Wife’s Separate Property Tracing Evidence was Insufficient

In this divorce case, Wife claimed that 70.88% of the purchase price of a home she bought was paid from separate property funds she obtained prior to marriage. The Court of Appeals ruled that her proof of her pre-marriage funds was insufficient to establish any separate property interest in the house.

 

A separate property claim must be supported by clear and convincing evidence, which requires documents tracing the separate nature of the money used to buy the house.  Wife presented bank account statements showing the funds she claimed she owned prior to marriage that were used to buy the house.

 

But her separate property, pre-marriage funds were in an account with community funds earned during marriage. When separate and community property funds have been commingled, they are all presumed to be community property if the funds cannot be identified and resegregated. Wife failed to present statements for every month from the date of marriage to the date of the house purchase. She presented statements showing her pre-marriage funds 4 months before marriage, but not at the time of marriage. And she presented statements showing some—but not all—of the funds in her account during marriage was her separate property. The “large gaps” in the monthly statements she presented (57 monthly statements were missing) made her evidence overall less than clear and convincing. And, she was unable to convincingly explain where $65,000 of the total ~$212,647 claimed separate funds originated.

 

Generally, testimony alone that property was purchased with separate property funds, without documents establishing a clear and convincing tracing of the funds from their inception to the relevant purchase, is on its own insufficient to rebut the community-property presumption.  Therefore, the court of appeals resolved the doubt in favor of the community estate. The case was remanded to the trial court to assess its “just and right” division of the marital estate as altered by the appeals court.