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Sharma v. Routh - 302 S.W.3d 355 (Tex. App. 2009)

Rule:

In a divorce decree, a trial court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage. Tex. Fam. Code Ann. § 7.001 (2006). To convince an appellate court to disturb the trial court's division of property, an appellant must show the trial court clearly abused its discretion by a division or an order that is manifestly unjust and unfair. Under this standard, the legal and factual sufficiency of the evidence are not independent grounds of error, but they are relevant factors in assessing whether the trial court abused its discretion. If the trial court mischaracterizes a spouse's separate property as community property and awards some of the property to the other spouse, then the trial court abuses its discretion and reversibly errs.

Facts:

Appellant Timothy L. Sharma and appellee Lisa C. Routh were married in Aug. 2004. A few months later, Timothy filed for divorce in Texas state court. Soon thereafter, the couple separated and ceased living together as husband and wife. After a lengthy bench trial, in Jan. 2006, the trial court signed a decree ending the parties' brief marriage. Sharma sought review of the divorce decree, asserting that the trial court reversibly erred by characterizing income distributions he received from two testamentary trusts as community property and awarding half of those distributions to Routh, rather than awarding all of the distributions to him as his separate property.

Issue:

Did the district court reversibly err by characterizing income distributions Sharma received from two testamentary trusts as community property and awarding half of those distributions to Routh, rather than awarding all of the distributions to Sharma as his separate property?

Answer:

Yes.

Conclusion:

The appellate court affirmed the trial court's grant of divorce and dissolution of the marriage, but severed the remainder of the judgment and reversed and remanded for further proceedings. Under the plain meaning of Tex. Const. art. XVI, § 15 and of the applicable sections of the Texas Family Code, the court held that, in the context of income distributions under an irrevocable trust during marriage, those distributions were community property only if the recipient had a present possessory right to part of the corpus, even if the recipient had chosen not to exercise that right. Under those circumstances, the recipient's possessory right to access the corpus meant the recipient was effectively an owner of the trust corpus. Under that standard, the trial court erred in characterizing the trust income as community property, and Sharma acquired that property by devise or gift rather than by the receipt of income on property he owned. Thus, the trial court erred by awarding Routh any part of that income.

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