions
      A.     Benefits are not assignable by employees, retirees
             or state courts except as specifically provided for in
             5 C.F.R. Part 838
      B.     Benefits are not subject to execution, levy,
             attachments, garnishment or other legal process


                  161
             except as is expressly provided for under federal
             law

iii.   Multiple Court Orders
       A.    Employee annuity or former spouse annuity - will be
             honored to the extent possible on a first come first
             serve basis
       B.    Refunds of employee contributions - if the Court
             orders affects two or more former spouses, the
             refund will not be paid if either court order prohibits
             payment of the refund, otherwise the orders will be
             honored in the order in which they were issued until
             the contributions have been exhausted
       C.    Validity of Court Order
             (i).      If conflicting court orders from the same
                       jurisdiction are submitted, OPM will consider
                       only the latest court order
             (ii).     If the conflicting orders are from different
                       jurisdictions and one order is from the
                       employee’s address reflected on OPM’s
                       records, OPM will consider only the order
                       issued by that jurisdiction
             (iii).    If none of the court orders are from the
                       jurisdiction of employee’s address, OPM will
                       only consider the latest court order
             (iv).     Side agreements or settlements not in the
                       form of a properly filed court order
                       acceptable for processing will not be
                       accepted
             (v).      Administrative appeals from OPM rulings
                       (a).   Issues concerning the application of
                              the regulations are not appealable
                       (b).   Issues concerning the validity of the
                              regulations are appealable
                       (c).   Appeal must be filed in accordance
                              with the procedures established by
                              the Merits System Protection Board



                      162
                            (d).   Appeal may not be filed before OPM
                                   has issued a final opinion
                  (vi.)     OPM address for filing court orders affecting
                            CSRS and FERS benefits is:
                            Office of Personnel Management
                            Retirement and Insurance Group
                            P. O. Box 17
                            Washington, DC 20044

                  (vii).    The address for personal delivery of court
                            orders affecting CSRS and FERS benefits
                            by process servers, express carriers or other
                            forms of hand-carried deliveries is:
                            Court Ordered Benefits Section
                            Allotment Branch
                            Retirement and Insurance Group
                            Office of Personnel Management
                            1900 E. Street, NW
                            Washington, DC
b.   Court Orders Affecting Employee Annuities and Refunds of
     Contributions

     i.    General Requirements for Court Orders Affecting
           Employee Annuities
           A.     Identify the system and divorce annuity
           B.     Provide for payment to former spouse
           C.     Provide information sufficient to compute award
           D.     Specify type of annuity
           E.     “Qualified Domestic Relations Orders” are
                  prohibited
           F.     Award for lifetime is prohibited

     ii.   General Requirements for Court Orders Affecting Refunds
           and Employee Contributions
           A.     Identify the system and divide the annuity
           B.     Provide for payment to former spouse
           C.     Provide information sufficient to compute award
           D.     An order barring refunds will not constitute an order
                  acceptable for processing unless it meets
                  requirements



                           163
iii.   Terminology in Orders

       A.    Must identify the retirement system, i.e., “CSRS”,
             “FERS”, “OPM” or “Federal Government” benefits
             payable
       B.    “Annuities” vs. “Contributions” - are terms sufficient
             to identify employee annuity and the refund of
             employee contributions
       C.    “Pro Rata Share” is a term of art

       D.    Cost of living and salary adjustments (COLA)

       E.    Computation of Length of Service
             (i). For inclusion of accrued sick leave - use the
                  term “credible service” and specify amount of
                  unused sick leave
       F.    Decrees including formulas and dollar amounts are
             deemed to include the dollar amount only as the
             Court’s estimate amount of the initial payment. The
             formula or percentage will control.
       G.    Portion of Annuity Being Divided
             (i).   “Gross Annuity”
             (ii).  “Net Annuity” = “Disposable Annuity”,
                    “Retirement Check”
             (iii). “Self-Only Annuity” = “Life Rate Annuity”,
                    “Unaccrued Annuity” and “Annuity Without
                    Survivor Benefit”
             (iv).    Any order that does not specify net annuity or
                      self only annuity will be treated as a gross
                      annuity
iv.    OPM Recommended Language for Dividing Employee
       Annuities
       A.    Do not label order dividing CSRS or FERS benefits
             a “QDRO”
       B.    Required language in order is labeled “QDRO”:
             “The Court has considered the requirements
             and standard terminology provided in Part
             838 of Title 5, Code of Federal Regulation.


                     164
           Terminology used in the provisions of this
           order concern benefits under the [Civil
           Service Retirement System/Federal
           Employees Retirement System] are
           governed by standard conventions
           established in that part.” Appendix A,
           Subpart F, Part 838, Title 5 Code of Federal
           Regulations, ¶101.
     C.    Identify the Retirement Benefit, 5 C.F.R. §838.303
           and Ordering Direct Payment, 5 C.F.R. §838.304.
           See Appendix A, Subpart F, Part 838, Title 5 Code
           of Federal Regulations ¶101 for recommended
           language.
     D.    Protecting Former Spouse Entitled to Military
           Retired Pay. See Appendix A, Subpart F, Part 838,
           Title 5 C.F.R. for OPM promulgated language

     E.    Computing Amount of Former Spouse’s Benefits.
           See Appendix A, Subpart F, Part 838, Title 5 C.F.R.
           ¶201 et seq. for clauses for awards.
           (i).      Award of fixed monthly amount - ¶201
           (ii).     Award of percentage - ¶201
           (iii).    Award of fraction - ¶203
           (iv).     Award of pro rata share - ¶204
           (v).      Award based on formula - ¶211
           (vi).     Awarding COLA’s on fixed monthly amount -
                     ¶231
           (vii).    Excluding COLA’s on awards other than
                     fixed monthly amounts ¶232
           (viii). Awards must specify type of annuity (gross,
                   net, or self only) if not a fixed dollar amount -
                   ¶300 et seq.
v.   Language Dealing With Refunds of Employee
     Contributions. See Appendix A, Subpart F, Part 838, Title
     5 C.F.R. ¶311 et seq.
     A.    Barring Payment of Refunds - ¶401


                    165
       B.     Dividing Refunds of Employee Contributions ¶402
vi.    Language Dealing with Death of Former Spouse and
       Effect on Former Spouse’s Share of Employee Annuity -
       no special provision is required to restore the entire annuity
       to the retiree upon the death of the former spouse. It is
       automatic unless the court order expressly provides
       otherwise. Order can provide for deceased former
       spouse’s share be paid to:
       A.     Children
       B.     Estate
       C.     Court (to administer the funds)
vii.   OPM Procedures for Processing Court Orders Affecting
       Employee Annuities
       A.     Availability and amounts subject to court orders. 5
              C.F.R. §838.211(a)(1)(2)&(3), §838.211(b) and
              §838.211(c)
       B.     Application Requirements
              (i).     Must apply in writing (personally or by
                       representation)
              (ii).    Application must be accompanied by
                       (a).   Certified copy of court order
                              acceptable for processing that is
                              directed at the employee annuity
                       (b).   A certification from former spouse or
                              representative that court order is
                              currently in force and has not been
                              amended, superseded or set aside
                       (c).   Information sufficient for OPM to
                              identify the employee or retiree
                              (name, social security number, CSRS
                              or FERS claim number, and date of
                              birth)
                       (d).   The current mailing address of former
                              spouse and employee




                      166
     (iii).    If payments are subject to termination for
               remarriage under the terms of the order
               provide a statement to OPM certifying
               (a).   Remarriage has not occurred
               (b).   Former spouse will notify OPM within
                      15 days of remarriage
               (c).   That former spouse will personally be
                      liable for any overpayment to him or
                      her
C.   OPM action on receipt of court orders acceptable
     for processing. See 5 C.F.R. §838.222
D.   OPM action on receipt of court orders not
     acceptable for processing - OPM will inform former
     spouse that they cannot approve the application and
     provide specific reasons

E.   Contesting validity of court orders - 5 C.F.R.
     §838.224(a). Employee, retiree or separated
     employee must establish validity of the order by
     submitting an order that
     (i).      Declares former spouse’s order invalid; or
     (ii).     Sets aside former spouse’s order
F.   OPM processing of amended or clarifying court
     orders. 5 C.F.R. §838.225(a) and (b)
G.   Commencement of payment by OPM - first day of
     second month after OPM receives the court order
     and required documentation. 5 C.F.R. §838.221
H.   Termination of payments to former spouse. 5
     C.F.R. §838.237
I.   OPM collecting arrearages. 5 C.F.R. §838.225 and
     5 C.F.R. §838.234
J.   OPM payment of lump sum awards. 5 C.F.R.
     §838.235
K.   Court orders barring payment of employee annuity
     is invalid. 5 C.F.R. §838.236
L.   Effect of death of former spouse


              167
                   (i).    Former spouse’s share terminates on the
                           last day of the month before death of the
                           former spouse and reverts to the retiree. 5
                           C.F.R. §838.237(a) unless there is an order
                           to pay former spouse’s share to the children,
                           her estate, or an officer of the court acting as
                           a fiduciary

             M.    OPM payment of COLA’s. 5 C.F.R. §838.621 and
                   5 C.F.R. §838.241
     viii.   OPM Procedures for Processing Court Orders Affecting
             Refunds of Employee Contributions
             A.    Availability and amounts subject to court orders. 5
                   C.F.R. §838.411
             B.    Application requirements (same as for employee
                   annuity). 5 C.F.R. §838.421
             C.    Time constraints on application. Application and
                   order for refund will not be effective unless OPM
                   receives the documentation required no later than
                   the last day of the second month before payment of
                   the refund or 20 days after OPM receives the
                   statement required by 5 C.F.R. §838.207(c) or 5
                   C.F.R. §843.206(b). See 5 C.F.R. §838.422(a)
             D.    OPM action on receipt of court order acceptable for
                   processing. 5 C.F.R. §838.423
             E.    OPM action on receipt of court order not acceptable
                   for processing. 5 C.F.R. §838.424 (same as for
                   employee annuity)
             F.    Contesting the validity of court orders. 5 C.F.R.
                   §838.425 (same as for employee annuity)
             G.    Court orders barring payment of refund. 5 C.F.R.
                   §838.432; 5 C.F.R. §838.505

c.   Court Orders Affecting Former Spouse Survivor Annuities
     i.      General Requirements for Court Orders Affecting Former
             Spouse Survivor Annuity




                          168
A.   Date of divorce limitation on CSRS awards -
     divorced on or after May 7, 1985. 5 C.F.R.
     §838.802(a) and (b)
B.   “Qualified Domestic Relations Orders” prohibited
     unless order expressly contains provision that the
     court order is governed by 5 C.F.R. Part 838. 5
     C.F.R. §838.803
C.   No continuation of employee annuity following death
     of retiree. 5 C.F.R. §838.803
D.   Express award of former spouse survivor annuity is
     required. 5 C.F.R. §838.804

E.   OPM application of formulas. 5 C.F.R. §838.805.
     Court order must
     (i).      Provide sufficient instructions and
               information so that OPM can determine the
               amount of the former spouse’s monthly
               benefit using only the express language of
               the court order, the regulations in 5 C.F.R.
               Part 838 and information from normal OPM
               files.

     (ii).     If the court uses a formula, it must not use any
               variables whose values are not readily
               ascertainable from the face of the court order
               or normal OPM files
     (iii).    Court order is not acceptable for processing
               if OPM would have to examine a state statute
               or court decision to understand, establish or
               evaluate the formula for computing the former
               spouse annuity
F.   Amended Court Orders. 5 C.F.R. §838.806
     (i).      An order issued after the date of retirement
               or death of the employee that modifies or
               replaces the first order dividing the property
               will not be treated by OPM as an acceptable
               order




              169
      G.    Cost of Former Spouse Annuity. 5 C.F.R.
            §838.807(e)
            (i).      Cost must be collected from the annuity paid
                      by OPM, 5 U.S.C. §8419, or the annuity
                      reduction required by 5 U.S.C. §8339 (j)(4)
ii.   Terminology in Orders Awarding Former Spouse Survivor
      Annuity
      A.    Identifying the System
            (i).      CSRS
            (ii).     FERS
            (iii).    OPM
            (iv).     Federal Government
      B.    Specifying Award of Former Spouse Annuity
            Required
            (i).      Former Spouse Survivor Annuities. 5 U.S.C.
                      §8341(b) for CSRS and 5 U.S.C. §8445 for
                      FERS
            (ii).     Insurable Interest Annuities. 5 U.S.C.
                      §8339(k) for CSRS and 5 U.S.C. §8444 for
                      FERS
            (iii).    Internal contradictions within the order are
                      controlled by the section reference. 5 C.F.R.
                      §838.912(c)
      C.    Determination of Amount of Former Spouse Annuity
            (i).      An order which does not state the amount of
                      the annuity will be interpreted by OPM as
                      providing the maximum former spouse
                      survivor annuity. 5 C.F.R. §838.921

      D.    Pro-rata Share Defined. 5 C.F.R. §922
      E.    Cost of Living Adjustments before death of retiree
            are deemed ordered unless the order expressly
            orders OPM not to add these adjustments. 5 C.F.R.
            §838.923



