No. 14-06-00717-CV (Tex. App. Dec. 31, 2008)

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Sharma v. Routh

Court of Appeals of Texas, Fourteenth District, Houston

Dec 31, 2008

No. 14-06-00717-CV (Tex. App. Dec. 31, 2008)

Opinion

No. 14-06-00717-CV

Opinions filed December 31, 2008.

On Appeal from the 246th District Court Harris County, Texas, Trial Court Cause No. 2004-61264.

Panel consists of Chief Justice HEDGES and Justices FROST and GUZMAN. (FROST, J. dissenting).

MAJORITY OPINION

ADELE HEDGES, Chief Justice.

Appellant, Timothy L. Sharma, appeals the final decree of divorce entered by the trial court. In seven issues, Sharma challenges the trial court's characterization of income from two testamentary trusts created by Sharma's first wife, the division of the marital estate, the reliability of expert testimony, and the trial court's refusal to file additional findings of fact and conclusions of law. We affirm the trial court's judgment.

I. FACTUAL BACKGROUND

Sharma and Routh were married on August 29, 2004. The couple separated months later, and their marriage was dissolved on January 26, 2006. In the final decree of divorce, the trial court characterized certain trust income as community property. The trust at issue was created by Sharma's first wife, Alice Hinniker Sharma ("Alice"). In her last will and testament, Alice created two trusts, the Marital Deduction Trust ("Marital Trust") and the Family Trust.

A. The Marital Trust

Under the Marital Trust, Sharma is the trustee and beneficiary; Upward Reach Foundation, a charity created by Alice and Sharma, is named as the remainder beneficiary. The Marital Trust provides for mandatory distributions of trust income to the beneficiary. The trust also provides for distributions from "trust principal . . . as are necessary . . . to provide for [Sharma's] health, support, and maintenance in order to maintain him . . . in accordance with the standard of living to which [he] is accustomed. . . ." At the time of Alice's death in July 2001, the Marital Trust owned two buildings that were psychiatric hospitals in Houston. The hospitals' services and other assets were owned by Cambridge International, Inc. and North Houston Enterprises, Inc. (companies owned by Alice and Sharma). In 2002, additional corpus was transferred into the Marital Trust. Specifically, the following pieces of corpus were added: (1) 6798 shares of common stock in Cambridge International; (2) an 86.25% interest in real estate located on Lake Houston (the "Lake Houston Property"); and (3) an 83.08% interest in real estate located on Earle Street in the Houston area (the "Earle Street Property").

Routh disputes whether the Marital Trust has a remainder beneficiary. On voir dire, Deo Shanker, Sharma's nephew and financial advisor, testified that Sharma was the sole beneficiary of the Marital Trust. Additionally, at the time of trial, Upward Reach Foundation had ceased to exist and was renamed the Timothy and Alice Foundation.

B. The Family Trust

The Family Trust also names Sharma as the trustee and beneficiary; the remainder beneficiary is again Upward Reach Foundation. The Family Trust provides for distributions from trust income and principal as necessary "to provide for [Sharma's] health, support and maintenance in order to maintain him . . . in accordance with the standard of living to which [he] is accustomed. . . ." The Family Trust's corpus initially consisted of 1272 shares of common stock in Cambridge International.

C. Sale of Corpus in the Marital Trust

In early 2003, Sharma and his financial advisors created a plan to convert the two psychiatric hospitals into tax exempt hospitals, requiring that the hospitals be sold to a tax exempt entity. The two psychiatric hospitals were renamed Intracare and Intracare North. Sharma then created the Cambridge Health Foundation, the 501(c)(3) corporation that would acquire the two hospitals. Sharma is on the board of trustees for Cambridge Health Foundation.

The 501(c)(3) corporation was originally named the Alice and Timothy Sharma Foundation and was thereafter changed to Cambridge Health Foundation. The former Alice and Timothy Sharma Foundation is a separate entity from the Timothy and Alice Sharma Foundation, which is the newly-named remainder beneficiary.

In December 2003, Sharma, acting as trustee to the Marital Trust, conveyed Intracare and Intracare North to Cambridge Health Foundation. The sale was financed by five promissory notes: one note was made payable to the Marital Trust, another to North Houston Enterprises, and three notes to Cambridge International. The first note was made payable to the Marital Trust for the real property on which the buildings were located (referred to hereinafter as the "MT building note"). The MT building note was in the amount of $30,115,000.00 and became corpus to the Marital Trust.

The second note was made payable to North Houston Enterprises in the amount of $1,127,494.00 for its ownership interest in Intracare North (the "Houston Enterprises note"). The three remaining notes, totaling $5,814,475.00, were made to Cambridge International and were divided between the three co-owners of Cambridge International. A note in the amount of $3,952,680.10 was transferred to the Marital Trust (the "MT asset note"), which owned 6798 shares of Cambridge International common stock. A note in the amount of $1,122,193.68 was made payable to Cambridge International but was not transferred to the Marital Trust; instead, this note was subsequently transferred to Sharma for his ownership interest in Cambridge International. A note in the amount of $739,601.22 was transferred to the Family Trust (the "FT note"), which owned 1272 shares of common stock in Cambridge International. Subsequently, the principal and accrued interest on these notes were generally transferred to Sharma's personal account.

Sharma contends that because he individually owned North Houston Enterprises, this note was not subsequently transferred to either trust.

The dissent disputes whether there is evidence that the interest was transferred to Sharma's personal account. Valinda Allen, Sharma's bookkeeper, testified that all money received from the Marital Trust, including principal, was deposited into Sharma's personal account. Additionally, the terms of Alice's trust required that the trust income, i.e., the interest from the notes, be distributed to Sharma.

D. Divorce Proceedings

Shortly after the parties' separation in 2004, Sharma filed an original petition for dissolution of marriage. He initially obtained a default judgment against Routh. Routh, then, successfully moved for a new trial, and the trial court set aside the first decree. A trial on the merits commenced on October 10, 2005 and continued thereafter for 13 days. One of the primary issues at trial was the proper characterization and division of the interest accrued during the marriage on the Marital and Family trusts. At the time, the Marital Trust owned the MT building and MT asset notes. The Family Trust owned the FT note. Both parties admitted and relied on expert testimony regarding the proper characterization of the trust interest income from the Marital and Family trusts.

Prior to trial, Sharma sold the Lake Houston Property and most of the Earle Street Property, which was part of the corpus in the Marital Trust. The proceeds from the sales were deposited into Sharma's personal account.

On May 24, 2006, the trial court signed the final decree of divorce, dissolving the marriage. The trial court also characterized the accrued interest on the MT building, MT asset, and FT notes as community property. In its findings of fact and conclusions of law, the trial court specified the amount of interest accrued on the notes during the marriage. The MT building note had $2,096,067.00 in accrued interest, while the MT asset note had $175,996.00. The Houston Enterprises note accrued $50,146.00 in interest during the marriage, and the FT note had $32,955.00 in accrued interest. The trial court found the interest accrued during the marriage to be community property and awarded Routh 50% thereof.

