New Laws in Texas Address Financial Matters

On June 17, Gov. Rick Perry, R-TX, signed into law two bills of keen interest to family lawyers in that state. They address spousal maintenance and fraud on the community estate.

Spousal Maintenance

In some limited situations, Texas law permits a court to order post-divorce payments, known as spousal maintenance, from one spouse to the other. H.B. 901 significantly has modified Chapter 8 of the Texas Family Code, which is the section that authorizes spousal maintenance.

Many of the changes are essentially refinements of terminology, such as further emphasis that spousal maintenance is only authorized for individuals who lack sufficient property to provide their own minimum reasonable needs. The new changes also clarify language providing that maintenance is authorized only in marriages of at least a 10-year duration, in instances of violence within the family unit, and/or when the spouse is incapable of providing for the spouse's minimum reasonable needs because of an incapacitating physical or mental disability.

Further, the new Family Code provisions clarify the rebuttable presumption that spousal maintenance is not warranted unless the spouse seeking support has exercised diligence in earning income and developing skills necessary to provide for the spouse's minimum reasonable needs.

Substantive Alterations

The new changes also include significant substantive alterations. Previously, the general rule was that three years was the maximum duration for spousal maintenance. However, the new law provides a stair-stepped increase in the maximum duration, which is related to the marriage duration. For example, a 20-year marriage now has a seven-year spousal maintenance maximum duration, and a 30-year marriage now is capped at a 10-year spousal maintenance maximum.

Additionally, the old rule was that the maximum monthly spousal maintenance amount was the lesser of $2,500 or 20% of the paying spouse's average monthly gross income. That cap has now been increased to the lesser of $5,000 or 20% of the paying spouse's average monthly gross income.

The new Texas Family Code changes include a self-contained section that identifies what is included in and excluded from gross income. Additionally, a new section addresses the situation of overpayment of spousal maintenance and authorizes the filing of a suit to recover such overpayments.

Fraud on the Community Estate

In 1998's Schlueter, et al. v. Schlueter, the Texas Supreme Court addressed claims of fraud, breach of fiduciary duty and conspiracy alleged by one spouse against the other in a divorce suit. Schlueter holds that the trial court sufficiently can remedy most spousal wrongs through its broad discretion in making a just and right division of the marital estate. However, a number of residual issues remained after Schlueter, which the Legislature now has addressed in H.B. 908.

New Texas Family Code provision ' 7.009 addresses situations where the trier of fact determines that a spouse has committed actual or constructive fraud on the community estate. In such instance, the trial court is required to calculate the value by which the community estate was depleted by fraud and then to calculate a “reconstituted estate,” which is defined as the total value of the estate that would have existed if the actual or constructive fraud on the community had not occurred. The trial court then has the discretion to divide the full reconstituted estate in a manner the court deems just and right. The new law specifically authorizes the court, in accomplishing the just and right division, to award the wronged spouse an appropriate share of the remaining community estate, a money judgment or both.

These changes certainly will alter the landscape for the family law practitioner and for families across Texas.

Jonathan J. Bates is a partner in Kinser & Bates in Dallas, TX, and is board certified in family law by the Texas Board of Legal Specialization. He serves on the board of directors of the Texas Academy of Family Law Specialists, and he is a fellow with the American Academy of Matrimonial Lawyers. This article also appeared in The Texas Lawyer, an ALM sister publication of this newsletter.

On June 17, Gov. Rick Perry, R-TX, signed into law two bills of keen interest to family lawyers in that state. They address spousal maintenance and fraud on the community estate.

Spousal Maintenance

In some limited situations, Texas law permits a court to order post-divorce payments, known as spousal maintenance, from one spouse to the other. H.B. 901 significantly has modified Chapter 8 of the Texas Family Code, which is the section that authorizes spousal maintenance.

Many of the changes are essentially refinements of terminology, such as further emphasis that spousal maintenance is only authorized for individuals who lack sufficient property to provide their own minimum reasonable needs. The new changes also clarify language providing that maintenance is authorized only in marriages of at least a 10-year duration, in instances of violence within the family unit, and/or when the spouse is incapable of providing for the spouse's minimum reasonable needs because of an incapacitating physical or mental disability.

Further, the new Family Code provisions clarify the rebuttable presumption that spousal maintenance is not warranted unless the spouse seeking support has exercised diligence in earning income and developing skills necessary to provide for the spouse's minimum reasonable needs.

Substantive Alterations

The new changes also include significant substantive alterations. Previously, the general rule was that three years was the maximum duration for spousal maintenance. However, the new law provides a stair-stepped increase in the maximum duration, which is related to the marriage duration. For example, a 20-year marriage now has a seven-year spousal maintenance maximum duration, and a 30-year marriage now is capped at a 10-year spousal maintenance maximum.

Additionally, the old rule was that the maximum monthly spousal maintenance amount was the lesser of $2,500 or 20% of the paying spouse's average monthly gross income. That cap has now been increased to the lesser of $5,000 or 20% of the paying spouse's average monthly gross income.

The new Texas Family Code changes include a self-contained section that identifies what is included in and excluded from gross income. Additionally, a new section addresses the situation of overpayment of spousal maintenance and authorizes the filing of a suit to recover such overpayments.

Fraud on the Community Estate

In 1998's Schlueter, et al. v. Schlueter, the Texas Supreme Court addressed claims of fraud, breach of fiduciary duty and conspiracy alleged by one spouse against the other in a divorce suit. Schlueter holds that the trial court sufficiently can remedy most spousal wrongs through its broad discretion in making a just and right division of the marital estate. However, a number of residual issues remained after Schlueter, which the Legislature now has addressed in H.B. 908.

New Texas Family Code provision ' 7.009 addresses situations where the trier of fact determines that a spouse has committed actual or constructive fraud on the community estate. In such instance, the trial court is required to calculate the value by which the community estate was depleted by fraud and then to calculate a “reconstituted estate,” which is defined as the total value of the estate that would have existed if the actual or constructive fraud on the community had not occurred. The trial court then has the discretion to divide the full reconstituted estate in a manner the court deems just and right. The new law specifically authorizes the court, in accomplishing the just and right division, to award the wronged spouse an appropriate share of the remaining community estate, a money judgment or both.

These changes certainly will alter the landscape for the family law practitioner and for families across Texas.

Jonathan J. Bates is a partner in Kinser & Bates in Dallas, TX, and is board certified in family law by the Texas Board of Legal Specialization. He serves on the board of directors of the Texas Academy of Family Law Specialists, and he is a fellow with the American Academy of Matrimonial Lawyers. This article also appeared in The Texas Lawyer, an ALM sister publication of this newsletter.