                     170
       F.     Temporary awards of survivor annuities becomes
              permanent when OPM is barred from honoring a
              modification of the court order. 5 C.F.R. §838.931
       G.     Court orders permitting election by former spouse
              to receive former spouse survivor annuity. 5 C.F.R.
              §838.932
       H.     Payment of Cost of Former Spouse Annuity. 5
              C.F.R. §933
              (i).     Cost of annuity will be deducted from the
                       former spouse’s share of the annuity (if
                       sufficient to cover it)
              (ii).    If not sufficient to cover the cost, then it will be
                       deducted from the employee’s annuity and
                       must be recovered from the former spouse
                       by the employee
iii.   OPM Recommended Language for Court Orders
       Awarding Former Spouse Survivor Annuities. Clauses for
       the award of a former spouse annuity promulgated by OPM
       are found in Appendix A, Subpart I, Part 38, Title 5, C.F.R.
       A.     Award of maximum survivor annuity
       B.     Award that continues predivorce survivor annuity
              benefits
       C.     Award of “pro rata” share. ¶703
       D.     Award of fixed monthly amount. ¶704
       E.     Award by percentage or fraction of employee
              annuity. ¶711
       F.     Award based on formula as share of employee
              benefit. ¶712
       G.     Award of percentage or fraction of maximum
              survivor annuity. ¶721
       H.     Award based on formula applied to share of
              maximum survivor annuity. ¶722




                      171
      I.    Award of reducing amount of former spouse
            survivor annuity on remarriage of employee prior to
            retirement. ¶751
      J.    Award of reducing amount of former spouse
            survivor annuity on remarriage of employee after
            retirement. ¶752
      K.    Paying cost of former spouse survivor annuity. ¶802
      L.    Refund of employee contributions. ¶901 and ¶902


iv.   OPM Procedures for Processing Orders Awarding Former
      Spouse Survivor Annuity
      A.    Application Requirements - 5 C.F.R. §838.721
            (i).      No special form
            (ii).     Former spouse or representative
            (iii).    Based upon a court order acceptable for
                      processing
            (iv).     Documents to be sent with application (same
                      as employees annuities paragraph above)
      B.    OPM Action on Receipt of Court Order Acceptable
            for Processing Living retiree. 5 C.F.R. §838.722(a)
            (i).      Deceased employee, separated employee
                      or retiree. 5 C.F.R. §838.722(b)
            (ii).     Living employee or separated employee. 5
                      C.F.R. §838.722(c)
      C.    OPM Action on Receipt of Court Order Not
            Acceptable for Processing. 5 C.F.R. §838.723
      D.    Contesting Validity of Court Orders. 5 C.F.R.
            §838.724
      E.    Commencing Date for Payments. 5 C.F.R.
            §838.731
      F.    Termination of Entitlement. 5 C.F.R. §838.732
      G.    Payment of Lump Sum Awards by Survivor Annuity.
            5 C.F.R. §838.734

                     172
                  H.     Cost of Living Adjustments. 5 C.F.R. §838.735

6.   Drafting Decrees Dealing with Awards of Thrift Savings Plan
     Benefits.
     Subpart I of Part 1859, Title 5 C.F.R.
     a.    Alimony and Child Support Court Orders
           Thrift Savings Plan is subject to legal process. 5 U.S.C.
           §8437(e)(2) and (3) and §459 of the Social Security Act (42
           U.S.C. §659)
     b.    Division of Plan Benefits
           i.     Will Only Honor Qualifying Retirement Benefits Order
                  A.     Court decree of divorce, annulment or legal
                         separation, or any other court or court approved
                         property settlement agreement incident to such
                         decree.
                  B.     Expressly refer to participants thrift savings plan
                         account
                  C.     Clear intent to deal specifically with the thrift savings
                         plan as distinguished from other federal retirement
                         benefits and contain terms appropriate to a defined
                         contribution plan
                  D.     Expressly award a specific dollar amount, a
                         percentage of the account as of a specific date or
                         event or by applying a formula. 5 C.F.R.
                         §1650.29(b)(1) and (2)
           ii.    Status Quo Temporary and Clarifying Orders. 5 C.F.R.
                  §1150.29(i)
           iii.   Procedures for Payment. 5 C.F.R. §1650.30
                  A.     Payment Dates
                  B.     Calculation of Amounts. 5 C.F.R. §1650.30(a)-(d)
                  C.     Exclusion of Interest and Earnings
                         (i).    Unless the order provides otherwise, a
                                 former spouse’s entitlement will not be
                                 credited with interest or earnings


                                173
            (ii).    Exception: Where order awards former
                     spouse a percentage or fraction of an
                     account to be calculated as of a future date
                     or event and payment is made as a result of
                     separation from federal service, earnings (or
                     losses) shall be included from the date of
                     which the entitlement was calculated. 5
                     C.F.R. §1650.30(e)

      D.    Vested and Nonvested Amounts. 5 C.F.R.
            §1650.30(f)

      E.    Ceiling on Payments - Payment to former spouse
            may not exceed the participant’s account balance
            less any nonvested money and excluding any
            outstanding loan amount. 5 C.F.R. §1650.30(g)

      F.    Adjustments to Entitlement. 5 C.F.R. §1650.30(h)

            (i).     Late contributions

            (ii).    Negative adjustments (attributable lost
                     earnings

      G.    Form of Payment - Single Payment Only. 5 C.F.R.
            §1650.30(i)

      H.    Effect of Death of Former Spouse Prior to Payment
            - Payment will be made to the estate of former
            spouse unless otherwise specified by the order. 5
            C.F.R. §1650.30(j)

iv.   Processing of Court Orders Dividing Benefits

      A.    Account will be frozen upon receipt by the federal
            retirement thrift investment board of a qualifying
            order and the parties will be notified. 5 C.F.R.
            §1650.31(a)

      B.    Review by general counsel to determine whether or
            not the order is a qualifying retirement benefits
            order and the amount of former spouse’s
            entitlement. 5 C.F.R. §1650.31(e)

                    174
                  C.     When Account Freeze Released. 5 C.F.R.
                         §1650.31(f)(1)-(4)
                  D.     Information to be Provided With the Order
                         (i).      Full name
                         (ii).     Mailing address
                         (iii).    Social security number of the participant
            v.    Appeal Procedures. 5 C.F.R. §1650.32
            vi.   Termination of Former Spouse Benefits. 5 C.F.R.
                  §1650.43(a)-(c)


7.    Transfer from CSRS to FERS
      a.    Election period was from July 1, 1987 to December 31, 1987
      b.    Election period applied to current employees and members
      c.    Potential problem - former employees who become re-employed
      d.    Election may not be effective unless made with written consent of
            any former spouse entitled to benefits so long as OPM has
            received a copy of the qualifying order and documents. OPM can
            waive this requirement if it is shown that former spouse’s
            whereabouts cannot be acquired or if the employee or member
            presents a judicial determination that would warrant waiver based
            on exceptional circumstances.

      e.    Transfer from CSRS to FERS will cancel any designation of a
            survivor beneficiary of the employees CSRS lump-sum credit. 5
            C.F.R. §846.501

8.    Health Insurance Benefits
      5 U.S.C. §8901 et seq.

9.    Civil Service Disability Benefits to the Extent They Are Earned
      During the Marriage Are Divisible

10.   Federal Worker’s Compensation Benefits
      5 U.S.C. §8101 et seq.



                                  175
              Split of Texas Authority

              a.     Divisible - Anthony v. Anthony, 624 S.W. 2d 388 (Tex. Civ. App.-
                     Austin 1981, writ dism’d)

              b.     Not Divisible - Bonar v. Bonar, 614 S.W. 2d 472 (Tex. Civ. App.-
                     El Paso 1981, writ ref’d n.r.e.)

       11.    Assignment of Federal Employees Group Life Insurance Benefits
              Now Allowed
              5 U.S.C. §8706(e)




X MISCELLANEOUS TOPICS.

  A.   Life Insurance Benefits.

       There are two basic types of life insurance: term insurance and whole life. For
       the divorce practitioner, whole life insurance has received more attention than
       term life, due to the fact that whole life has more obvious value at divorce than
       term insurance. It is clear that there is a community claim to the cash value of a
       whole life policy purchased during marriage with community funds. Womack v.
       Womack, 172 S.W.2d 307 (Tex. 1943); Grost v. Grost, 561 S.W.2d 223 (Tex.
       Civ. App. -- Tyler 1977, writ dism'd w.o.j.); In re Holmgren, 130 Cal. Rptr. 440
       (Cal. App. 1976). In contrast, some courts have concluded that a term policy
       has no value at divorce. See Carter v. Massey, 668 S.W.2d 450 (Tex. App. --
       Dallas 1984, no writ). Some courts in other states have reached the same
       conclusion regarding term policies. See generally J. T. Oldham, Divorce,
       Separation and the Distribution of Property (1994), Section 7.08. Of course,
       spouses may agree in a settlement agreement to share term life insurance after
       divorce. Hudspeth v. Stoker, 644 S.W.2d 92 (Tex. App. -- San Antonio 1982,
       writ ref'd.). An analysis of the California cases show:

       1.      Although some California courts have agreed with what appears to be
              the current Texas view regarding term life policies (In re Lorenz, 194 Cal.
              Rptr. 237 (Cal. App. 1983)), other courts in California have questioned
              whether term life policies have no value. For example, one court noted
              that a term policy could have a value to the insured spouse if the spouse

                                         176
     became uninsurable after the purchase of the policy, and the spouse was
     only able to maintain life insurance coverage after divorce due to
     coverage purchased during marriage by the community. In re Estate of
     Logan, 236 Cal. Rptr. 368 (Cal. App. 1987); Modern Woodmen of
     America v. Gray, 299 Pac. 754 (Cal. App. 1931); Biltoft v. Wootten, 157
     Cal. Rptr. 581 (Cal. App. 1979). (Under most term policies, the
     insurance company may not cancel the life policy for health reasons after
     it is purchased, and the insured need not provide any additional evidence
     of insurability.) Indeed, other courts have noted that the proper measure
     for the value of whole life policies should not be limited to cash surrender
     value if the insured has become uninsurable during marriage, or if certain
     other benefits will accrue to the insured at a favorable rate due to the
     payment of premiums with community funds during marriage. In re
     Marriage of Gonzalez, 214 Cal. Rptr. 634 (Cal. App. 1985).

2.   One recent California decision that involved a spouse who became
     uninsurable during marriage was In Re Marriage of Spengler, 6 Cal.
     Rptr.2d 764 (Cal. App. 1992). The court disagreed with the argument
     that the community should have a claim to a term policy if the insured
     spouse becomes uninsurable during marriage. In this case, the life
     insurance was a fringe benefit of employment. The court concluded that
     in this situation the insured's right to continue the coverage was
     contingent both upon the insured continuing to work for the employer and
     the employer maintaining the group insurance plan. Because of these
     contingencies, the court concluded that there was no community property
     interest in the term insurance at divorce.

3.   Even if the insured did not become uninsurable during marriage, other
     courts have held that the term policy can have some value at divorce. For
     example, in Biltoft v. Wootten, supra, the insured continued to make
     premium payments after separation with separate property funds. The
     court found that the insured would not have been able to purchase the
     same coverage at the time of separation for the price he was paying had
     he not purchased the policy previously and paid the premiums with
     community funds. This court noted that this "discounted" insurance
     coverage was valuable and should be considered a community
     contribution. See also, In re Marriage of Gonzalez, 214 Cal. Rptr. 634
     (Cal. App. 1985).

4.   In re Bowman, 217 Cal. Rptr. 174 (Cal. App. 1985) is the most
     interesting California case regarding term life insurance. The husband
     first became covered by his employer's group life insurance plan during


                               177
            marriage. When the husband and wife divorced, the decree was silent
            regarding the insurance policies. The husband later remarried and
            designated his new wife as beneficiary. When he died, the first wife
            claimed a portion of the proceeds. The court held that the term policy
            had economic value at the time of divorce, and was community property
            to be divided. Because this community property interest was not divided
            at divorce, under California law, like Texas, the spouses continue to hold
            the property as tenants in common. The court concluded that, on
            remand, the trial court should determine the amount of life insurance
            benefits the husband could have purchased had he terminated his
            employment as of the date of separation from his first wife. The portion
            of the life insurance proceeds that would be included in the first
            community would be the ratio between that amount and the amount of
            insurance that was in force when the insured died.

     5.     Not all California courts have endorsed the views expressed in Gonzalez
            and Bowman. See Logan, supra, and Spengler, supra.

            It is unclear whether Texas courts will ever accept the views expressed in
            Gonzalez and Bowman. Still, conservative Texas practitioners would be
            wise to include an award of term life insurance policies in the decree
            when your client is covered by a term policy.

B.   The Refinanced Home Loan.

     Many Texans have within the past decade refinanced loans obtained when
     interest rates were substantially higher. A marital property rights issue arises if
     the spouse bought the property (and obtained the loan) before marriage and
     refinances it during marriage. Before the refinancing, the legal rule is clear.
     Community funds used to make loan payments create a prima facie right of
     reimbursement, based on Pennick v. Pennick, 783 S.W.2d 194 (Tex. 1988).
     This right of reimbursement arises because community funds are being used to
     pay a separate (pre-marriage) debt.

     What does the refinancing do? Does the new loan become a community debt
     for purposes of reimbursement calculations? If so, does the character of the
     property change? Somewhat surprisingly, no Texas case has discussed this
     problem.

     In Yeldell v. Yeldell, 551 A.2d 832 (D.C. App. 1988) the court ignored a
     refinancing transaction when characterizing the property.



                                       178
C.   Paying Obligations from a Prior Marriage During a Subsequent Marriage.
     If a spouse pays premarriage debts with community property, this
     normally gives rise to a prima facie community reimbursement claim.
     What if the prior debt was an alimony or child support claim?