E. Issues on Appeal

Sharma raises seven issues on appeal. In issues one through four, Sharma challenges the trial court's characterization of the trust income as community property. First, he contends that the trust income is his separate property because he is not a named remainder beneficiary, and therefore he is not entitled to receive trust principal. Second, Sharma argues that the "income from separate property is community property" rule is not controlling in this case because he did not own the property giving rise to the income. Third, Sharma claims that the interest is his separate property because he acquired it by gift or devise. Fourth, Sharma argues that the trial court's mischaracterization of the trust income constitutes reversible error. In his fifth issue, Sharma claims that the trial court erred by including the trust income as part of the marital estate absent a favorable finding on Routh's claims for reimbursement or fraud. In his sixth issue, Sharma contends that the testimony of Routh's expert, Jeannie McClure, was not reliable with respect to the proper characterization of the trust income. Lastly, Sharma alleges that the trial court erred in refusing to file additional findings of fact and conclusions of law after it made its initial findings.

On review, Sharma only disputes the characterization of the interest accrued during the marriage on the MT building, MT assets, and FT notes totaling $2,305,018.00.

II. STANDARD OF REVIEW

We review the trial court's characterization of property under an abuse of discretion standard. Murff v. Murff, 615 S.W.2d 696, 698-99 (Tex. 1981); Stavinoha v. Stavinoha, 126 S.W.3d 604, 607-08 (Tex.App.-Houston [14th Dist.] 2004, no pet.). The issue of whether property is separate or community is determined by the facts that, according to rules of law, give character to the property. Raymond v. Raymond, 190 S.W.3d 77, 80 (Tex.App.-Houston [1st Dist.] 2005, no pet.). We may reverse the trial court only if, after reviewing the record, it is clear that the trial court's decision is an abuse of discretion or is manifestly unjust and unfair. Stavinoha, 126 S.W.3d at 607-08; see also Sutton v. Eddy, 828 S.W.2d 56, 58 (Tex.App.-San Antonio 1991, no writ) (stating that the record must affirmatively show that the trial court's decision is arbitrary and unreasonable).

Under this abuse of discretion standard, the legal and factual sufficiency of the evidence are not independent grounds for error, but are merely relevant factors in assessing whether an abuse of discretion has occurred. Stavinoha, 126 S.W.3d at 608. When a court mischaracterizes separate property as community property, the error requires reversal because the subsequent division divests a spouse of his or her separate property. Smith v. Smith, 22 S.W.3d 140, 147 (Tex.App.-Houston [14th Dist.] 2000, no pet.); McElwee v. McElwee, 911 S.W.2d 182, 189 (Tex.App.-Houston [1st Dist.] 1995, writ denied).

III. CHARACTERIZATION OF TRUST INCOME

In Sharma's first four issues, he contends that the trial court abused its discretion by improperly characterizing the trust income as community property. According to Sharma, the trust income is his separate property because he has no interest in the trust corpus, and he acquired the interest by gift or devise.

A. Definition of Separate and Community Property

In Texas, all marital property is either separate or community property. Hilley v. Hilley, 342 S.W.2d 565, 567 (Tex. 1961). Separate property is defined by the Texas Constitution as property acquired before marriage or during marriage by gift, devise, or descent. Tex. Const. art. XVI, § 15. Community property consists of property, other than separate property, acquired by either spouse during marriage. Tex. Fam. Code § 3.002; Barnett v. Barnett, 67 S.W.3d 107, 111 (Tex. 2001). There is a statutory presumption that all property possessed by either spouse during or on dissolution of marriage is community property. Tex. Fam. Code § 3.003(a); Barnett, 67 S.W.3d at 111. To overcome this statutory presumption, a spouse claiming assets as separate property is required to establish their separate character by clear and convincing evidence. Tex. Fam. Code § 3.003(b); Stavinoha, 126 S.W.3d at 607. "Clear and convincing" evidence means the 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. Tex. Fam. Code § 101.007; In re J.F.C., 96 S.W.3d 256, 264 (Tex. 2002).

B. Characterization of Trust Income

The property in question is trust income in the form of interest payments from the MT building, MT asset, and FT notes. Courts have articulated the following rule: if a married beneficiary has an interest in trust principal and receives income from the principal, the income is characterized as community property. Ridgell v. Ridgell, 960 S.W.2d 144, 148 (Tex.App.-Corpus Christi 1997, no pet.) (holding that trust income is community property where the spouse beneficiary maintains an interest in trust corpus); In re Marriage of Long, 542 S.W.2d 712, 718 (Tex.Civ.App.-Texarkana 1976, no writ) (concluding that income received on trust corpus is community property if married beneficiary is entitled to corpus); Mercantile Nat'l Bank at Dallas v. Wilson, 279 S.W.2d 650, 654 (Tex.Civ.App.-Dallas 1955, writ ref'd n.r.e.) (holding that income on trust corpus during the marriage is community property where spouse has interest in corpus); c.f. Cleaver v. Cleaver, 935 S.W.2d 491, 493-94 (Tex.App.-Tyler 1996, no pet.) (holding that trust income is separate property only where trust prohibits distributions from corpus). Thus, if the record reveals that Sharma (1) has an interest in the corpus and (2) received trust income, the interest is community property. See Ridgell, 960 S.W.2d at 148; Long, 542 S.W.2d at 718; Wilson, 279 S.W.2d at 654.

The dissent rejects this rule and insists that we expand the definition of community property by further defining "an interest in corpus" with a distinction between expectancy right and present possessory right. As explained further below, we cannot add to or take from the constitutional definition of community property. See Arnold v. Leonard, 114 Tex. 535, 542, 273 S.W. 799, 803 (1925). Furthermore, there is no need for us to make this novel distinction because the record reveals that under either rule, Sharma is deemed to have an interest in trust corpus or, as articulated by our dissenting colleague, a present possessory right to the corpus, because he distributed trust corpus to himself.

1. Sharma Has an Interest in the Trust Corpus

There is undisputed evidence that Sharma has an interest in the trust corpus. Sharma's former CPA, Elizabeth Bunk, and bookkeeper, Valinda Allen, testified that all principal payments made to the Marital and Family trusts were directly transferred to Sharma's personal account until April 2005. Invading the corpus and depositing the principal payments into his personal account gave Sharma an interest in the corpus. See Ridgell, 960 S.W.2d at 147 (stating that under a discretionary trust, a beneficiary is entitled to or has an interest in trust corpus when a distribution from the trust principal is made to the beneficiary); see also Long, 542 S.W.2d at 718 (reasoning that a spouse retains an interest in trust corpus if he physically or constructively receives a portion of the trust corpus). Alice's will created the two trusts for the benefit of Sharma with all income, and potentially all corpus, to be utilized for his benefit as determined to be appropriate exclusively by Sharma. By acquiring portions of the trust corpus, Sharma affected the relative interest of the remainder beneficiary. Although Upward Reach Foundation is named as a remainder beneficiary of the corpus remaining in the trust, if any, upon Sharma's death, the trust was created for the benefit of Sharma and contemplated that the entire trust, both income and principal, could be expended for Sharma's benefit, at his sole discretion.

Sharma also sold the Lake Houston Property and most of the Earle Street Property, which were parts of the corpus in the Marital Trust. The proceeds from the sales were deposited into Sharma's personal account.

The Marital Trust also requires that the trust pay from principal "the difference between all taxes which must be paid by reason of [Sharma's] death and those taxes which would be payable by reason of [Sharma's] death had such principal not been includ[ed] in his gross estate for the purpose of calculating such taxes." By its terms, the trust contemplated that the principal would be considered as part of Sharma's personal estate and required a mandatory distribution from trust principal for payment of Sharma's death taxes. Additionally, Sharma reported the principal payments as his personal income on his tax returns and on a financial report for a loan application. An interest in corpus arises when the spouse beneficiary is or becomes entitled to the corpus. Ridgell, 960 S.W.2d at 148. A spouse beneficiary, in the context of a discretionary trust, becomes entitled to trust corpus when a distribution from the principal is made to the spouse beneficiary. Id. at 147. Because Sharma invaded the corpus, possessed the corpus in his personal account, and later donated the corpus to his charity, we conclude that Sharma has an interest in the corpus of the Marital and Family trusts.

