O’Connor v. O’Connor addresses tracing of property in a divorce proceeding and an evidentiary issue, but there are lessons for parties to mineral deeds as well. First, …
A few Texas marital property rules
- Property acquired by either spouse during the marriage is community property unless it is separate property.
- Property owned or claimed by a spouse during or on dissolution of the marriage is presumed to be community property.
- The presumption can be defeated by “clear and convincing evidence” of the separate nature of the property’s ownership.
- Separate property includes property acquired by the spouse during marriage by gift, devise or descent.
- Texas law presumes that a parent-to-child transfer of property is a gift.
The lesson
Your mineral deed (or any written transaction for that matter) could be in jeopardy if the recitations in the document do not match the substance of the actual transaction and the intent of the parties. The deed in question used words of conveyance for consideration, not of a gift. Then husband Mike could not trace the funds for the purchase to his separate property. Did the scrivener pull out a document from the form file without thinking through the transaction? Did the parties give the scrivener accurate instructions? Did somebody grab a form off the internet? could not produce sufficient records to support his claim that he used separate property. Maybe the marital relationship was suffused with such bliss at the time of the transaction that nobody (talking to you, married persons who stand to inherit valuable stuff) thought a paper trail mattered.
The facts
Mike and Shannon were married in 1995. Mike’s mother died in 2009 and Dad became trustee of a trust in her name that held mineral interests in McMullen County. By Mineral Deed effective in 2009 Dad transferred minerals to Mike and Mike’s five siblings. The deed recited that “for accurate consideration paid and received”, Dad granted, conveyed, etc.
Trial
The trial court concluded the deed was not a gift. It had no gift language; it recited that the minerals were sold for an unspecified amount of adequate consideration that was tendered at the time of the transaction.
If Mike could not trace the transaction to his separate property then the minerals and proceeds therefrom would be community property. Mike’s tracing failed. He could not establish by clear and convincing evidence that he used separate property to acquire the minerals. Clear and convincing evidence is a measure or degree of proof that will produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established. That burden is high.
Mike alleged that the trial court failed to admit evidence showing his father intended to transfer the mineral interests as Mike’s separate property when he directed conveyance of the interests from the trust to Mike and gave Mike $12,000 with which to purchase the interests.
The rejected exhibit was fully redacted in the reporter’s record. It did not indicate the substance of its contents or what Dad’s intent was. The appellate court was unable to determine the harm resulting from the trial court’s refusal to admit the exhibit because there is no record of what the exhibit would have shown. The alleged error was not preserved.
Tracing methods
The court discussed the various tracing methods and explained why one applied and the others didn’t:
- the community-out-method (applied by the trial court):
- the clearinghouse method,
- the identical-sum-inference method,
- the minimum-sum-balance method.
Mixing up your musical interludes:
Diana Krall
Elaine Elias
Eric Clapton
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