     1.    In Marriage of Moore, 890 S.W.2d 821 (Tex. App. -- Amarillo 1994, no
           writ) the court held that the community was entitled to reimbursement
           when the spouse used community funds to pay a property division
           obligation that arose from a prior divorce.

     2.    In Zieba v. Martin, 928 S.W.2d 782 (Tex. App. -- Houston [14th Dist.]
           1996) the husband paid $147,000 during marriage in child support to
           children from a prior relationship. The wife argued at the time of divorce
           that he should reimburse the community for these expenditures. The
           court rejected this argument, noting that "these obligations were imposed
           by court order." Id. at 790.

     3.    This explanation is a bit odd. Why does it matter that the obligation was
           in the form of a court order? Are these somehow more "real" debts than
           contract debts? How is Zieba different from Moore (since both involve
           debts in a decree)?

     4.    Zieba's cursory statement leaves the state of Texas law in this area
           unclear. For example, should the result be affected by whether the other
           spouse consented to using community funds for these expenditures? Is
           it relevant whether the obligor had separate funds that could have been
           used?

     5.    Joan Jenkins has noted that the result in Zieba seems fair, in that the
           other spouse "got what she bargained for, a used spouse complete with
           court-ordered financial obligations." See "Recent Cases, Interesting,
           Alarming and Otherwise," 1997 Marital Dissolution Institute, at J-l. This
           may be true, but how is this different from any other situation when a
           spouse marries another with premarriage debts and both are aware of
           the debts? Is there something different about child support?

     6.    In Pelzig v. Berkville, 931 S.W.2d 398 (Tex. App. -- Corpus Christi 1996)
           a spouse asserted a Zieba-type reimbursement claim for community
           funds used to pay alimony and child support. The court considered this
           claim in more detail than the court did in Zieba. The court concluded that
           it was not an abuse of discretion not to award reimbursement in this
           situation. Here the husband apparently had separate property but made


                                     179
            payments with community funds. The court noted that the wife was aware
            of these obligations when she married him, and that the wife never tried
            to get the husband to use separate property for these obligations.

     7.      Pelzig leaves a few unanswered questions (assuming that it is the most
            detailed statement of Texas law to date). First, would it have been an
            abuse of discretion if the court had granted reimbursement? Second,
            would the result have been different if the wife had objected to the use of
            community funds?

     8.     Callendar v. Callendar, 625 So.2d 257 (La. App. 1993) reached a result
            consistent with Zieba. However, Louisiana has adopted a statute that
            expressly states that a support obligation is a community obligation.

     9.     In California, the community would have a right to reimbursement in a
            Zieba situation only to the extent that the obligor had separate property
            from which the obligation could have been paid. See Cal. Fam. Code
            sec. 915. (Note that this rule probably would have caused a different
            result in Pelzig).

     10.    In Schweitzer v. Schweitzer, 915 P.2d 575 (Wash. App. 1996), the
            mother remarried and, over her husband's objection, used $35,000 in
            community funds to pay post divorce college expenses for a child of the
            first marriage. The appellate court reversed the trial court's order that
            she had to reimburse the community for these costs.

D.   Alimony

     Until recently, Texas has not permitted court-ordered post-divorce alimony.
     Even now, statutory rules governing post-divorce alimony are quite restrictive.
     This makes it important what constitutes "alimony." Please note:

     1.     Texas courts may award a money judgment at divorce, as long as that
            award is tied to community property rights. See Price v. Price, 591
            S.W.2d 601 (Tex. Civ. App. -- Tyler 1979, no writ).

     2.     May a court do anything else? In Price, supra at 603, and in Francis v.
            Francis, 412 S.W.2d 29, 32-33 (Tex. 1967) the courts stated that an
            order to pay income from a spouse's property to the other spouse after
            divorce is NOT ALIMONY. No Texas court has since commented on this
            statement. So, is there another form of post-divorce support that now is
            possible in Texas, other than that set forth in TEX. FAM. CODE ANN.


                                       180
            §3.9601? See also, Le Blanc v. Le Blanc ,761 S.W.2d 450 (Tex. App.--
            Corpus Christi 1988, writ denied) which says, in dictum, that a divorce
            court may award the non-owner a homestead interest in the other
            spouse’s separate realty.

E.   Quasi-Community Property.

     What happens when spouses accumulate property in another state, come to
     Texas, and divorce? Tex. Fam. Code sec. 3.63(b) was enacted to avoid the
     traditional result that such property was "separate" property in a Texas sense,
     regardless of whether it was accumulated due to a spouse's efforts during
     marriage. See Cameron v. Cameron, 641 S.W.2d 210 (Tex. 1982).

     1.     A number of complicated problems have arisen under this statute. First,
            what happens if spouses come from a community property state with
            things that are characterized as community property in the state of the
            prior domicile (say, a personal injury recovery) and divorce in Texas,
            where the item is considered separate? One approach would be that the
            property was community property before the move and should not be
            changed by the move. The language of the statute could support such a
            construction. But should all the property brought here be construed under
            Texas law, or only that accumulated here (as well as that property brought
            from the prior domicile that would be community property under Texas
            law, even though separate under the law of the prior domicile)?

     2.     A similar problem arises when parties move from a common-law marital
            property state to Texas, and the divorce law of the prior domicile would
            have created a larger divisible estate than would arise under Texas law.
            Which law should govern--that of Texas or the prior domicile? Should the
            answer depend upon whether the court believes the spouse migrating to
            Texas did so to forum shop for a more favorable divorce law? Should the
            answer depend on whether one or both spouses have moved to Texas?



     3.     Some of these questions were most recently litigated in Dawson-Austin
            v. Austin, 920 S.W.2d 776 (Tex. App. -- Dallas 1996, writ granted). Here
            the couple moved to Texas from Minnesota and divorced. Under the law
            of Minnesota, all of the increase in value during marriage of the
            husband's separate business would be marital; under Texas law, the
            community would have no claim. The husband argued that Texas law
            should always apply. The court rejected this approach, but did determine
            that Texas in this instance was the place of most significant relationship

                                      181
            and did apply Texas law. Id. at 790-91. Cf. Dawson, which applied the
            law of the forum, to Seizer v. Sessions, 915 P.2d 553 (Wash. App. 1996)
            where the Washington court applied Texas law (the prior domicile) to
            characterize a community claim to lottery winnings.

     4.     Of course, Texas law might be applied even if only one spouse moved to
            Texas. See Ismail v. Ismail, 702 S.W.2d 216 (Tex. App. -- Houston [1st
            Dist.] 1985, writ ref'd, n.r.e.).

     5.     Louisiana has adopted a rule that, in this situation, the court should apply
            the law that creates the largest divisible estate. So, if the law of the forum
            (Louisiana) would consider the acquisition community, apply Louisiana
            law. In contrast, if the law of Louisiana would not consider the acquisition
            divisible but the law of the prior domicile would, apply the law of the prior
            domicile. See La. Civ. Code art. 3526; Symneonides, "Louisiana's Draft
            on Succession and Marital Property," 35 Am. J. Comp. L. 259 (1987).
            This approach would lead to a very different result than Dawson-Austin,
            supra.

F.   Foreign Marriage Contracts.

     Spouses sometimes enter into an arrangement regarding the marital regime
     applicable to their marriage (which choice of marital regime is enforceable
     under the law of the initial marital domicile), and then later move to Texas and
     divorce. If the spouses chose a separate property regime, what should a Texas
     court do? Consider:

     1.     In many countries (such as Austria, Belgium, Denmark, France,
            Germany, Italy, Japan, the Netherlands, Spain and Sweden), the marital
            property rights of spouses are determined by the law of the first marital
            domicile, and are not changed by any later move. Of course, this rule is
            not accepted in the U.S. A move to the U.S. after marriage can have a
            huge effect on marital property rights. See Ismail v. Ismail, 702 S.W.2d
            216 (Tex. App. -- Houston [1st Dist.] 1985, writ ref'd n.r.e.).

     2.     If Texas law is applied to determine the rights of spouses who moved, the
            arrangement spouses made in the initial domicile might not be honored.
            For example, under many civil regimes the spouses designate on some
            document in connection with their marriage which marital property
            regime they wish to select. This may not be in the form of an agreement;
            it may merely be something equivalent to a marriage license. Of course,
            Texas law requires a written agreement.


                                       182
     3.       An important question may be whether Texas law applies to determine
              the enforceability of this marital regime choice. Under traditional choice
              of law rules, the law of the place of contracting governs the enforceability
              of that contract (unless the law violates an important public policy of the
              forum). See Estate of Santos, 648 So.2d 277 (Fla. App. 1995). If this
              marital regime choice would be considered a contract, or if for some
              other reason the law of the initial marital domicile would usually apply,
              under this approach the law of the initial marital domicile might well apply.

     4.       Of course, under current Duncan most significant relationship analysis, a
              Texas court might not look to the law of the initial marital domicile,
              particularly if the court concluded that the law would harm a Texas
              domiciliary. See Seth v. Seth, 694 S.W.2d 459 (Tex. App. -- Ft. Worth
              1985, no writ); Lewis v. Lewis, 748 P.2d 1362 (Hawaii 1988). If the
              spouses chose a separate property regime, the enforcement of this
              election might well be seen as harming a Texas resident.

     5.       In a California case, the court did enforce an election for a separate
              property regime by Mexican nationals in Mexico, even though the couple
              moved to California and divorced. See Fernandez v. Fernandez, 15
              Cal. Rptr. 375 (Cal. App. 1961). In contrast, a North Carolina court has
              applied forum law to determine whether to enforce a Syrian marriage
              contract. See Atassi v. Atassi, 451 S.E.2d 371 (N.C. App. 1995).



G.   Torts.

     1.       Spousal Fraud.

              a.     Damages. Texas law now seems fairly confused about the
                     remedies possible when one spouse brings a claim of fraud
                     against the other spouse in connection with a divorce. It has
                     always been clear that a spouse could, in connection with a
                     constructive fraud claim against the other spouse, obtain a
                     judgment against the spouse for 50% of the community assets
                     dissipated. The current question is whether in addition to a
                     recovery of the value of the objecting spouse's interest in the
                     assets dissipated, the spouse may also recover punitive
                     damages and pain and suffering. Consider:




                                         183
i.     In Belz v. Belz, 667 S.W.2d 240 (Tex. App. -- Dallas 1984,
       writ ref'd n.r.e.) the court held that a fraud claim would not
       be permitted when the spouse alleged that the other
       spouse attempted to hide community property. This was
       merely a factor to be considered when the community
       estate was divided. (The court distinguished between this
       type of situation and an attempt to steal separate property.)

ii.    A few other cases have reiterated the Belz approach
       regarding fraud claims. In Marriage of Moore, 890 S.W.2d
       821 (Tex. App. -- Amarillo 1994, no writ), the court held that
       a tort remedy was not possible for a fraud on the
       community claim.

iii.   Some other courts have disagreed. For example, in
       Devine v. Devine, 869 S.W.2d 415 (Tex. App. -- Amarillo
       1993, writ den.), the trial court awarded $3000 in
       exemplary damages against a spouse for actual fraud.
       The appellate court did not consider this issue, because
       the spouse did not object to this issue being given to the
       jury at the time of trial.

iv.    In Mazique v. Mazique, 742 S.W.2d 805 (Tex. App. --
       Houston [1st Dist.] 1987, no writ) a spouse dissipated
       community funds on mistresses. In addition to ordering that
       spouse to reimburse the community for those expenditures,
       the court awarded $5000 in exemplary damages.

v.     A spouse attempted to hide community funds in Schleter v.
       Schleter, 929 S.W.2d 94 (Tex. App. -- Austin 1996, writ
       granted). The court affirmed an award of $30,000 in
       exemplary damages, arguing that Belz was overruled by
       Price v. Price, 732 S.W.2d 316 (Tex. 1987).

vi.    A recent Houston case distinguishes between constructive
       fraud ("fraud on the community") and actual fraud. In
       Vickery v. Vickery, 1996 WL 698867 (Tex. App. -- Houston
       [1st Dist.] 1996) the court stated that it would not permit a
       separate action between spouses for fraud on the
       community but would permit a separate action for fraud.
       Here the court found that the husband had committed
       actual fraud, and permitted a separate action.


                   184
     b.    What Can Constitute Constructive Fraud? The cases discussed
           above involved situations where constructive fraud or fraud was
           found to exist. This can occur, for example, when a spouse
           makes an unreasonable unilateral gift of community property. See
           Mazique, supra. Can it occur in other instances?

           i.     It is frequently said that, when managing community
                  property, a spouse has a fiduciary duty to the other. Can
                  the spouse be liable for dumb or negligent investment
                  decisions? Texas courts to date have concluded, in
                  general, that an investment decision made in good faith is
                  not actionable, even if it turns out to be bad. See Andrews
                  v. Andrews, 677 S.W.2d 171 (Tex. App. -- Austin 1984, no
                  writ). The scope of this rule has not totally been tested,
                  however. For example, what if a spouse goes to Las
                  Vegas, goes to a roulette table, and bets $10,000 on
                  black. If it comes up red, is that spouse liable to the
                  community? (Cf. Reaney v. Reaney, 505 S.W.2d 338
                  (Tex. Civ. App. -- Dallas 1974, no writ) where the husband
                  had to reimburse the community for a portion of gambling
                  losses incurred after the parties were experiencing serious
                  marital discord.) Also, in Massey v. Massey, 807 S.W.2d
                  391 (Tex. App. -- Houston [1st Dist.] 1991), writ den., 867
                  S.W.2d 766 (Tex. 1993), the court upheld a jury finding that
                  the husband's investments and expenditures operated as a
                  constructive fraud on the wife.

           ii.    A recent case involved a different type of negligent
                  management claim. In Grossnickle v. Grossnickle, 927
                  S.W.2d 687 (Tex. App. -- Texarkana 1996), the wife was
                  given the right to live in the community home during the
                  divorce process. During this period, she did not maintain
                  the home and it was seriously damaged (by mildew, leaks,
                  vandalism, etc.). She was held liable for the $80,000 in
                  repairs that were needed.