The dissent's conclusion that Sharma did not receive any distributions from any part of the corpus from the Marital or Family trusts is not supported by the record. Ms. Bunk's and Ms. Allen's uncontroverted testimony contradicts the dissent's factual conclusion. The dissent concedes that Sharma donated the disputed principal to his charity. As explained in more detail below, the only manner in which the principal could have reached and could have been donated to the charity is by a distribution first to Sharma.

2. Sharma Received Trust Income

There is also undisputed evidence that Sharma received income distributions from the trusts. The Marital Trust required mandatory distributions of trust income to Sharma. Because the interest payments were trust income, the interest had to be distributed to Sharma. The mandatory distribution provision limited all income distributions to Sharma, and thus the only manner in which the interest could have reached Cambridge Foundation was if Sharma donated the funds after the interest was mandatorily distributed to him. Likewise, the Family Trust provided that, during Sharma's lifetime, trust income could only be discretionarily distributed to Sharma. Based on the discretionary provision of the Family Trust, the interest could have only been distributed to Sharma. The only manner in which Cambridge Foundation could have received the interest from the Family Trust was if a discretionary distribution had been made first to Sharma. Pursuant to the terms of the two trusts, the only manner in which the interest could have reached Cambridge Foundation was through mandatory and discretionary distributions to Sharma.

The dissent sharply disputes the fact that distributions from trust corpus were made to Sharma because there was no explicit declaration of a distribution by Sharma. We cannot imagine what an "explicit declaration" could add to the evidence of distribution. Based on the undisputed facts supported by the record, the Cambridge donations can only be the result of a prior distribution from corpus to Sharma. The following facts are undisputed: (a) the only way the principal could be retrieved from the trusts was by way of a distribution; (b) Sharma was the only beneficiary allowed to receive a distribution from trust corpus during the relevant time period; and (c) Sharma donated trust corpus to Cambridge. To go from undisputed fact "b" to undisputed fact "c," Sharma had to make a distribution to himself. A distribution from trust principal could not be made directly to Cambridge. On these three undisputed facts, it is illogical to conclude that no distribution from corpus was made to Sharma. See McDonald v. New York Cent. Mut. Fire Ins. Co., 380 S.W.2d 545, 547 (Tex. 1964) (an appellate court may logically infer facts from the evidence in the record); Texas Dep't of Pub. Safety v. Segrest, No. 03-02-00671-CV, 2003 WL 22348841, at *3 (Tex.App.-Austin Oct. 16, 2003, no pet.) (mem op.) (same); Derouen v. State, Nos. 14-98-00632-CR, 14-98-00633-CR, 2000 WL 767757, at *3 (Tex.App.-Houston [14th Dist.] June 15, 2000, pet. ref'd) (not designated for publication) (reasoning that an appellate court may infer the existence of one fact from the proof of other related facts). Sharma also reported the interest payments as his personal income on his tax returns and on a financial report for a loan application. This evidence sufficiently shows that Sharma personally received the interest payments. Because Sharma has an interest in the corpus and made distributions from the corpus to himself, the income that rose from the corpus is community property. See Ridgell, 960 S.W.2d at 148; Long, 542 S.W.2d at 718; Wilson, 279 S.W.2d at 654. Accordingly, the trial court did not abuse its discretion in characterizing the interest payments as community property. We overrule Sharma's first, second, and fourth issues.

C. Sharma Did Not "Constructively Receive" the Income

We find Sharma's "constructive receipt" argument, effectually adopted by the dissent, unpersuasive. Sharma contends that the interest was earmarked for subsequent charitable donation and that his receipt of the funds was a mere "constructive distribution." However, the fact that Sharma may have intended to receive the funds and subsequently donate them to a third party does not change the character of the property. See Long, 542 S.W.2d at 718 (holding that a spouse's physical or constructive receipt of distribution on trust corpus is community property). Sharma and the dissent cite no authority allowing for an intended charitable commitment to redefine community property as separate property. Once the distributions were made to Sharma individually and as the beneficiary, the funds became community property. See id.

Although the dissent denies advocating Sharma's constructive receipt argument, it effectually adopts the argument in its reasoning. Our dissenting colleague argues that Sharma's accounting team made clerical errors in depositing the trust distributions into Sharma's account for over a year. The dissent's "clerical error proposition" allows a spouse's reinvestment or donation of community property to be recharacterized as separate property. The dissent cites to no authority to support this theory. We also not persuaded by this "clerical error proposition" because Allen testified that Sharma made sure that all principal payments were deposited into his personal account. The record reflects that there was no clerical error by the accounting team; they were acting exclusively at the direction of Sharma.

***D. The Interest Payments Were Not Acquired by Gift or* *Devise***

Sharma also argues that he acquired the interest by gift or devise, rendering it his separate property. The Texas Constitution clearly defines separate property as property acquired before marriage or during marriage by gift, devise, or descent. Tex. Const. art. XVI, § 15; see also Arnold v. Leonard, 114 Tex. 535, 542, 273 S.W. 799, 803 (1925) (enunciating the general definition of separate property: property acquired before marriage or during marriage by gift, devise, or descent). However, if property does not fit within this definition of separate property, the property is characterized as community property. See Tex. Fam. Code § 3.002. Courts have interpreted property that does not necessarily fit within the definition of separate property as community property. See Smith v. Lanier, 998 S.W.2d 324, 332 (Tex.App.-Austin 1999, pet. denied) (cash dividends on separately held stock are community property); McElwee, 911 S.W.2d at 188-89 (rental payments, crops, and timber arising from separate property are community property); Gutierrez v. Gutierrez, 791 S.W.2d 659, 664-65 (Tex.App.-San Antonio 1990, no writ) (offspring born from separate property cattle during marriage is community property); Harris v. Harris, 765 S.W.2d 798, 802 (Tex.App.-Houston [14th Dist.] 1989, writ denied) (profit-sharing distributions on separate property are community property). Courts have further interpreted income from trust corpus, identical to the disputed property in the instant case, to be community property. See Ridgell, 960 S.W.2d at 148; Long, 542 S.W.2d at 718; Wilson, 279 S.W.2d at 654.

There is not "clear and convincing" evidence that Sharma acquired the interest payments prior to marriage or during marriage by gift, devise, or descent. Because we cannot expand the definition of separate property beyond what the Texas Constitution provides and courts have interpreted income from trust corpus as community property, the disputed property in this case cannot be characterized as separate property. Sharma has failed to rebut the statutory presumption that the interest payments, received during marriage, are community property. See Tex. Fam. Code § 3.003(b); Stavinoha, 126 S.W.3d at 607; see also Ridgell, 960 S.W.2d at 148; Long, 542 S.W.2d at 718.

IV. REIMBURSEMENT

In Sharma's fifth issue, he contends that the trial court erred by including the trust income in the overall value of the community estate. Specifically, Sharma argues that while the trial court denied all reimbursement claims, it implicitly reimbursed the community estate with the trust income. Sharma argues that the only manner in which the interest could have been awarded to Routh was reimbursement because the interest was "nonexistent" at the time of trial. According to Sharma, the trial court's reimbursement resulted in an improper division of the marital estate. We disagree.