2.   Third Party Tort Claims. The character of third-party claims generally
     is clear. To the extent the recovery is for pain and suffering and post-
     divorce lost wages, it is separate. To the extent it is for medical
     expenses incurred during marriage and lost wages during marriage, it is
     community. A loss of consortium claim is separate property.
     Additionally:


                              185
            a.     Two types of more complicated characterization problems have
                   arisen. First, what should occur if the spouse (or the spouses)
                   settled the tort claim and did not allocate what portion of the
                   settlement went to which portion of the recovery? In other words,
                   is this a commingled fund?

            b.     Courts in a number of states have instructed divorce courts to try
                   to determine what portion of the recovery should be allocated to
                   each component of the recovery. See Johnson v. Johnson, 386
                   S.E.2d 136 (Ga. 1989); Bandow v. Bandow, 794 P.2d 1346 (Alas.
                   1990); Russell v. Russell, 801 P.2d 93 (N. M. App. 1990). The
                   only Texas case to consider this question held that it was a
                   commingled fund and therefore all community property, unless the
                   party claiming that is was partially separate could establish what
                   portion was separate. See Kyles v. Kyles, 832 S.W.2d 194 (Tex.
                   App. -- Beaumont 1992, no writ). It is unclear what evidence
                   would be sufficient to accomplish this.

            c.     Another type of community property issue stems from the
                   collateral source rule. Under this rule, the injured party may
                   recover against the tortfeasor for medical expenses even if
                   reimbursed by insurance. Remember, under Graham v. Franco,
                   488 S.W.2d 390 (Tex. 1972) a tort recovery is community to the
                   extent that it reimbursed the community for medical expenses
                   borne by the community. If the recovery includes medical
                   expenses reimbursed by medical insurance, what should the
                   character of this recovery be?

            d.     In Russell v. Russell, 740 P.2d 127 (N.M. App. 1987) the injured
                   spouse incurred $80,000 in medical expenses; all but $1400 were
                   reimbursed. What was the community claim? The court held it
                   was $80,000. The community was entitled to this windfall, not the
                   spouse's separate estate.

H.   Trusts.

     Before the wedding, may a wealthy spouse before the wedding decrease the
     size of the community that otherwise might result during marriage by any action
     other than signing a prenuptial agreement? In Lemke v. Lemke, 929 S.W.2d
     662 (Tex. App. -- Ft. Worth 1996) the spouse had created a trust four years
     before marriage. A third party was the trustee. The spouse had no absolute
     right to demand payments; the trustee in her discretion determined the


                                      186
     appropriate amount for the spouse's support. At divorce, the other spouse
     argued that the income on the corpus that accumulated during marriage was
     community, even though not distributed. The court concluded that it was not
     community.

     Does this mean that a trust will always work to reduce the amount of income
     generated during marriage on premarriage savings that would otherwise be
     community property? The Lemke court did note that there was no allegation that
     the trust was created to defraud the wife. (The trust was funded by a medical
     malpractice settlement received by the spouse years before the marriage.)
     Would there be a different result if a heathy spouse creates a trust one month
     before a wedding? Cf. Land v. Marshall, 426 S.W.2d 841 (Tex. 1968).


I.   Reimbursement--The Guaranteed Loan.

     There are, of course, millions of potential reimbursement questions under Texas
     law. This article will address one perhaps less obvious one:

     1.    Assume a spouse owns a separate property corporation. If the
           corporation borrows money, the debt will be a corporate debt, and the
           community would have no claim. All items purchased with such a loan
           will be owned by the corporation.

     2.    Assume further, however, that the bank will not loan the corporation
           money without the personal guarantee of the owner. If this occurs, and
           community property is executed upon to collect the debt, this obviously
           creates a prima facie reimbursement claim for the community in the
           amount of the value of the property executed upon. However, what if the
           corporation pays the debt and the community loses nothing?

     3.    In Faulkner v. Faulkner, 582 S.W.2d 639 (Tex. Civ. App. -- Dallas 1979,
           no writ) the court considered a similar issue. The issue was easier,
           however, because neither spouse had an ownership interest in the
           corporation when the guarantee was given. (The husband later was
           given an ownership interest in the family corporation.) The community
           had no claim. What should happen, though, if the spouse did have an
           ownership interest in the corporation when the guarantee was given?
           The community has not lost anything (unless the community, due to the
           guarantee, could not obtain credit to engage in another potentially
           profitable transaction), but the spouse's separate estate has benefited.
           (Presumably the loan could not have been obtained but for the guarantee


                                     187
           provided by community credit.) Is there a reimbursement claim for the
           benefit received? If so, how could this benefit received be quantified?

     4.    In Thomas v. Thomas, 738 S.W.2d 342, 346 (Tex. App. -- Houston [1st
           Dist.] 1987, writ den.), Justice Dunn, in a concurring and dissenting
           opinion, stated:

           "Neither the parties' research nor ours has revealed a Texas case
           deciding the question of whether the community has a right to
           reimbursement for the use of credit to secure a loan to refinance
           the husband's separate property debts, However, I am not willing
           to state . . . that this new reimbursement theory is without merit. I
           would analogize this situation to cases where the separate debts
           are discharged with community funds. However, there is an
           important difference . . . when a debt is discharged, the cost to
           the community is obvious, but when a separate property debt is
           refinanced with the community acting as a guarantor, the cost to
           the community is not so readily ascertainable. In the latter
           situation, expert testimony would be required . . . .

           In the case before us, there is no testimony concerning the cost to the
           community resulting from the use of their credit to guarantee the
           refinancing of the separate property debt. The appellant has,
           therefore, failed to meet her burden of establishing the community's
           right of reimbursement for the use of the community credit."

J.   Commingling.

     If a spouse has $10,000 in an account before marriage and deposits $1000 of
     community funds, this does not create an immediate problem. The account
     contains $10,000 of separate property and $1000 of community. The problem
     arises when the spouse then withdraws $1000. What is left?

     1.    This depends whether "strict tracing " is required. Under strict tracing, if
           the spouse cannot show the withdrawal was used for a family living
           expense, the withdrawal is presumed to be separate property. (This
           presumption is intended to encourage the manager to keep good
           records.) In contrast, under "community out first," the withdrawal is
           presumed to be community. So, if the manager cannot show what the
           withdrawal was used for, under the former analysis the account contains
           $9000 separate and $1000 community; under the latter analysis the
           account contains $10000 separate.


                                      188
          2.     There has been substantial confusion about what tracing method to use
                 in a Texas divorce. Recent cases (Welder v. Welder, 794 S.W.2d 420
                 (Tex. App. -- Corpus Christi 1990, no writ) and some commentators
                 (Kazen, "Characterization, Tracing and Reimbursement," May 1997
                 University of Houston Family Practice Seminar, at N-6) argue that
                 community out first is now the prevalent view.

          3.     It might be noted that the Supreme Court has not spoken about this
                 issue. One might also wish to consider Stuart Gagnon's exhaustive
                 reviews of the cases in this area. He has concluded that the community
                 out first cases almost always arise to accomplish rough justice in certain
                 types of cases, such as when the manager mixes community funds with
                 the separate funds of the other spouse (see Sibley v. Sibley, 286
                 S.W.2d 657 (Tex. Civ. App. -- Dallas 1955, writ dism'd)), commingling in
                 marriages of short duration (see DePuy v. DePuy, 483 S.W.2d 883
                 (Tex. Civ. App. -- Corpus Christi 1972, no writ)), cases involving spouses
                 who married late in life after being previously married to others (see
                 Peterson v. Peterson, 595 S.W.2d 889 (Tex. Civ. App. -- Austin 1980,
                 writ dism'd)), and cases involving expenditures or deposits made very
                 early in the marriage (see Peterson, supra; DePuy, supra). He is critical
                 of applying this rule in other cases, such as relatively long, "childful"
                 marriages.

XI Alimony

When obtaining an agreement for contractual alimony, include the following:

   1.     Cite the length of the marriage.

   2.     Cite the minor children who are in the care of the creditor spouse.

   3.     State that the support payments are in recognition of the spouse's need for
          future support and to maintain the spouse's standard of living equivalent to that
          which the parties enjoyed during the marriage.

   4.     Set forth the limited financial resources of the creditor spouse and the greater
          financial resources of the other spouse.

   5.     Set forth that the payments are to occur over an extended period as opposed to
          a lump sum payment.

   6.     Set forth that the payments are to equalize the disparity in income between the
          parties.

                                             189
   7.       Set forth the age, ill health, insufficient work skills and insufficient education of
            your client.

   8.       Set forth specifically that it is support or alimony and not property division.

   9.       Have the payments end when the recipient dies or remarries.

   10.      Make sure that the payments are deducted by the debtor and included in the
            creditor's income for tax purposes.

   11.      Mandate by order that the receiving party reports the money as income and that
            the paying party deducts the amount for tax purposes.

   12.      If the payments are to a third party on behalf of the non-debtor spouse, then be
            sure to include a hold harmless and indemnification provision. These have been
            frequently withheld to be in the nature of support and not payment of debt and
            thus not dischargeable. See In re Smith, 114 B.R. 457 (Banr. D S Miss 1990)
            where a hold harmless provision requiring the debtor to pay the mortgage
            payments was found to be in the nature of support and not dischargeable,
            largely in part due to the indemnification and hold harmless provisions.


XII Legal Issues

   A.    LEGAL ISSUES: PROPERTY

                    Quick Reference Guide on Legal Issues - Property

Issue:                                Cases and Point of Law Notes:

Alimony                        Alimony was previously prohibited in Texas as against public
                               policy - Francis v. Francis, 412 S.W.2d 29 (Tex. 1967),
                               however it is now specifically authorized under certain
                               circumstances by TEX. FAM. CODE §8.001, et. seq.


Alter Ego                      Rules re theory of alter ego apply to divorce action; corporate
                               fiction will be disregarded if it operates to circumvent a statute,
                               will prejudice rights of third parties, or results in evasion of
                               existing legal obligation - Zisblatt v. Zisblatt, 693 S.W.2d 944
                               (Tex. App.--Fort Worth 1985, writ dism'd).



                                                190
                  Court should pierce corporate veil and impose personal
                  liability only under compelling circumstances - Commercial
                  Escrow Co. v. Rockport Rebel, Inc., 778 S.W.2d 532 (Tex.
                  App.--Corpus Christi 1989, writ dism'd).

                  Piercing corporate veil is not separate cause of action but
                  means of imposing individual liability where it would not
                  otherwise exist - Gallagher v. McClure, 740 S.W.2d 118 (Tex.
                  App.--Austin 1987, writ dism'd); Kearn v. Gleason, 840
                  S.W.2d 730 (Tex. App.--Amarillo 1992, no writ).




Bonus
Payments          Bonus payment received for execution of lease is generally
                  considered to be advance royalty and is thus money paid for
                  sale of minerals "in place"; when made upon oil and gas lease
                  upon separate property, such payments retain separate
                  property character - Lessing v. Russek, 234 S.W.2d 891 (Tex.
                  Civ. App.--Austin 1950, writ ref'd n.r.e); Texas Co. v. Parks,
                  347 S.W.2d 179 (Tex. Civ. App.--Fort Worth 1952, writ ref'd
                  n.r.e.).

Burden of Proof
(Character)       Burden of proof is on party asserting separate property claim -
                  Tarver v. Tarver, 394 S.W.2d 780 (Tex. 1965); and
                  Cockerham v. Cockerham, 527 S.W.2d 162 (Tex. 1975).

Burden of Proof
(Reimbursement)   Party seeking reimbursement has burden of proof - Vallone v.
                  Vallone, 644 S.W.2d 455 (Tex. 1982).



Cemetery Plot     Plot in which exclusive right of sepulture is conveyed is
                  presumed to be separate property of person named as
                  grantee in instrument of conveyance - Health & Safety Code §
                  711.039.



                                 191
Commingling          When separate property is commingled and cannot be
                     identified, it becomes community property - Carnes v.
                     Meador, 533 S.W.2d 365 (Tex. Civ. App.--Fort Worth 1975,
                     writ ref'd n.r.e.).

Community Credit
(Improvements to
Separate Property)          Community credit used to improve separate property
                            does not alter character of property but may give rise to
                            claim for reimbursement - Bradley v. Bradley, 521
                            S.W.2d 504 (Tex. Civ. App.--Houston [1st Dist.] 1975,
                            no writ).




Community Credit
(Acquisition)        Where an asset is acquired on credit, the property so acquired
                     will take on the character of the credit. Cockerham v.
                     Cockerham, 527 S.W.2d 162 (Tex. 1975) and Broussard v.
                     Tian, 295 S.W.2d 405 (Tex. 1956). If acquired part by
                     separate property and in part with community credit, the
                     character of the asset acquired may be proportionately
                     community and separate. Gleich v. Bongio, 99 S.W.2d 881
                     (Tex. Comm’n. App. 1937, opinion adopted).

Community Out
First (Tracing)      “Community out first" rule is appropriate method of tracing
                     funds -Sibley v. Sibley, 286 S.W.2d 657 (Tex. 1955); Welder
                     v. Welder, 794 S.W.2d 420 (Tex. App.--Corpus Christi 1990,
                     no writ).

Constructive Fraud   Factors to be considered in claim of constructive fraud against
                     community property:

                            1.     Size of gift in relation to total size of community
                                   estate;
                            2.     Adequacy of estate
                                   remaining;
                            3.     Relationship of donor to donee.
                                   Horlock v. Horlock, 533 S.W.2d 52 (Tex. Civ.
                                   App.--Houston [14th Dist.] 1975, writ dism'd);

                                    192
                                     Massey v. Massey, 807 S.W.2d 391 (Tex. App.-
                                     -Houston [1st Dist.] 1991, writ denied); Mazique
                                     v. Mazique, 742 S.W.2d 805 (Tex. App.--
                                     Houston [1st Dist.] 1987, no writ).

Corporations           Corporation organized during marriage although operated as
                       sole proprietorship before marriage; no showing initial
                       capitalization was from Wife's separate estate; inception of
                       title doctrine can only be applied to corporation as of date of
                       incorporation - Allen v. Allen, 704 S.W.2d 600 (Tex. App.--
                       Fort Worth, 1986, no writ).


Crops                  Crops grown or produced by annual cultivation on separate
                       property lands are distinct from underlying property and are
                       community property; it makes no difference whether crop is
                       growing or is matured and harvested at time of the divorce.
                       McGanaugh v. McGanaugh, 177 S.W.2d 296 (Tex. Civ. App.-
                       -Amarillo 1943, writ dism'd); Cleveland v. Cole, 65 Tex. 402
                       (1886); Coggin v. Coggin, 204 S.W. 2d 47 (Tex. Civ. App.--
                       Amarillo 1947, no writ).

Debt                   Separate estate allowed reimbursement for payment of
                       community obligations - Hilton v. Hilton, 678 S.W.2d 645
                       (Tex. App.--Houston [14th Dist.] 1984, no writ).

Delay Rentals          Delay rentals paid on separate property oil and gas leases are
                       considered to be rents received on separate property rather
                       than payments for lease or minerals in place; as rents from
                       separate property, they are community property - McGanaugh
                       v. McGanaugh, 177 S.W.2d 296 (Tex. Civ. App.--Amarillo
                       1943, writ dism'd).

Disability Insurance   If a disability policy is purchased with community property, the
                       benefits are characterized as community property. Anderle v.
                       Anderle, 751 S.W.2d 955 (Tex. App.--Eastland 1988, writ
                       dism’d).

Dividends - Cash       Dividends paid in cash on separately owned stock are part of
                       community estate - Amarillo National Bank v. Liston, 464
                       S.W.2d 395 (Tex. Civ. App.-- Amarillo 1970, writ ref'd n.r.e.);


                                       193
                    Fain v. Fain, 93 S.W.2d 1226 (Tex. Civ. App.--Fort Worth
                    1936, writ dism'd).

Dividends - Stock   Stock dividends and stock splits retain character of underlying
                    stock upon which they are paid or issued; if underlying stocks
                    are separate property, stock dividends or splits are separate
                    property; likewise, if underlying stock is community, stock
                    dividends or splits are community - Tirado v. Tirado, 357
                    S.W.2d 468 (Tex. Civ. App.--Texarkana 1962, writ dism'd).



Earned Acreage
and Farmouts        Interests in oil and gas acquired through talent, skill and toil of
                    a spouse are community property - Tarver v. Tarver, 394
                    S.W.2d 780 (Tex. 1965).

Earnings of Minor   Earnings of unemancipated minor are part of the community
                    property of parent spouse - TEX. FAM. CODE §3.103;
                    Insurance Company of Texas v. Stratton, 287 S.W.2d 320
                    (Tex. Civ. App.--Waco 1956, writ ref'd n.r.e.).

Earnings of
Spouse              Personal earnings of each spouse accrued during marriage
                    are community property - Moss v. Gibb, 370 S.W.2d 452 (Tex.
                    1963).

                    Such earnings include result of all labor and effort during the
                    marriage - Graham v. Franco, 488 S.W.2d 676 (Tex. 1972).

                    Earnings for labor or services rendered prior to marriage but
                    received during marriage are separate property - Moore v.
                    Moore, 192 S.W.2d 929 (Tex. Civ. App.--Fort Worth 1946, no
                    writ); Dessommes v. Dessommes, 543 S.W.2d 165 (Tex. Civ.
                    App.--Texarkana 1976, writ ref'd n.r.e.).

                    Earnings for labor or services rendered during marriage but
                    received after divorce are community property - Busby v.
                    Busby, 457 S.W.2d 551 (Tex. 1970); Cearley v. Cearley, 544
                    S.W.2d 661 (Tex. 1976).




                                    194
                         Earnings attributable to a time subsequent to divorce are not
                         community property - McBride v. McBride, 256 S.W.2d 250
                         (Tex. Civ. App.--Austin 1953, no writ).

                         See also: Echols v. Austron, Inc., 529 S.W.2d 840 (Tex. App.-
                         -Austin 1975, writ ref'd n.r.e.), where corporate officer received
                         bonus compensation after rendition of judgment for divorce,
                         but before entry of that judgment, and such earnings were held
                         not to be community property.

Employee Benefits               Employee benefits acquired by employee spouse
                                during marriage are community property - Herring v.
                                Blakely, 385 S.W.2d 843 (Tex. 1965). Retirement
                                benefits earned during marriage are community
                                property, but benefits earned before and after marriage
                                are separate property of the employee spouse.
                                Cearley v. Cearley, 544 S.W.2d 661 (Tex. 1976) and
                                Berry v. Berry, 674 S.W.2d 945 (Tex. 1983).

Enhancement
Value                    Reimbursement for improvements to real estate is
                         enhancement in value less any benefit received - Anderson v.
                         Gilliland, 684 S.W.2d 673 (Tex. 1985).

Fortuitousness and
Resulting Appreciation
of Separate Property     Increase in spouse's separate property resulting from
                         fortuitous causes such as natural growth or market fluctuation
                         remains a part of separate property - Dillingham v.
                         Dillingham, 434 S.W.2d 459 (Tex. Civ. App.--Fort Worth
                         1968, writ dism'd).

Fraud                           In action for conspiracy to defraud community estate,
                                there must be finding of damages resulting from
                                conspiracy to recover judgment - Belz v. Belz, 667
                                S.W.2d 240 (Tex. Civ. App.--Dallas 1984, writ ref'd
                                n.r.e.).

General Economic
Condition                Increases in value of separate property as result of general
                         economic conditions as distinguished from labor and effort


                                         195
                          remain separate property - Smoot v. Smoot, 568 S.W.2d 177
                          (Tex. Civ. App.--Dallas 1978, no writ).

Goodwill
(Professional Practice)   To determine if goodwill attaches to a professional practice
                          and is subject to division:

                                 1.     Goodwill must exist independently of personal
                                        ability;
                                 2.     If goodwill exists it must be determined whether
                                        it has commercial value.
                                        Finn v. Finn, 658 S.W.2d 735 (Tex. App.--
                                        Dallas 1983, writ ref'd n.r.e.)

Goodwill
(Professional)            Professional goodwill is that which attaches to person as result
                          of clients' confidence in professional skill or ability; does not
                          possess value separate from professional; and is extinguished
                          at death, retirement or disability - Rathmell v. Morrison, 732
                          S.W.2d 6 (Tex. App.--Houston [14th Dist.] 1987, no writ).

                          Professional goodwill is not property subject to division in
                          divorce - Guzman v. Guzman, 827 S.W.2d 445 (Tex. App.--
                          Corpus Christi 1992, order granting writ withdrawn 843
                          S.W.2d 486 [Tex. 1993]); Nail v. Nail, 486 S.W.2d 761 (Tex.
                          1972).

Inception of Title        Property characterized as "separate" or "community" at time
                          of inception of title - Saldana v. Saldana, 791 S.W.2d 316
                          (Tex. App.--Corpus Christi 1990, no writ).

                          Claim to separate property arises when right to claim property
                          is established prior to marriage - Welder v. Lambert, 44 S.W.
                          281 (Tex. 1898).

                          Under inception of title doctrine, character of property is fixed
                          at time of acquisition - Colden v. Alexander, 171 S.W.2d 328
                          (Tex. 1943).

Interest Income           Interest which accrues during marriage on notes or funds
                          belonging to the community estate or to the separate estate of
                          one or both spouses belongs to and becomes part of the

                                          196
                           community estate. Martenson v. Trammell, 604 S.W.2d 269
                           (Tex. Civ. App.--Corpus Christi 1980, writ ref'd n.r.e.).




Leasehold Interests
(Minerals)                 Income from production or sale of separate leasehold interests
                           retain separate property character; community funds
                           expended on development, equipment, or operation, or for
                           drilling wells, give rise to right of reimbursement only and do
                           not change character of property - Cone v. Cone, 266 S.W.2d
                           480 (Tex. Civ. App.--Amarillo 1953, writ dism'd).

Life Insurance
(Cash Surrender Value) Increase in cash surrender value of a life insurance policy is
                       community property - Grost v. Grost, 561 S.W.2d 223 (Tex.
                       Civ. App.--Tyler, 1977, writ dism'd w.o.j.).

Life Insurance
(Premiums)                 Community estate entitled to reimbursement for premiums
                           paid on husband's separate property life insurance policy -
                           McCurdy v. McCurdy, 372 S.W.2d 381 (Tex. Civ. App.--Waco
                           1963, writ ref'd).

Liquidating Dividends      Dividends of cash or property received upon liquidation of
                           corporation retain character of estate or original stock - Wells
                           v. Hiskett, 288 S.W.2d 257 (Tex. Civ. App.--Texarkana 1956,
                           writ ref'd n.r.e.).


Livestock                  Livestock bred and raised during marriage becomes
                           community property, whether or not underlying breeding herd
                           is community or separate - Amarillo National Bank v. Liston,
                           464 S.W.2d 395 (Tex. Civ. App.--Amarillo 1970, writ ref'd
                           n.r.e.); Blum v. Light, 16 S.W. 1090 (Tex. 1891).

                           Other products of separate property animals such as milk and
                           wool are community. However, enhancement in value of
                           separate property animals due to augmentation of size and
                           weight remain separate property despite community funds

                                           197
                      being used for care and food - Stringfellow v. Sorrells, 18
                      S.W. 689 (Tex. 1891).

Loss of Consortium    Recovery for loss of consortium is separate property of
                      deprived spouse - Whittlesey v. Miller, 572 S.W.2d 665 (Tex.
                      1978).

Lottery Prizes and
Gambling Winnings     Prize drawn on lottery ticket purchased during marriage with
                      separate funds is community property - Dixon v. Sanderson,
                      10 S.W. 535 (Tex. 1888).

Mercantile Business   Profits earned by spouse from operation of mercantile
                      business are part of community estate, even though business
                      owned by spouse as separate property - In the Matter of the
                      Marriage of York, 613 S.W.2d 764 (Tex. Civ. App.--Amarillo
                      1981, no writ); Schecter v. Schecter, 579 S.W.2d 502 (Tex.
                      Civ. App.--Dallas 1978, no writ).

Merger Transactions   Stock interests acquired through merger represent mutation of
                      original stock interest, and as such retain same character as
                      original ownership interest - Horlock v. Horlock, 533 S.W.2d
                      52 (Tex. Civ. App.--Houston [14th Dist.] 1975, writ dism'd
                      w.o.j.).

Mutation              Mutation of separate property does not alter character of
                      property if it can be traced - Horlock v. Horlock, 533 S.W.2d
                      52 (Tex. Civ. App.--Houston [14th Dist.] 1975, writ dism'd
                      w.o.j.).

Mutual Funds          Cash dividends received on mutual fund shares are
                      community, even if paid on separate property interests; profits
                      or gains realized upon distribution or sale of mutual fund
                      capital assets retain character of ownership of mutual fund
                      shares - Bakken v. Bakken, 503 S.W.2d 315 (Tex. Civ. App.--
                      Dallas 1973, no writ).

Oil and Gas
Operating Income      Oil and gas in place when produced from separate property
                      remain separate property and part of corpus, rather than
                      community property; however, where community labor, talent
                      and funds are expended in production and sale of gas

                                     198
                          produced from separate estate, gas is community property -
                          Norris v. Vaughan, 260 S.W.2d 676 (Tex. 1953).

Partnership               Rights of divorcing spouse can only attach to other spouse's
                          interest in partnership but not specific partnership property -
                          McKnight v. McKnight, 543 S.W.2d 863 (Tex. 1976).

                          Rights of husband partner in partnership remained same
                          (separate property) even though second partnership
                          agreement executed during marriage; no evidence to show
                          husband acquired additional partnership interest during
                          marriage - Harris v. Harris, 765 S.W.2d 798 (Tex. App.--
                          Houston [14th Dist.] 1989, writ denied).

                          Parties to contingent fee contract were Hughes heirs and
                          Andrews and Kurth partnership; no evidence contract was
                          owned by partners individually; under entity theory of
                          partnership, undivided interest owned by partners in specific
                          partnership property is not community propriety; only partner's
                          interest in partnership may be characterized as community
                          property (or separate property) - Harris v. Harris, 765 S.W.2d
                          798 (Tex. App.--Houston [14th Dist.] 1989, writ denied).

Partnership
(Profits Distributed)     Distributions of partner's share of profits and income during
                          marriage are community even if partner's interest is separate
                          property - Marshall v. Marshall, 735 S.W.2d 587 (Tex. App.--
                          Dallas 1987, writ ref'd n.r.e.).