A trial court has wide discretion in awarding a spouse his or her share of community property, including reimbursement and economic contribution. See Zieba v. Martin, 928 S.W.2d 782, 789-90 (Tex.App.-Houston [14th Dist.] 1996, no writ) (op. on reh'g); see generally Jensen v. Jensen, 665 S.W.2d 107 (Tex. 1984). A money judgment is a distinct remedy, exclusive of reimbursement, that may be used by the trial court for the wronged spouse to recoup the value of his or her share of community property. See Schlueter v. Schlueter, 975 S.W.2d 584, 588-89 (Tex. 1998); see also Murff, 615 S.W.2d at 699 (allowing money judgment against husband in division of community property where he had substantial sums in savings before separation that had disappeared by the time of trial). Contrary to Sharma's assertions, the trial court in this case did not reimburse the community estate with the value of the trust income. Instead, the trial court awarded Routh a money judgment that directly refers to the specific amount of lost community property, i.e., her community share of the trust income.

As discussed above, the trial court properly characterized the trust income as community property. Thereafter, the trial court was entitled to award Routh, by way of a money judgment, her share of the trust income that was wrongfully depleted by Sharma. Accordingly, we conclude that the trial court did not abuse its discretion in awarding a money judgment to Routh for the value of her share of the trust income. See Schlueter, 975 S.W.2d at 588-89. We overrule Sharma's fifth issue.

We note that Sharma cites to no authority prohibiting a trial court from simultaneously denying a reimbursement claim and awarding a money judgment for a wronged spouse's share of community property.

V. RELIABILITY OF EXPERT TESTIMONY

In his sixth issue, Sharma argues that the expert testimony of Jeannie McClure is not reliable. Jeannie McClure, a licensed CPA and expert witness for Routh, testified that the trust income was community property. On appeal, Sharma challenges the admissibility of and the weight to be given to McClure's expert testimony.

Sharma's admissibility challenge essentially attacks the factual sufficiency of the evidence with respect to the proper characterization of the trust income. As discussed above, there is sufficient evidence that the trust income was properly characterized as community property. Furthermore, Sharma has waived his admissibility challenge because he stipulated to the admissibility of McClure's expert testimony. To preserve error for appellate review, the complaining party generally must object to the complained-of evidence. See Tex. R. App. P. 33.1(a) (providing that as a prerequisite for presenting a complaint for appellate review, a party must have raised the complaint in the trial court by a timely and sufficiently specific request, objection, or motion). The record reflects that Sharma lodged no admissibility objections to McClure's expert testimony on assessing the value of the estates, characterizing community assets and separate property, and assessing the reimbursement claims. We find that Sharma has not preserved his admissibility complaint for our review. See id.

As to Sharma's challenge on the weight to be given to McClure's testimony, we, as an appellate court, are prohibited from making credibility determinations. See Ulmer v. Ulmer, 130 S.W.3d 294, 300 (Tex.App.-Houston [14th Dist.] 2004, no pet.). The trier of fact is the sole judge of witnesses' credibility and the weight to be given their testimony. See id. We decline Sharma's invitation to re-weigh McClure's expert testimony.

We overrule Sharma's sixth issue.

VI. REQUEST FOR ADDITIONAL FINDINGS OF FACT AND CONCLUSIONS OF LAW

In issue seven, Sharma argues that the trial court erred when it failed to issue additional findings of fact and conclusions of law. On July 3, 2005, the trial court issued findings of fact and conclusions of law. In these original findings, the trial court found that the interest and earnings were community property and granted each party a 50% interest in the community estate. The trial court also denied all reimbursement claims. Thereafter, Sharma filed a request for additional findings of fact and conclusions of law, but the trial court never granted his request. In the request for additional findings, Sharma asked the trial court to add facts surrounding the formation of the Marital and Family trusts, to add the terms of the two trusts in its findings, and to specify whether Sharma acquired the trust income by constructive or actual receipt. Sharma further requested that certain findings of fact be converted to conclusions of law.

A trial court is required to file findings of fact and conclusions of law within twenty days after a timely request is made. Tex. R. Civ. P. 297. Upon a party's timely request for additional findings, the trial court "shall file any additional or amended findings and conclusions that are appropriate." Tex. R. Civ. P. 298. Additional findings are not required if the original findings and conclusions "properly and succinctly relate the ultimate findings of fact and law necessary to apprise [the party] of adequate information for the preparation of [the party's] appeal." In re R.D.Y., 51 S.W.3d 314, 322 (Tex.App.-Houston [1st Dist.] 2001, pet. denied). An ultimate fact is one that would have a direct effect on the judgment. Jamestown Partners, L.P. v. City of Fort Worth, 83 S.W.3d 376, 386 (Tex.App.-Fort Worth 2002, pet. denied). Thus, Sharma must show that the trial court's refusal to file the requested additional findings caused the rendition of an improper judgment. See Johnston v. McKinney Am., Inc., 9 S.W.3d 271, 277 (Tex.App.-Houston [14th Dist.] 1999, pet. denied). If the refusal to file additional findings did not prevent Sharma from adequately presenting his argument on appeal, there is no reversible error. See In re R.D.Y., 51 S.W.3d at 322.

We find that Sharma was able to adequately brief his appeal to this court without the issuance of additional findings. The original findings were sufficient for Sharma to adequately present his case on appeal to this court. The findings of fact and conclusions of law are comprised of his factual and legal arguments which the trial court rejected. The requested additional findings would not cause the rendition of a different judgment. Because Sharma has not established that the trial court's refusal to make the requested additional findings and conclusions prevented him from adequately presenting his case on appeal, we overrule his seventh issue.

CONCLUSION

We hold that the trial court properly characterized the trust income as community property. Further, the trial court did not abuse its discretion in awarding Routh a money judgment for her share of the trust income. We affirm the trial court's judgment.

KEM THOMPSON FROST, Justice.

DISSENTING OPINION

This is an appeal from a divorce decree in which the husband, appellant Timothy L. Sharma, asserts that the trial court reversibly erred by characterizing distributions from two testamentary trusts as community property and awarding half of those distributions to his wife, appellee Lisa C. Routh, rather than awarding all of the distributions to him as his separate property. In the context of a spouse who receives distributions of trust income under an irrevocable trust during marriage, case law indicates that the income distributions are community property if the receiving spouse owns the trust corpus but that the distributions are separate property if the receiving spouse does not own the trust corpus. Neither the Texas Supreme Court nor this court has decided what the legal standard should be for determining whether the receiving spouse owns the trust corpus. Today this court holds that the receiving spouse need only have "an interest in the corpus" and then holds that the husband who received the distributions has such an interest under the facts of this case. Rather than adopting this vague "interest in the corpus" legal standard, this court instead should hold that such income distributions are community property only if the recipient has a present possessory right to part of the corpus. Under either legal standard, however, this court should hold that the trial court reversibly erred by characterizing the trust income as community property. The trial evidence conclusively proved that the distributions in question are separate property because the husband acquired title to them by devise or gift during marriage. Therefore, after affirming the trial court's grant of divorce and dissolution of the marriage, this court should sever the remainder of the decree, and reverse and remand.

THE LEGAL STANDARD

In the context of a spouse who receives a distribution of trust income under an irrevocable trust during marriage, case law indicates that the income distribution is community property if the receiving spouse owns the trust corpus but is separate property if the receiving spouse does not own the trust corpus. No case from the Texas Supreme Court or this court identifies the legal standard for determining whether the receiving spouse `owns" the trust corpus. The majority holds that the receiving spouse need only have "an interest in the corpus." The cases upon which the majority relies do not support the majority's legal standard.

The majority indicates that another requirement of the legal standard is that the receiving spouse has received distributions of trust income; however, this element is more appropriately considered part of the context for this legal standard rather than part of the legal standard.

See ante at pp. 7-8.

The majority relies on Ridgell v. Ridgell, a case in which the Corpus Christi Court of Appeals held that mandatory distributions of income from two testamentary trusts to the wife were community property. See 960 S.W.2d 144, 147-50 (Tex.App.-Corpus Christi 1997, no pet.). However, the Ridgell court did not hold that the legal standard is whether the receiving spouse has an interest in the corpus; rather, the Ridgell court focused on whether the receiving spouse "is entitled, or becomes entitled" to distributions of trust corpus during the marriage. Id. at 148. In Ridgell, the testamentary trusts mandated that the trustee make annual distributions of trust corpus to the receiving spouse throughout the time period during which she was married and receiving distributions of trust income. See id. at 146-50. In the instant case, the trust instruments give Timothy no present possessory right to receive distributions of trust corpus. Under the Ridgell legal standard, Timothy is not entitled to any trust corpus and therefore, the income distributions are separate property. See id. For this reason, the Ridgell case does not support either the majority's adopted legal standard or the result reached in the majority opinion.

Likewise, the Texarkana Court of Appeals in Long did not hold that the legal standard is whether the receiving spouse has an interest in the corpus; rather, the Long court focused on whether the receiving spouse "is entitled" to distributions of trust corpus during the marriage and whether the spouse has "a present possessory interest" in part of the trust corpus. See In re Marriage of Long, 542 S.W.2d 712, 717-18 (Tex.Civ.App.-Texarkana 1976, no writ). Because the receiving spouse in Long had a present possessory right to half of the trust corpus under the mandatory language of the trust, the Long court held that half of the corpus would be treated as the husband's separate property and the accrued income on that half of the corpus would be treated as community property, even though the husband had told the trustee to leave that half of the corpus in the trust. See id. Under the Long legal standard, Timothy is not entitled to any trust corpus and therefore, the income distributions are separate property. See id. The Long case does not support either the majority's legal standard or the result reached in the majority opinion.

The majority also relies on Mercantile National Bank at Dallas v. Wilson. See 279 S.W.2d 650, 651-54 (Tex.Civ.App.-Dallas 1955, writ ref'd n.r.e.). However, in that case, the court does not articulate the legal standard the majority adopts today. See id. Moreover, the Wilson case is not on point. Because the trust in Wilson was an inter vivos trust, there was no possibility of a devise. See id. Because the wife was the sole settlor and sole beneficiary of the trust, there was no possibility that she could receive a gift, because she could not make a gift to herself. In addition, the majority incorrectly describes Cleaver v. Cleaver. 935 S.W.2d 491, 492-94 (Tex.App.-Tyler 1996, no pet.). See ante at pp. 7-8. The Cleaver court did not hold that trust income is separate only in cases in which the receiving spouse has no right to receive distributions from the corpus. See id.

As explained more fully below, this court should hold that, when a spouse receives distributions of trust income under an irrevocable trust during marriage, the income distributions are community property only if the recipient has a present possessory right to part of the trust corpus.

The rationale for this court's holding is not clear.

The majority does not explain what is necessary for the receiving spouse to have "an interest in the corpus." In part of its opinion, the majority states that it is sufficient if the receiving spouse, who is also the trustee, for more than one year deposits payments that were part of the trust corpus into his personal bank account. In other parts of the opinion, the majority indicates that the trustee also must have made distributions from the corpus to himself in his capacity as a trust beneficiary. If the latter is required, then, as discussed below, there is no evidence that Timothy declared and made a distribution of trust corpus to himself as beneficiary. If the former is all that is necessary, then the majority concludes that Timothy, who also was the trustee, has an interest in the trust corpus because for more than one year payments that were part of the trust corpus were deposited into his personal bank account. In the majority opinion, the court holds that this action gives Timothy "an interest in the corpus" even though

See ante at p. 8.

See ante at p. 8, n. 7; p. 9 n. 9; p. 10.

• Timothy had no interest in the remainder of the trust;

• Timothy was entitled to exercise control over the trust corpus in his capacity as trustee;

• No evidence demonstrates that Timothy, as trustee, declared a distribution of trust corpus;

• No evidence reflects that Timothy determined that the condition precedent mandated by the trust instruments for such a distribution had been satisfied;

• Evidence indicates that the depositing of trust corpus into Timothy's personal bank account was done by Timothy's staff in error; and

The majority states that Valinda Allen testified that Timothy made sure all principal payments were deposited into his personal bank account. See ante at p. 11. Allen did not so testify. Rather, Allen testified that she received instructions about where to deposit the principal payments on the Notes but that these instructions did not come from Timothy. Allen testified that Elizabeth Bunk previously had told her that trust income could go straight to Timothy and that she applied this instruction to the principal on the Notes and erroneously deposited them into Timothy's personal bank account. Allen testified that she was getting direction from Bunk and the relevant documents and that Timothy gave her no direction as to how to handle the trusts. Allen testified repeatedly that the payments of principal on the Notes were placed in Timothy's personal account in error, and she testified she was not acting at the direction of Timothy.

• The depositing of these payments into Timothy's personal account ceased and Timothy then had a reconciliation performed, after which he returned the trust corpus to separate accounts for both of the trusts.

Even under the majority's adopted legal standard (whether Timothy had an "interest in the corpus" during the marriage), the plain meaning of the trust instruments and the trial evidence prove as a matter of law that Timothy had no such interest. A trustee's depositing of trust corpus into his personal bank account, even if imprudent or wrongful, does not in and of itself withdraw the property from the corpus and constitute a distribution of corpus to any trust beneficiary, including the trustee in his personal capacity. The depositing of trust corpus into Timothy's personal account did not confer upon him an interest in the corpus. Therefore, even applying the standard the court adopts today, the trial court erred in characterizing the trust income and the majority errs in analyzing the issue. A better approach is outlined below following an overview of the relevant facts.

The record in this case is voluminous and contains evidence regarding many matters. This opinion focuses on the facts relevant to the analysis and disposition of this appeal.

OVERVIEW OF FACTS RELEVANT TO CHARACTERIZATION OF THE TRUST INCOME

Timothy and Lisa were married in August 2004. A few months later, Timothy filed for divorce. Soon thereafter, the couple separated and ceased living together as husband and wife. After a lengthy bench trial, in January 2006, the trial court signed a decree ending the parties' brief marriage.

Husband's Prior Marriage and Rights to Trust Property

Before his marriage to Lisa, Timothy was married to Alice Hiniker Sharma from 1982 until Alice's death in 2001. Under Alice's will, two trusts were created: the Alice Hiniker Sharma Marital Trust (hereinafter "Marital Trust") and the Alice Hiniker Sharma Family Trust (hereinafter "Family Trust"). Timothy is the trustee of both the Marital Trust and the Family Trust. Alice's will requires that the net income of the Marital Trust be distributed to Timothy at least quarterly. Likewise, under certain circumstances and to a specified extent, the trustee of the Family Trust is required to distribute income or principal to Timothy from the Family Trust.

While married to Alice, Timothy, who is a psychiatrist, built up and developed psychiatric hospitals in the Houston area. In 2002, the Marital Trust was initially funded with two psychiatric hospitals, realty, and shares of common stock in Cambridge International, Inc. ("International"), with a total stated value of more than $39 million. The Family Trust was initially funded only with shares of International common stock.