Partnership
(Profits Undistributed)   Profits earned but retained for reasonable needs of business
                          remain part of "partnership property" - Jones v. Jones, 699
                          S.W.2d 583 (Tex. App. -- Texarkana 1985, no writ).

Presumption
(Joint Title)             Property titled in joint names is prima facie community
                          property -- Duke v. Duke, 605 S.W.2d 408 (Tex. Civ. App. --
                          El Paso 1980, dism'd w.o.j.).



Presumption

                                          199
(Community Property)       Statutory presumption that property possessed by other
                           spouse during or on dissolution of marriage presumed to be
                           community property - TEX. FAM. CODE §3.003; Contreras v.
                           Contreras, 590 S.W.2d 218 (Tex. Civ. App. --Tyler 1979, no
                           writ).

Presumption
(Burden of Proof)          Burden of proof on person opposing presumption -
                           Combined Am. Ins. Co. v. Branton, 353 S.W.2d 847
                           (Tex.1962).

Presumption
(Rebuttable)                      Generally presumption is not evidence and is
                                  rebuttable - City of Amarillo v. Attebury, 303 S.W.2d
                                  804 (Tex.Civ.App.--Amarillo 1957, no writ).

Presumption
(Irrebuttable/Real Est.)   If instrument of acquisition contains significant recital that real
                           estate is separate property or that consideration is from
                           separate property, there is presumption of separate property;
                           when offered by party to transaction, parole evidence not
                           admissible to rebut presumption - Messer v. Johnson, 422
                           S.W.2d 908 (Tex. 1968); Lindsey v. Clayman, 254 S.W.2d
                           277 (Tex. 1952); Hodge v. Ellis, 277 S.W.2d 900 (Tex. 1955);
                           Henry S. Miller Co. v. Evans, 452 S.W.2d 426 (Tex. 1970).
                           Spouse's mere presence when transaction takes place will
                           preclude parole evidence - Long v. Knox, 291 S.W.2d 292
                           (Tex. 1956).

Presumption
(Gift/Participation)       Although non-acquiring spouse is not party to transaction, gift
                           to acquiring spouse is presumed where non-acquiring spouse
                           participates and conveyance contains significant recital - Little
                           v. Linder, 61 S.W.2d 895 (Tex. App.--Tyler 1983, writ ref'd
                           n.r.e.).




Presumption


                                           200
(Gift to Spouse)        Conveyance from one spouse to other creates presumption
                        that grantor spouse intended gift to grantee spouse - Babb v.
                        McGee, 507 S.W.2d 821 (Tex. App.--Dallas 1974, ref'd n.r.e.).

Presumption
(Gift/Spouse/Income)    If one spouse makes gift of property to other, gift is presumed
                        to include all income and property which may arise from that
                        property - TEX. FAM. CODE §3.005 and TEX. CONST. art.
                        XVI, §15.

Presumption
(Constructive Fraud)    Presumption of constructive fraud arises when one spouse
                        disposes of other spouse's ½ interest in community property
                        without knowledge or consent of other spouse. The burden of
                        proof is then on the disposing spouse to prove the fairness of
                        the disposition. Jackson v. Smith, 703 S.W.2d 791 (Tex. Civ.
                        App.--Dallas 1985, no writ).

                        But see TEX. FAM. CODE §3.102, which states that a spouse
                        has sole management, control and disposition of community
                        property that he or she would have owned if single. It is not
                        necessary that one spouse approve or agree with other
                        spouse's disposition of his or her special community property -
                        Horlock v.Horlock, 533 S.W.2d 52 (Tex. Civ. App.--Houston
                        [14th Dist.] 1976, writ dism'd).
                        Relationship of trust and confidence exists between spouses
                        which requires spouse's disposition of his special community
                        property be fair to other spouse; managing spouse has burden
                        to show disposition of community property was fair - Massey
                        v. Massey, 807 S.W.2d 391 (Tex. App.--Houston [1st Dist.]
                        1991, denied).

Rebutting the
Community Presumption          To overcome the community presumption the party
                               asserting separate property ownership must clearly
                               trace the separate property - Cockerham v.
                               Cockerham, 527 S.W.2d 162 (Tex. 1975).



Reimbursement


                                       201
(General)           If one marital estate benefits or enhances another marital
                    estate, a prima facie claim for reimbursement is established.
                    Dakan v. Dakan, 83 S.W.2d 620 (Tex. Sup. 1935). A claim
                    for reimbursement is not a right, but is a claim for money in
                    equity. Burton v. Bell. 380 S.W. 2d 561 (Tex. 1964)

Reimbursement
(Improvements)      Claims for reimbursement for funds expended by an estate are
                    to be measured by enhanced value to the benefitted estate -
                    Anderson v. Gilliland, 684 S.W.2d 673 (Tex.1985).

Reimbursement
(Living Expenses)   Spouse is obligated to furnish support for community living and
                    if no community funds are available spouse should use
                    separate funds; separate funds spent for community living
                    should be deemed gift to community; allowing reimbursements
                    at later date would be inconsistent with fundamental concept
                    that (spouse) should provide for home and community - Norris
                    v. Vaughan, 260 S.W.2d 676 (Tex. 1953).

                    But see Hilton v. Hilton, 678 S.W.2d 645 (Tex. App.--Houston
                    [14th Dist.] 1984, no writ) in which court held that separate
                    funds spent to pay off loan to community, proceeds of which
                    were used for living expenses, are reimbursable.

Reimbursement       Factors to be considered in computing reimbursement to
                    community for increase in value of separate corporation:
                    increase in value attributable to community effort and (under
                    or adequate) compensation of community for that effort -
                    Trawick v. Trawick, 671 S.W.2d 105 (Tex. App.--El Paso
                    1984, no writ).

                    Difficult to use single formula that will balance equities in every
                    case, thus trial court must have broad discretion in determining
                    value of reimbursement claim; in determining amount of
                    reimbursement, courts may consider benefits received and
                    offset them against amount claimed or may not make any
                    award at all, depending on equities - Penick v. Penick, 783
                    S.W.2d 194 (Tex. 1988).

Reimbursement



                                    202
(Time, Toil, Talent) Community will be reimbursed for value of time, toil and talent of
                     either spouse to enhance separate property stock other than that
                     reasonably necessary to manage and preserve separate property,
                     less remuneration received for time, toil and talent - Jensen v.
                     Jensen, 665 S.W.2d 107 (Tex. 1984).

Reimbursement
(Cannot Trace)             Absent fraud, equity is well served by reimbursing separate
                           estate for initial investment that served as foundation for
                           building community estate, although tracing of separate
                           property was impossible - Horlock v. Horlock, 533 S.W.2d 52
                           (Tex. Civ. App.--Houston [14th Dist.] 1976, dism'd).

Rents from
Separate Property          Rents, revenues, and income from separate property are
                           community property - Arnold v. Leonard, 272 S.W. 799 (Tex.
                           1925); Coggin v. Coggin, 204 S.W.2d 47 (Tex. Civ. App.--
                           Amarillo 1947, no writ); Moss v. Gibb, 370 S.W.2d 452 (Tex.
                           1963); Uranga v. Uranga, 527 S.W.2d 761 (Tex. Civ. App.--
                           San Antonio 1974, writ dism'd); Dobrowolski v. Wyman, 397
                           S.W.2d 930 (Tex. Civ. App.--San Antonio 1966, no writ).

Retained Earnings                 Retained earnings of Sub S Corporation, stock of which
                                  is separate property, were not community property
                                  subject to division in divorce even though community
                                  paid taxes on retained earnings during marriage -
                                  Thomas v. Thomas, 738 S.W.2d 342 (Tex. App.--
                                  Houston [1st Dist.] 1987, denied).

Royalty Interests          Royalty interests reserved on or carved out of separate
                           property real estate or mineral interests, and royalties paid on
                           such interests for oil and gas production from separate
                           property retain separate property character; royalty represents
                           payment for extraction, production, and sale of minerals "in
                           place" which are considered an interest in real estate - Norris
                           v. Vaughan, 260 S.W.2d 676 (Tex. 1953).
Separate Property
(Defined)                  TEX. CONST. art. XVI,§15 and TEX. FAM. CODE §3.001.

Separate Property



                                           203
(Personalty)               Community property only property subject to
                           divestment upon divorce - Cameron v. Cameron, 641
                           S.W.2d 210 (Tex. 1982).

Separate Property
(Realty)            Community property only property subject to divestment upon
                    divorce - Eggemeyer v. Eggemeyer, 554 S.W.2d 137 (Tex.
                    1977).

Social Security
Benefits            Social security benefits are not community property for
                    purposes of division upon divorce - Richard v. Richard, 659
                    S.W.2d 746 (Tex. App.--Tyler 1983, no writ).

Stock Increase
in Value            Capital gains or increase in value of stock retains same
                    character as underlying property; increase in value does not
                    change underlying character of property - Johnson v. First
                    National Bank of Fort Worth, 306 S.W.2d 927 (Tex. Civ.
                    App.--Fort Worth, no writ); Dillingham v. Dillingham, 434
                    S.W.2d 459 (Tex. Civ. App.--Fort Worth 1968, writ dism'd);
                    Scofield v. Weiss, 131 F.2d 631 (5th Cir. 1942).

Tax Benefits        Community reimbursement not allowed where community
                    enjoyed benefits from tax deduction from separate property -
                    Shnider v. Shnider, 613 S.W.2d 8 (Tex. Civ. App.--Dallas
                    1981, no writ).

                    Reimbursement for debts, taxes, interest or insurance is
                    measured by amount paid less any benefit received - Penick
                    v. Penick, 783 S.W.2d 194 (Tex. 1988).



Tax Liability       Under circumstances presented, court's refusal to make
                    determination of parties' income tax liability was reversible
                    error - McCartney v. McCartney, 548 S.W.2d 435 (Tex. Civ.
                    App.--Houston [1st Dist.] 1977, no writ); Cole v. Cole, 532
                    S.W.2d 102 (Tex. Civ. App.--Dallas 1975, no writ).
Tax Consequences



                                   204
(Future)            Trial court erred in allowing Husband offset for hypothetical tax
                    consequences associated with property he received in divorce
                    - Harris v. Holland, 867 S.W.2d 86 (Tex. App.--Texarkana
                    1993, no writ).

                    Trial court erred in reducing face value of deferred
                    compensation plans by plans' hypothetical present tax liability
                    because trial court assumed present liquidation of plans and
                    used husband's current income tax rate; absent proof of
                    reasonable deduction for future tax liability, plans had prima
                    facie value equal to face value - Simpson v. Simpson, 679
                    S.W.2d 39 (Tex. App.--Dallas 1984, no writ).

Timber and
Mineral Interests   Spontaneously growing timber, minerals, soil, gravel, rock,
                    sand, etc. growing on or located on separate lands are also
                    separate property but may be impressed with community
                    character if community labor, talents, and funds (in excess of a
                    "reasonable" amount of time, talent, effort, control, and
                    management) are used to develop and "harvest" them (e.g.
                    brick made from clay from separate property mines and
                    sawed lumber from separate property timber interests) -
                    Norris v. Vaughan, 260 S.W.2d 676 (Tex. 1953).

Tracing             To discharge the burden of the community property
                    presumption, a spouse must trace and clearly identify property
                    claimed as separate property - Tarver v. Tarver, 394 S.W.2d
                    780 (Tex. 1965) and McKinley v. McKinley, 496 S.W.2d 540
                    (Tex. 1973). As long as separate property can be traced and
                    identified, it remains separate regardless of fact that it may
                    undergo mutations and changes - Welder v. Welder, 794
                    S.W.2d 420 (Tex. App.--Corpus Christi 1990, no writ).

Tracing
(Loan Proceeds)     Lender must have agreed to look solely to separate property
                    of borrower for repayment of loan for asset purchased with
                    loan proceeds to be separate property - Gleich v. Bongio, 99
                    S.W.2d 881 (Tex. Com. App. 1937, op. adopted); Broussard
                    v. Tian, 295 S.W.2d 405 (Tex. 1956); Mortenson v. Trammell,
                    604 S.W.2d 269 (Tex. Civ. App.--Corpus Christi 1980, ref'd
                    n.r.e.).



                                    205
                     Intention of one spouse alone to repay loan from separate
                     funds and hold property purchased with loan proceeds as
                     separate property has never been controlling - Welder v.
                     Welder, 794 S.W.2d 420 (Tex. App.--Corpus Christi 1990, no
                     writ).

Tracing
(Expert Testimony)   Parameters of expert's testimony regarding tracing of funds,
                     including characterization - Welder v. Welder, 794 S.W.2d
                     420 (Tex. App.--Corpus Christi 1990, no writ).

                     Exhibit providing daily tracing of deposits, expenditures and
                     purchases of assets based on review of ledgers, cash
                     disbursements and receipts journals, deposit slips etc.
                     admitted into evidence as summary by expert accountant;
                     predicate (demonstrating that underlying records were
                     voluminous, were made available to opposing party and were
                     admissible under Tex. Bus. Records Act) laid to bring
                     summary within Rule 1006, Tex. R. Civ. Evid., Welder v.
                     Welder, 794 S.W.2d 420 (Tex. App.--Corpus Christi 1990, no
                     writ).

                     Though characterizations made by experts are included within
                     summary, they do not make summary inadmissible; even if
                     summaries and records were inadmissible hearsay, expert's
                     testimony was still admissible under Rule 703, Tex. R. Civ.
                     Evid. which provides that facts or data upon which expert
                     relies need not be admissible if they are "of a type reasonably
                     relied upon by experts in the particular field in forming opinions
                     or inferences upon the subject" - Welder v. Welder, 794
                     S.W.2d 420 (Tex. App.--Corpus Christi 1990, no writ).