In 2003, Timothy, as trustee of the Martial Trust, sold the realty and improvements for the two hospitals to a nonprofit organization now known as the Cambridge Health Foundation (hereinafter "Cambridge Foundation") in exchange for a promissory note in the original principal amount of $30,115,000 (hereinafter "Building Note"). As a result of its ownership of International stock, the Marital Trust also received a promissory note in the original principal amount of $3,952,680.10; the maker of the note is Intracare Hospital (hereinafter "Intracare Note"). As a result of its ownership of International stock, the Family Trust received a promissory note in the original principal amount of $739,601.22; the maker of the note is Intracare Hospital (hereinafter "Family Trust Note"). Following a complex set of transactions in December 2003, two nonprofit organizations, Intracare Hospital and Intracare Hospital North, began operating the two psychiatric hospitals. The Cambridge Foundation owns the land and buildings for these two hospitals.

At the time of the sale, the foundation was known as the Alice and Timothy Sharma Foundation.

The majority states that the Marital Trust's sale of the two hospitals was financed by means of the Building Note, the Intracare Note, the Family Trust Note, a note payable to North Houston Enterprises, Inc. ("Houston Enterprises Note"), and one other note. However, of these instruments, only the Building Note could be considered the means of financing this sale. The other notes were generated by the sale of the assets of International and North Houston Enterprises, Inc. ("Houston Enterprises"). The Houston Enterprises Note was generated when Houston Enterprises, an entity not owned by any trust, sold its assets to Intracare Hospital North. Lisa does not assert that the Houston Enterprises Note was ever held by a trust, and, in any event, Timothy has not challenged the trial court's characterization of the interest on this note. Therefore, the Houston Enterprises Note is not relevant to this appeal.

The Building Note, the Intracare Note, and the Family Trust Note (hereinafter collectively the "Notes") all provide for periodic payments of principal and interest. The interest portion of the payments on the Building Note and the Intracare Note is income to the Marital Trust, which, under Alice's will, must be distributed to Timothy. The record reflects that Timothy also received distributions of income from the Family Trust. However, at all material times since the execution of the Notes on December 31, 2003, Timothy has donated the income distributions (not principal or trust corpus, as stated by the majority) from both trusts to the Cambridge Foundation without taking actual receipt of any money. Timothy reported these distributions as income on his personal income tax return and claimed a charitable deduction for his donation of these distributions. The record contains no evidence that Timothy received distributions of trust corpus from the Marital Trust or the Family Trust.

The majority states that this dissent concedes that Timothy donated trust corpus or principal on the Notes to the Cambridge Foundation. See ante at p. 9, n. 9 p. 10. This opinion contains no such concession. The majority also states that the record shows that it is undisputed that Timothy donated trust corpus to the Cambridge Foundation. This, too, is incorrect. There is no evidence in the record that Timothy donated trust corpus or principal on the Notes to the Cambridge Foundation. There is evidence that Timothy donated income distributions from both trusts to the Cambridge Foundation. The majority also states that the record shows an "undisputed fact" that "the only way the principal could be retrieved from the trusts was by way of a distribution." See ante at p. 10. Thus, the majority reasons that because Timothy donated trust corpus to the Cambridge Foundation, he must have first distributed trust corpus to himself. See ante at p. 10. However, there is no evidence that the only way the principal could be retrieved from the trusts was by way of a distribution. Even if there were such evidence, the proposition is a matter of law, not of fact. A trustee who is also a potential beneficiary of trust principal under certain conditions, might be entitled to receive a distribution of principal as a beneficiary of the trusts. However, the trustee also could receive trust principal in his capacity as trustee, even if that capacity were not clearly indicated. In addition, a trustee can also receive trust principal by appropriating it in his individual capacity even though he has no right to do so, which would amount to conversion but would not be a distribution. See Ames v. Ames, 776 S.W.2d 154, 157 (Tex. 1989) (discussing trustee's distribution of funds to certain beneficiaries and his conversion of other funds).

Timothy testified that he donated the income from the trusts to the Cambridge Foundation, and the record contains no evidence that trust income was deposited in any of Timothy's bank accounts. The majority states that the accrued interest on the Notes was "generally transferred to [Timothy's] personal account." See ante at p. 4. Initially, whether distributions of income from the trusts were deposited into Timothy's personal bank account is irrelevant to the marital-property analysis under the legal standard stated in the majority opinion and this dissenting opinion. In any event, the trial court made no finding in this regard, and the record contains no trial evidence that such a transfer ever occurred. The majority claims that there is such evidence based on Valinda Allen's testimony that all money received from the Marital Trust prior to April 2005 was deposited into Timothy's personal account and that the Marital Trust required that trust income be distributed to Timothy. See ante at p. 4, n. 4. However, no reasonable factfinder could find that any trust income distribution derived from interest on the Notes was deposited into Timothy's personal account based on this evidence. Allen did not testify that any of the money received from the Marital Trust was derived from interest on the Notes. In addition, the Marital Trust's requirement that trust income be periodically distributed to Timothy does not require that Timothy actually receive funds and does not preclude Timothy from donating this income back to the maker, the Cambridge Foundation, so that he never actually received money from the Marital Trust. Because Timothy donated the trust income distribution from the interest back to the Cambridge Foundation, there was no actual transfer of funds involved in the income distributions. For this reason, the trial court did not make any findings that any interest was paid on the Notes; rather, the trial court made findings as to the amount of interest that accrued.

The record contains no evidence that Timothy paid income tax on any amount of principal under the Notes or on distributions of trust corpus, as asserted by the majority. See ante at p. 9. There is no evidence that Timothy donated trust corpus to any charity, as asserted by the majority. See id. at pp. 9, 10.

Evidence at trial, however, showed that, during the twenty months following the funding of the Marital Trust and the Family Trust, neither of these trusts had its own bank account. During this period the principal portions of payments on the Notes were deposited into one of Timothy's community-property bank accounts by staff hired to assist him. There was testimony that this was done in error because Timothy and his advisors lacked experience in operating trusts, given that Timothy had never been a trustee before. Eventually, a reconciliation was performed by professional staff, and separate accounts were established for both of the trusts. There is no evidence that Timothy, as trustee, ever declared or determined that he was entitled to receive or had received distributions of corpus from the Marital Trust or the Family Trust. The trial court did not find that the depositing of this principal into Timothy's personal bank account constituted distributions of corpus to Timothy. Based in part on the depositing of part of the trust corpus into Timothy's personal bank account, Lisa sought leave to file a trial amendment asserting that the Marital Trust and the Family Trust should be disregarded because Timothy allegedly had engaged in a pattern of dealing with the trust property as if he owned the property, such that the trusts are Timothy's alter egos. The trial court denied Lisa leave to file this trial amendment. Lisa has not challenged this ruling on appeal.

Trial Court Proceedings

After a lengthy bench trial involving extensive testimony and trial exhibits, the trial judge signed an order on January 26, 2006. In this order, the trial court granted the parties a divorce and, among other things, made the following determinations:

• The corpus of the Marital Trust is Timothy's separate property.

• Because interest received on separate property is community property, the interest on the corpus of the Marital Trust is community property.

• Lisa is entitled to fifty percent of the interest that accrued on the Building Note and the Intracare Note during the marriage — from August 29, 2004 through January 26, 2006.