                     Expert should testify that records and summaries thereof are
                     of type generally relied upon by experts in the field - Welder v.
                     Welder, 794 S.W.2d 420 (Tex. App.--Corpus Christi 1990, no
                     writ).

Trust Income         Neither legislature nor spouses can expand constitutional
                     definition of separate property - Arnold v. Leonard, 272 S.W.
                     799 (Tex. 1925) - After Arnold it has been argued that income
                     from separate property trust must be community property.



                                     206
                         Undistributed trust income is community property from date of
                         beneficiary's marriage - Mercantile National Bank at Dallas v.
                         Wilson, 279 S.W.2d 650 (Tex. Civ. App.--Dallas 1955, ref'd
                         n.r.e.).

                         Undistributed trust income is not community property in case
                         where trust income was added to corpus and all distributions
                         were made according to trustee's "uncontrolled discretion" -
                         Currie v. Currie, 518 S.W.2d 386 (Tex. Civ. App.--San Antonio
                         1974, writ dism'd); andIn Re Marriage of Long, 542 S.W.2d 714
                         (Tex. Civ. App.--Texarkana 1976, no writ).

                         Whether trust income is separate or community is unsettled -
                         See Don Smith article "Characterization of Marital Property,"
                         1991 Family Law Advanced Course, pp. 142 et seq. for lengthy
                         discussion.

Waiving "the Rule"       Expert witnesses are generally exempt from "the Rule" (Rule
                         614, Tex. R. Civ. Evid.) - Triton Oil and Gas Corp. v. Moran
                         Drilling Co., 509 S.W.2d 678, Tex. Civ. App.--Fort Worth 1974,
                         ref'd n.r.e.); Elbar, Inc. v. Claussen, 774 S.W.2d 45 (Tex. App.--
                         Dallas 1989, writ dism'd).

Workers’ Compensation
Benefits              Compensation for disability for a period after divorce is not
                      community property even though the injury occurred during the
                      marriage. Hicks v. Hicks, 546 S.W.2d 71 (Tex. Civ. App.--
                      Dallas 1977, no writ).

Working Interests        Income from working interest properties is generally determined
                         according to rules of time and circumstances of acquisition in
                         accordance with usual characterization rules; there is some
                         authority in Norris v. Vaughan, supra, that nonoperating working
                         interest is characterized as described above and that an
                         operating working interest is a business interest whose net profit
                         is community income; See also Tarver v. Tarver, 394 S.W.2d
                         780 (Tex. 1965).

Wrongful Death           Damages from wrongful death claim held to be separate
                         property - Johnson v. Holly Farms of Texas, Inc., 731 S.W.2d
                         641 (Tex. App.--Amarillo, 1987, no writ).


                                         207
     B.     LEGAL ISSUES: DIVISION FACTORS

             Quick Reference Guide on Legal Issues - Division Factors

Issue:                               Case & Point of Law Notes:

Fault of Parties               Murff v. Murff, 615 S.W.2d 696 (Tex. 1981)

                               Young v. Young, 609 S.W.2d 758 (Tex. 1980)

                               Smith v. Smith, 836 S.W.2d 688 (Tex. App. - Houston
                               [1st Dist.] 1992, no writ)

                               Massey v. Massey, 807 S.W.2d 391 (Tex. App. -
                               Houston [1st Dist.] 1991, denied)

                               Velasco v. Haberman, 700 S.W.2d 729 (Tex. App. - San
                               Antonio 1985, no writ)

                               Hausler v. Hausler, 636 S.W.2d 874 (Tex. App. - Waco
                               1982, no writ)

                               Hourigan v. Hourigan, 635 S.W.2d 556 (Tex. App. - El
                               Paso, 1981, no writ)

                               Stephens v. Stephens, 625 S.W.2d 428 (Tex. Civ. App. -
                               Fort Worth 1981, no writ)

                               Bray v. Bray, 618 S.W.2d 93 (Tex. Civ. App. - Corpus
                               Christi 1981, dism’d)

                               Hooper v. Hooper, 403 S.W.2d 215 (Tex. Civ. App. -
                               Amarillo 1996, dism’d)

Needs of Children of the
Marriage (including adults)    Young v. Young, 609 S.W.2d 758 (Tex. 1980)

                               Eggemeyer v. Eggemeyer, 554 S.W.2d 137         (Tex.
                               1977)

                               Rice v. Rice, 21 Tex. 58 (1858)

                                       208
                         Fitts v. Fitts, 14 Tex. 443 (1855)

                         WK v. MHK, 719 S.W.2d 232 (Tex. App. -Houston [14th
                         Dist.] 1986, ref’d n.r.e.)

                         Hourigan v. Hourigan, 635 S.W.2d 556 (Tex. App - El
                         Paso, 1981, no writ)

                         Treadway v. Treadway, 576 S.W.2d 121 (Tex. Civ. App. -
                         Texarkana 1978, no writ)

                         In re Long, 542 S.W.2d 712 (Tex. Civ. App. - Texarkana
                         1976, no writ)

                         Boriack v. Boriack, 541 S.W.2d 237 (Tex. Civ. App. -
                         Corpus Christi 1976, dism’d)

                         McKnight v. McKnight, 535 S.W.2d 658 (Tex. Civ. App. -
                         El Paso, 1976, reversed on other grounds 543 S.W.2d
                         863 [Tex. 1976])

                         Horlock v. Horlock, 533 S.W.2d 52 (Tex. Civ. App. -
                         Houston [14th Dist.] 1975, dism’d)

                         Liddell v. Liddell, 29 S.W.2d 868 (Tex. Civ. App. - San
                         Antonio 1930, no writ)


Spouse to Whom Custody
is Granted               Boriack v. Boriack, 541 S.W.2d 237 (Tex. Civ. App. -
                         Corpus Christi 1976, dism’d)

                         Thomas v. Thomas, 525 S.W.2d 200 (Tex. Civ. App. -
                         Houston [1st Dist.] 1975, no writ

Amount of Child
Support Paid             Abrams v. Abrams, 713 S.W.2d 195 (Tex. App. -Corpus
                         Christi 1986, no writ)




                                 209
Need for Future Support         Smith v. Smith , 836 S.W.2d 688 (Tex. App. - Houston
                                [1st Dist.] 1992, no writ)

                                Roever v. Roever, 824 S.W.2d 674 (Tex. App. - Dallas
                                1992, no writ)

                                Goren v. Goren, 531 S.W.2d 897 (Tex. Civ. App. -
                                Houston [1st Dist.] 1975, dism’d)

                                Pickett v. Pickett, 401 S.W.2d 846 (Tex. Civ. App. - Tyler
                                1966, no writ)

Needs of Spouses in
Future and Disparity
of Earning Power                Murff v. Murff, 615 S.W.2d 696 (Tex. 1981)

                                Nail v. Nail, 486 S.W.2d 761 (Tex. 1972)

                                Smith v. Smith, 836 S.W.2d 688 (Tex. App. - Houston [1 st
                                Dist.] 1992, no writ)

                                Roever v. Roever, 824 S.W.2d 674 (Tex. App. - Dallas
                                1992, no writ)

                                Magill v. Magill, 816 S.W.2d 530 (Tex. App. -
                          Houston [1st Dist.] 1991, denied)

                                Hahne v. Hahne, 663 S.W.2d 77 (Tex. App. -
                          Houston [14th Dist.] 1984, no writ)

                                 Frausto v. Frausto, 611 S.W.2d 656 (Tex. Civ.
                          App. - San Antonio, 1981, dism’d)

                                Wisdom v. Wisdom, 575 S.W.2d 124 (Tex. Civ. App. -
                                Fort Worth 1979, dism’d)

                                 Bokhoven v. Bokhoven, 559 S.W.2d 142 (Tex.
                          Civ. App. - Tyler 1977, no writ)

                                Cray v. Cray, 550 S.W.2d 730 (Tex. Civ. App. -
                                Houston [1st Dist.] 1977, no writ)



                                         210
                               Smallwood v. Smallwood, 548 S.W.2d 796          (Tex.
                               Civ. App. - Waco 1977, no writ)

                               Roberts v. Roberts, 535 S.W.2d 373 (Tex. Civ. App. -
                               Tyler 1976, no writ)

                               Cravens v. Cravens, 533 S.W.2d 372 (Tex. Civ. App. - El
                               Paso 1975, no writ)

Business Opportunities         Murff v. Murff, 615 S.W.2d 696 (Tex. 1981)

                                Roever v. Roever, 824 S.W.2d 674 (Tex. App.
                         - Dallas 1992, no writ)

                               In Re Marriage of McCurdy, 489 S.W.2d 712 (Tex. Civ.
                               App. - Amarillo 1973, dism’d)

Spouses Capacities
and Abilities                         Murff v. Murff, 615 S.W.2d 696 (Tex. 1981)

                               Magill v. Magill, 816 S.W.2d 530 (Tex. App. -
                         Houston [1st Dist.] 1991, denied)




Relative Financial
Condition and Obligations      Murff v. Murff, 615 S.W.2d 696 (Tex. 1981)

                               Magill v. Magill, 816 S.W.2d 530 (Tex. App. -
                         Houston [1st Dist.] 1991, denied)

Education and Future
Employability                  Murff v. Murff, 615 S.W.2d 696 (Tex. 1981)

                               Smith v. Smith, 836 S.W.2d 688 (Tex. App. -
                         Houston [1st Dist.] 1992, no writ)

                               Wisdom v. Wisdom, 575 S.W.2d 124 (Tex. Civ. App. -
                               Fort Worth 1979, dism’d)


                                       211
                                 McCartney v. McCartney, 548 S.W.2d 435 (Tex. Civ.
                                 App. - Houston [1st Dist.] 1976, no writ)

                                 Cooper v. Cooper, 513 S.W.2d 229 (Tex. Civ. App. -
                                 Houston [1st Dist.] 1974, no writ)
Ages of Spouses                  Murff v. Murff, 615 S.W.2d 696 (Tex. 1981)

                              Smith v. Smith, 836 S.W.2d 688 (Tex. App. -
                        Houston [1st Dist.] 1992, no writ)

                                 Roberts v. Roberts, 535 S.W.2d 373 (Tex. Civ. App. -
                                 Tyler 1976, no writ)

Health of Spouses                      Murff v. Murff, 615 S.W.2d 696 (Tex. 1981)

                              Smith v. Smith, 836 S.W.2d 688 (Tex. App. -
                        Houston [1st Dist.] 1992, no writ)

                              Magill v. Magill, 816 S.W.2d 530 (Tex. App. -
                        Houston [1st Dist.] 1991, denied)

                                 Hahne v. Hahne, 663 S.W.2d 77 (Tex. App. - Houston
                                 [14th Dist,] 1984, no writ)

                                 Cravens v. Cravens, 533 S.W.2d 372 (Tex. Civ. App. - El
                                 Paso 1975, no writ)

Benefits Innocent
Spouses Would Receive
from Continuation of
Marriage                         Murff v. Murff, 615 S.W.2d 696 (Tex. 1981)

                                 Hedtke v. Hedtke, 112 Tex. 404, 248 S.W. 21
                        (1921)

                                 Smith v. Smith, 836 S.W.2d 688 (Tex. App. - Houston
                                 [1st Dist.] 1992, no writ)

                                 Hopkins v. Hopkins, 540 S.W.2d 783 (Tex. Civ. App. -
                                 Corpus Christi 1976, no writ)




                                         212
                             Hooper v. Hooper, 403 S.W.2d 215 (Tex. Civ. App. -
                             Amarillo 1966, dism’d)


Wasting of Community
Assets                       Mazique v. Mazique, 742 S.W.2d 805 (Tex. App. -
                             Houston [1st Dist.] 1987, no writ)

                             Morrison v. Morrison, 713 S.W.2d 377 (Tex. App -Dallas
                             1986, dism’d)

                             Rafidi v. Rafidi, 718 S.W.2d 43 (Tex. App. - Dallas, 1986,
                             no writ)

                             Simpson v. Simpson, 679 S.W.2d 39 (Tex. App. - Dallas
                             1984, no writ)

                             Andrews v. Andrews, 677 S.W.2d 171 (Tex. App. - Austin
                             1984, no writ)

                             Leal v. Leal, 628 S.W.2d 168 (Tex. App. - San Antonio
                             1982, no writ)

                             Arrington v. Arrington, 613 S.W.2d 565 (Tex. Civ. App. -
                             Fort Worth 1981, no writ)

                              Grothe v. Grothe, 590 S.W.2d 238 (Tex. Civ.
                       App. - Austin 1979, no writ)

                              Reaney v. Reaney, 505 S.W.2d 338 (Tex. Civ.
                       App. - Dallas 1974, no writ)

                              Hartman v. Crain, 398 S.W.2d 387 (Tex. Civ.
                       App. - Houston 1966, no writ)

                              Swisher v. Swisher, 190 S.W.2d 382 (Tex. Civ.
                       App. - Galveston 1945, no writ)

Credit for Temporary
Alimony Paid                 Schecter v. Schecter, 579 S.W.2d 582 (Tex.        C i v .
                             App. - Dallas 1978, no writ)


                                     213
                           Edsall v. Edsall, 240 S.W.2d 424 (Tex. Civ.     App. -
                           Eastland 1951, no writ)

Size of the Estate         Padon v. Padon, 670 S.W.2d 354 (Tex. App. - S a n
                           Antonio 1984, no writ)