In the order, the trial court did not specifically mention the Family Trust, but it indicated that it also was awarding Lisa half of the interest that accrued on the Family Trust Note during the marriage. This order did not contain all the necessary information for a property division and a final decree; therefore, further proceedings in the trial court were required. Following these proceedings, Timothy and Lisa agreed that, from the date of their marriage (August 29, 2004) through the date of their divorce (January 26, 2006), $2,096,067 in interest accrued on the Building Note and $175,996 in interest accrued on the Intracare Note. The sum of these two amounts is $2,272,063 (hereinafter collectively "Marital Trust Income"). The parties also agreed that, during the same period, $32,955 in interest accrued on the Family Trust Note (hereinafter "Family Trust Income"). The trial court signed a final decree and issued findings of fact and conclusions of law. The trial court found that a just and right division of the community estate having due regard for each party's rights would be to award each party fifty percent of the community estate. The trial court determined that the total community estate, including the Marital Trust Income and the Family Trust Income, had a value of $3,872,924.23. The trial court awarded Lisa one-half of this amount to equalize the division of the estate. The trial court rendered judgment in favor of Lisa and against Timothy in the amount of $1,936,462.12, plus interest. The trial court denied all parties' claims for reimbursement or economic contribution.

Timothy's Brief Contains No Argument, Analysis, or Citations to the Record and Legal Authorities Regarding Any Assertion That the Trial Court Erred in Dividing the Trust Income in Question Because it Was No Longer Part of the Parties' Estate, Given That Timothy Had Donated this Income Back to the Maker of the Notes. See TEX. R. APP. P. 38.1(h); San Saba Energy, L.P. v. Crawford, 171 S.W.3d 323, 337 (Tex.App.-Houston [14th Dist.] 2005, no pet.).

Analysis of Appellate Issues

Timothy challenges the trial court's division of property, asserting, inter alia, that the trial court erred by characterizing the Marital Trust Income and the Family Trust Income as community property rather than as Timothy's separate property. Timothy asserts that this income is his separate property because he acquired it by devise or gift, and that the trial court erred by awarding half of this income to Lisa.

In a divorce decree, the 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 (Vernon 2006). To convince this court to disturb the trial court's division of property, Timothy must show the trial court clearly abused its discretion by a division or an order that is manifestly unjust and unfair. See Stavinoha v. Stavinoha, 126 S.W.3d 604, 607 (Tex.App.-Houston [14th Dist.] 2004, no pet.). 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. Id. at 608. If the trial court mischaracterizes a spouse's separate property as community property and awards some of it to the other spouse, then the trial court abuses its discretion and reversibly errs.

See Eggemeyer v. Eggemeyer, 554 S.W.2d 137, 142 (Tex. 1977); Gana v. Gana, No. 14-05-0060-CV, 2007 WL 1191904, at *4 (Tex.App.-Houston [14th Dist.] Apr. 24, 2007, no pet.) (mem. op.).

All property possessed by either spouse during or on dissolution of marriage is presumed to be community property. TEX. FAM. CODE ANN. § 3.003(a) (Vernon 2006). The burden of overcoming the presumption of community property is on the party asserting otherwise by clear and convincing evidence. Id. § 3.003(b). "Clear and convincing" evidence means the 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. In re J.F.C., 96 S.W.3d 256, 264 (Tex. 2002). Whether property is separate or community is determined by its character at the inception of the party's title. Barnett v. Barnett, 67 S.W.3d 107, 111 (Tex. 2001). Inception of title occurs when a party first has a claim of right to the property by virtue of when title is ultimately vested. Smith v. Smith, 22 S.W.3d 140, 145 (Tex.App.-Houston [14th Dist.] 2000, no pet.).

In the Texas Constitution, the people of Texas have proclaimed:

All property, both real and personal, of a spouse owned or claimed before marriage, and that acquired afterward by gift, devise or descent, shall be the separate property of that spouse; and laws shall be passed more clearly defining the rights of the spouses, in relation to separate and community property. . . .

TEX. CONST. art. XVI, § 15. In the Texas Family Code, the legislature restates this definition of "separate property" from the Texas Constitution, and it then states that "community property consists of the property, other than separate property, acquired by either spouse during marriage." TEX. FAM. CODE ANN. § 3.002 (Vernon 2006). In interpreting the Texas Constitution, Texas courts rely heavily on the literal text and must give effect to its plain language. Republican Party of Texas v. Dietz, 940 S.W.2d 86, 89 (Tex. 1997); Arnold v. Leonard, 273 S.W. 799, 801-03 (Tex. 1925) (stating that a court's duty is to give effect to the will of the people of Texas, as expressed by the plain meaning of the Texas Constitution). Basing its analysis on the plain meaning of the constitutional text, the Supreme Court of Texas has reasoned that, as to property a spouse acquires during marriage, if the spouse acquires the property by gift, devise, or descent, then the property belongs to the spouse's separate estate, but if the property is acquired in any other manner, then the property belongs to the community estate. See Arnold, 273 S.W. at 801-03. Decades ago in Arnold, our high court concluded that rents and revenues acquired during marriage based on a spouse's ownership of separate realty were not acquired by gift, devise, or descent and therefore were community property. See id. The Arnold court held unconstitutional a statute in which the legislature attempted to make such property part of the spouse's separate estate. See id. at 803-05. The high court indicated that rents and revenues were acquired at the time they came into existence rather than when a spouse received the property that generated the rents and revenues. See id. The Arnold case did not involve trust income or a devise or gift of income. See id.

***The evidence proves, as a matter of law, that the husband acquired* the marital trust income by devise or gift so that this income is his *separate property.***

Under the unambiguous language of Alice's will, Alice required the trustee of the Marital Trust to distribute the Marital Trust Income to Timothy. A devise is "the act of giving property by will." BLACK'S LAW DICTIONARY 483 (8th ed. 2004). Timothy acquired the Marital Trust Income because in Alice's will she required that this income be distributed to him. Under the unambiguous meaning of "acquired . . . by . . . devise" and under the unambiguous language of Alice's will, Timothy acquired the Marital Trust Income by devise.

Lisa agrees that this action is required under Alice's will.

Courts have held that distributions from testamentary or inter vivos trusts to married recipients who have no right to the trust corpus are the separate property of the recipient because these distributions are received by gift or devise. See Cleaver v. Cleaver, 935 S.W.2d 491, 492-94 (Tex.App.-Tyler 1996, no pet.); Wilmington Trust Co. v. United States, 4 Cl. Ct. 6, 14 (1983) (applying Texas law), aff'd, 753 F.2d 1055 (Fed. Cir. 1985). However, though the Arnold case did not involve trust income or a devise or gift of income, the Arnold court suggested that, if a spouse owns the property that generates income during the marriage, then the income results from the ownership of the property rather than any gift or devise that may have bestowed the income-generating property on the spouse in the past. See Arnold, 273 S.W. at 803-05. Consequently, for the Marital Trust Income to constitute separate property, it appears that Timothy must not have owned the property that generated the income. See id. In the context of a distribution of trust income under an irrevocable trust during marriage, there are at least four possible rules that could be adopted:

Courts also have held that, if a potential beneficiary under a trust has no right to acquire corpus or accrued trust income, then that income or corpus cannot possibly be the community property of the potential beneficiary's spouse. See Lemke v. Lemke, 929 S.W.2d 662, 663-64 (Tex.App.-Fort Worth 1996, writ denied); In re Marriage of Burns, 573 S.W.2d 555, 556-67 (Tex.Civ.App.-Texarkana 1978, writ dism'd); Currie v. Currie, 518 S.W.2d 386, 389-90 (Tex.Civ.App.-San Antonio 1974, writ dism'd). Conversely, if a spouse has a present possessory right to trust income or corpus but the spouse elects not to receive it, then courts have treated the spouse as having acquired title to the corpus or income as separate property, with any future income from that property during marriage being community property. See Cleaver, 935 S.W.2d at 492-94 (holding that, because wife had present possessory right to undistributed income from trust, she would be treated as having acquired that income as her separate property and income on the undistributed income was community property); In re Long, 542 S.W.2d at 717-18 (holding that, because husband had present possessory right to half of trust corpus, that half of the corpus would be treated as the husband's separate property and the accrued income on that half of the corpus would be treated as community property, even though husband had decided to leave that half of the corpus in the trust).