                           Madrid v. Madrid, 643 S.W.2d 186 (Tex. App.-
                     El Paso 1982, no writ)
                           Janik v. Janik, 634 S.W.2d 323 (Tex. App. -
                     Houston [14th Dist.] 1982, no writ)

                           Currie v. Currie, 518 S.W.2d 386 (Tex. Civ.     App. -
                           San Antonio 1974, dism’d)

                            Wilkerson v. Wilkerson, 515 S.W.2d 52 (Tex.
                     Civ. App. - Tyler 1974, no writ)

Size of Spouses
Separate Estates           Murff v. Murff, 615 S.W.2d 696 (Tex. 1981)

                           Smith v. Smith, 836 S.W.2d 688 (Tex. App. -
                     Houston [1st Dist.] 1992, no writ)

                           Beaupre v. Beaupre, 700 S.W.2d 353 (Tex. App. - Fort
                           Worth 1985, dism’d)




Community Indebtedness
and Liabilities            McKnight v. McKnight, 535 S.W.2d 658 (Tex. Civ.
                           App. - El Paso, 1976, reversed on other grounds 543
                           S.W.2d 863 (Tex. 1976)

                            Benedict v. Benedict, 542 S.W.2d 692 (Tex.
                     Civ. App. - Fort Worth 1976, dism’d)

                            Horlock v. Horlock, 533 S.W.2d 52 (Tex. Civ.
                     App. - Houston [14th Dist.] 1975, dism’d

                           Cole v. Cole, 532 S.W.2d 102 (Tex. Civ. App.
                           - Dallas 1975, no writ)

                                    214
                                  Gaulding v. Gaulding, 256 S.W.2d 684 (Tex.
                           Civ. App. - Dallas 1953, no writ)

Tax Consequences                 Able v. Able, 725 S.W.2d 778 (Tex. App. - Houston [14th
                                 Dist.] 1987, no writ)

                                  Robbins v. Robbins, 601 S.W.2d 90 (Tex. Civ.
                           App. - Houston [1st Dist.] 1980, no writ)

                                 McCartney v. McCartney, 548 S.W.2d 435 (Tex.
                                 Civ. App. - Houston [1st Dist.] 1976, no writ)

                                 Benedict v. Benedict, 542 S.W.2d 692 (Tex. Civ.
                                 App. - Fort Worth 1976, dism’d)

                                  Cole v. Cole, 532 S.W.2d 102 (Tex. Civ. App.
                           - Dallas 1975, no writ)

                                 Gaulding v. Gaulding, 256 S.W.2d 684 (Tex. Civ.
                                 App. - Dallas 1953, no writ)

Community Funds Used
to Purchase Out-of-State
Property                         Hailey v. Hailey, 331 S.W.2d 299 (1960)

                                 Ismail v. Ismail, 702 S.W.2d 216 (Tex. App. -
                           Houston [1st Dist.] 1985 ref’d n.r.e.)

                                 Risch v. Risch, 395 S.W.2d 709 (Tex. Civ. App. -
                                 Houston 1965, dism’d, cert. denied 386 U.S. 10 [1965]

                                 Turner v. Turner, 289 S.W.2d 836 (Tex. Civ. App. -
                                 Dallas 1956, no writ)

                                  Walker v. Walker, 231 S.W.2d 905 (Tex. Civ.
                           App. - Texarkana 1950, no writ)

Gifts to Spouse During
Marriage                         Dorfman v. Dorfman, 457 S.W.2d 417 (Tex. Civ. App. -
                                 Texarkana 1970, no writ)




                                          215
Excessive Gifts to Children      In re Marriage of McCurdy, 489 S.W.2d 712
                          (Tex. Civ. App. - Amarillo 1973, dism’d)

Expected Inheritance            Whittenberg v. Whittenberg, 523 S.W.2d 797       (Tex.
                                Civ. App. - Austin 1975, no writ)

Attorneys’ Fees                 Carle v. Carle, 234 S.W.2d 1002 (1950)

                                Roever v. Roever, 824 S.W.2d 674 (Tex. App.
                         - Dallas 1992, no writ)

                                Rodriguez v. Rodriguez, 616 S.W.2d 383 (Tex. Civ. App.
                                - Houston [1st Dist.] 1981, no writ)

                                Haggard v. Haggard, 550 S.W.2d 374 (Tex. Civ. App. -
                                Dallas 1977, no writ)

                                Fortenberry v. Fortenberry, 545 S.W.2d 40 (Tex. Civ.
                                App. - Waco 1976, no writ)

                                Thomas v. Thomas, 525 S.W.2d 200 (Tex. Civ. App. -
                                Houston [1st Dist.] 1975, no writ)




Reimbursement Between
Marital Estates and
Increase in Value of
Separate Property by
Community Effort                Jensen v. Jensen, 665 S.W.2d 107 (Tex. 1983)
                                Vallone v. Vallone, 644 S.W.2d 455 (Tex. 1982)

                                Torregross v. Szelc, 603 S.W.2d 803 (Tex. 1980)

                                Morrison v. Morrison, 713 S.W.2d 377 (Tex. App. -
                                Dallas 1986, dism’d)




                                        216
                                  Jones v. Jones, 699 S.W.2d 583 (Tex. App. -
                            Texarkana 1985, no writ)

                                  Duke v. Duke, 605 S.W.2d 408 (Tex. Civ. App. -
                                  El Paso 1980, dism’d)

                                  Hale v. Hale, 557 S.W.2d 614 (Tex. Civ. App. -
                            Texarkana 1977, no writ)

Nature of Property                       Murff v. Murff, 615 S.W.2d 696 (Tex. 1981)

                                  Nail v. Nail, 486 S.W.2d 761 (Tex. 1972)

                                  Smith v. Smith, 836 S.W.2d 688 (Tex. App. -
                            Houston [1st Dist.] 1992, no writ)
                                  Magill v. Magill, 816 S.W.2d 530 (Tex. App. -
                            Houston [1st Dist.] 1991, denied)

                                  Eikenhorst v. Eikenhorst, 746 S.W.2d 882 (Tex. App. -
                                  Houston [1st Dist.] 1988, no writ)

                                  Jones v. Jones, 699 S.W.2d 583 (Tex. App. -
                            Texarkana 1985, no writ)

                                  McKnight v. McKnight, 535 S.W.2d 658 (Tex. Civ.App. -
                                  El Paso, 1976, reversed on other grounds 543 S.W.2d
                                  863 [Tex. 1976])

                                  Thomas v. Thomas, 535 S.W.2d 200 (Tex. Civ.
                                  App. - Houston [1st Dist.] 1975, no writ)

                                  Waggener v. Waggener, 460 S.W.2d 251
                                  (Tex. Civ. App. - Dallas 1970, no writ)

Alcoholism                        Wisdom v. Wisdom, 575 S.W.2d 124 (Tex.           C i v .
                                  App. - Fort Worth 1978, dism’d)

      C.        ENFORCING PROPERTY DIVISION

           1.        LAW

                a.    Statutes [TFC - Texas Family Code]

                                          217
TFC § 9.001 Provides for enforcement of property division by filing suit to enforce
            governed by TRCP, requiring notice by citation.

TFC § 9.002 The court rendering divorce/annulment decree retains jurisdiction to
            enforce property division.

TFC § 9.003 For property in existence at time of decree, subsection (a) sets forth
            filing deadline of two years from date of decree or date of finality after
            appeal, whichever occurs later. For future property not in existence at
            time of decree, subsection (b) sets forth filing deadline of two years from
            date property right matures or accrues or the decree becomes final,
            whichever is later.

TFC § 9.004 Does not apply to existing property not divided in divorce.

TFC § 9.005 Party may not demand a jury trial if enforcement procedures of
            Subchapter 9 are invoked.

TFC § 9.006 The Court has power to make further orders to enforce the decree to
            assist in implementation or clarification of the decree, without affecting
            substantive division of property.

TFC § 9.007 The Court cannot modify the division of property, and any such order
            modifying division is unenforceable, and the court’s power to implement
            and/or clarify is abated during appeal.

TFC § 9.008 Party may request and court may order clarification order before
            contempt is heard, with contempt, or after contempt is denied. Such
            clarification order may set forth specific terms to enforce compliance
            with original property division, but may not give retroactive relief, and
            shall provide for reasonable time for compliance before future
            enforcement.

TFC § 9.009 For enforcement purposes, the Court may make orders for delivery of
            property (including cash or its equivalent), regardless of special value.

TFC § 9.010 If delivery of property is no longer an adequate remedy, court may
            render money judgment for damages for failure to comply. If party did
            not receive cash payments as awarded, court may render judgment for
            amount of unpaid payments. Reduction to money judgment is in
            addition to other available legal remedies and may be enforced by any
            legal means available.

                                     218
TFC § 9.011 The court may enforce award of installment or lump sum payments due
            to maturation of vested or non-vested future right (pension and annuity
            benefits). Receipt of the same by non-owning party creates fiduciary
            duty and constructive trust.

TFC § 9.012 Order requiring delivery of specific property or a right to future property
            is enforceable by contempt, but order for installment or lump sum
            payments is in the nature of a debt, and therefore is not enforceable by
            contempt, unless the sum of money existed at the time of the decree or
            is a mature right to future payments as provided in TFC § 9.011.

TFC § 9.013 Court may award costs.

TFC § 9.014 Court may award reasonable attorney’s fees.

b.     Cases

       i.      McLaurin v. McLaurin, 968 S.W.2d 947 (Tex. App. – Texarkana 1998).
               An order which altered the agreed mode of payment without changing
               the liabilities of the parties (instead clarifying the means of payment to
               extinguish those liabilities) was consistent with the prior judgment and
               “merely prescribed the method of execution.”

       ii.     Pate v. Pate, 874 S.W.2d 186 (Tex. App. – Houston [14th Dist.] 1994,
               writ denied). Trial court improperly changed final decree to alter the
               division of retirement benefits.

       iii.    Whittingham v. Whittingham, 853 S.W.2d 193 (Tex. App. – Beaumont
               1993, no writ). Trial court had duty to require ex-husband to sign note.

       iv.     Pierce v. Pierce, 850 S.W.2d 675 (Tex. App. – El Paso 1993, writ
               denied). When divorce decree is unambiguous, trial court cannot alter
               or modify original property division.

       v.      Sharman v. Schuble, 846 S.W.2d 574 (Tex. App. – Houston [14th Dist.]
               1993, no writ). House ordered sold and proceeds divided 50-50; trial
               court cannot amend that provision to redress noncompliance with other
               aspects of final order.

       vi.     Elliott v. Elliott, 797 S.W.2d 388 (Tex. App. – Austin 1990, no writ). Trial
               court could not adjust division of retirement pay to deduct disability
               benefits.


                                       219
vii.    Haworth v. Haworth, 795 S.W.2d 296 (Tex. App. – Houston [14th Dist.]
        1990, no writ). Trial court acted improperly in attempting to modify
        division of pension benefits to give ex-spouse a share of post-divorce
        adjustments.

viii.   Reiter v. Reiter, 788 S.W.2d 201 (Tex. App. – Fort Worth 1990, writ
        denied). Order requiring ex-spouse to sign note and impressing lien on
        real estate was permissible clarification of earlier order.

ix.     Spradley v. Hutchison, 787 S.W.2d 214 (Tex. App. – Fort Worth 1990,
        writ denied). Trial court’s allowance of offset on monetary judgment not
        an impermissible modification of original order.

x.      Cain v. Cain, 746 S.W.2d. 861 (Tex. App. – El Paso 1988, writ denied).
        Turnover order is not an impermissible modification of decree.

xi.     Able v. Able, 725 S.W.2d 778 (Tex. App. – Houston [14th Dist.] 1987,
        writ ref’d n.r.e.). Court acted properly in requiring husband to reimburse
        wife for taxes in year of divorce.

xii.    McDowell v. McDowell, 705 S.W.2d 345 (Tex. App. – Dallas 1986, no
        writ). Appointment of receiver to sell property impermissibly modified
        terms of decree.

xiii.   Griffith v. Griffith, 698 S.W.2d 729 (Tex. App. – El Paso 1985, no writ).
        Trial court acted properly in requiring ex-husband to designate ex-wife
        for military survivors benefit plan.

xiv.    Lundy v. Lundy, 973 S.W.2d 687 (Tex. App. – Tyler 1998). Alleged
        clarifying order in fact was impermissible substantive change of
        unambiguous child support order.

xv.     Pearcy v. Pearcy, 884 S.W.2d 512 (Tex. App. – San Antonio 1994, no
        writ). Clarification order proper where original property division is
        ambiguous or not specific enough to enforce.

xvi.    Traylor v. Traylor, 789 S.W.2d 701 (Tex. App. – Texarkana 1990, no
        writ). This section does not authorize clarification of provisions in
        settlement agreement which the court could not have originally rendered.

xvii.   Tyler v. Tyler, 742 S.W.2d 740 (Tex. App. – Houston [1st Dist.] 1987,
        writ denied). Trial court’s attempt to make husband reimburse wife for


                               220
         payments following divorce was an impermissible modification of final
         property division.

xviii.   Mullins v. Mullins, 785 S.W.2d 5 (Tex. App. – Fort Worth 1990, no writ).
         $3,500.00 awarded as attorney’s fees for enforcement of court order.
xix.     McEntire v. McEntire, 706 S.W.2d 347 (Tex. App. – San Antonio 1986,
         writ dism’d w.o.j.). Attorney’s fees awarded to enforce and clarify
         agreed decree of divorce.




                                221