(a) Income distributions are always community property, even if the recipient has no right to the corpus of the trust, because the recipient's right to receive the income means that the recipient is a trust beneficiary and effectively an owner of the trust corpus (hereinafter "Rule A").

(b) Income distributions are community property only if the recipient has some potential right to the corpus, even if the right has not yet become a possessory right, because the recipient's potential right to access the corpus means that the recipient is effectively an owner of the trust corpus (hereinafter "Rule B").

(c) Income distributions are community property only if the recipient has a present possessory right to part of the corpus, even if the recipient has chosen not to exercise that right, because the recipient's possessory right to access the corpus means that the recipient is effectively an owner of the trust corpus (hereinafter "Rule C").

(d) Income distributions are community property only if the recipient has exercised a possessory right to part of the corpus, because the recipient's exercise of this possessory right means that the recipient is effectively an owner of the trust corpus (hereinafter "Rule D").

Because there are no decisions by the Texas Supreme Court or this court that specifically address this issue, this court must determine which rule to apply.

The Arnold case does not address this issue. See Arnold, 273 S.W. at 801-05. Timothy cites Hutchison v. Mitchell, 39 Tex. 487 (1873) (holding that income from trust received by wife was her separate property in situation in which wife was income beneficiary). The Hutchison case was decided by the so-called "Semicolon Court" that sat from 1870-73, during the end of the Reconstruction Era. James R. Norvell, Oran M. Roberts and the Semicolon Court, 377 TEX. L.REV. 279, 279-87 (1959). Lisa asserts that cases from this court have no precedential value, citing Peck v. City of San Antonio, 51 Tex. 490, 1879 WL 7699 (1879). However, the Peck court held that decisions from the so-called "Military Court" (the Texas Supreme Court from 1867 to 1869, which was appointed without constitutional basis by military authorities under Congressional Reconstruction) have no precedential value, while decisions from the Semicolon Court do have precedential value because that court had authority under the Texas Constitution of 1869. See Peck, 51 Tex. at 492-93, 1879 WL 7699, at *1-2; see also Norvell, 377 TEX. L.REV. at 287-96. In any event, though the Hutchison case is inconsistent with Rule A, it does not affirmatively address which rule applies. Therefore, the Hutchison case does not aid this court in determining the legal rule in this case.

Texas courts have addressed similar issues using a variety of approaches. In Ridgell v. Ridgell, the court held that mandatory distributions of income from two trusts to the wife were community property, using an analysis that supports Rule C. In Ridgell, as to both of these trusts, the wife either had received or had a present possessory right to receive mandatory distributions of corpus beginning in the year in which she was married.

See 960 S.W.2d 144, 147-50 (Tex.App.-Corpus Christi 1997, no pet.).

See Ridgell, 960 S.W.2d at 147-50.

In McClelland v. McClelland, the husband was a beneficiary under his father's testamentary trust. 37 S.W. 350, 354-56 (Tex.Civ.App. 1896, writ ref'd). Upon the husband's death, the trust would end and the assets would be distributed to the father's heirs at law. Though he had no interest in the remainder of the trust, the husband was entitled to a mandatory monthly distribution of $100 while he was unmarried and $150 while he was married. See id. In addition, if the trustee determined that the husband was "provident and careful," then the trustee had discretion to make additional distributions to the husband. See id. at 356. The trustee did not make any discretionary distributions to the husband, but the trustee did make the monthly distributions of $150 during marriage. See id. at 357. In McClelland, the trial court granted the wife a divorce from the husband and ruled as a matter of law that all trust income that had accrued during marriage was community property. See id. at 358. The court of appeals concluded that (1) this income was separate property as a matter of law, and (2) except as to the monthly distributions, husband had no possessory right to access the income on the trust corpus and therefore, the husband had not acquired this property during marriage. See id. at 358-59. As to the monthly distributions that the husband acquired during marriage, the court of appeals concluded that these distributions were the husband's separate property because he acquired them by devise. See id. The holding in the McClelland case supports Rule C and is contrary to Rule A and Rule B.

Lisa cites Buckler v. Buckler for the proposition that the Texas Supreme Court overruled this part of the McClelland holding in the Arnold case. See 424 S.W.2d 514, 516 (Tex.Civ.App.-Fort Worth 1967, writ dism'd). Though the Buckler court quoted the Buckler appellant's argument that Arnold overruled this part of McClelland, the Buckler court held that Arnold did not overrule this part of McClelland. See id. In any event, a review of the Arnold case shows that the Arnold court did not overrule any part of McClelland relevant to the analysis in the case at hand. See Arnold, 273 S.W. at 801-05.

The court of appeals in Shepflin v. Small concluded that trust income was a spouse's separate property; however, in the opinion the court did not detail the rights of the spouse, if any, to access the corpus of the trust, so that case is not helpful to the inquiry at hand. 23 S.W. 432, 432-33 (Tex.Civ.App. 1893, no writ).

Various other courts of appeals have indicated disapproval of Rule D and have concluded that, if a spouse has a present possessory right to trust income or corpus but the spouse elects not to receive it, then that spouse should be treated as having acquired title to the corpus or income as separate property to the extent they are entitled to receive it. See Cleaver, 935 S.W.2d at 492-94; In re Marriage of Long, 542 S.W.2d at 717-18. This reasoning is sound. For this reason, Rule D should be rejected.

In adopting a legal standard, it is important to select a rule that not only honors the text and spirit of the Texas Constitution and the principles emphasized by the Texas Supreme Court but also makes it easy to clearly distinguish community property from separate property. By adopting precise standards, the courts promote consistency, uniformity, fairness, and predictability in our jurisprudence. Given the plain meaning of article XVI, section 15 of the Texas Constitution ("Section 15") and the applicable sections of the Family Code, as well as the cases discussed above, this court should adopt Rule C. In the context of a distribution of trust income under an irrevocable trust during marriage, income distributions should be characterized as community property only if the recipient has a present possessory right to part of the corpus, even if the recipient has chosen not to exercise that right, because the recipient's possessory right to access the corpus means that the recipient is effectively an owner of the trust corpus.

See J. Thomas Oldham, Tracing, Commingling, and Transmutation, 23 FAM. L.Q. 219, 250 (1989) (noting that legal rules clearly distinguishing community property from separate property increase predictability and uniformity).

Lisa cites obiter dicta from a case involving the characterization of income generated by patents. See Alsenz v. Alsenz, 101 S.W.3d 648, 653 (Tex.App.-Houston [1st Dist.] 2003, pet. denied). The general obiter dicta statements in Alsenz are not on point in answering the issues in this appeal. See id.

The unambiguous language of Alice's will and the trial evidence prove the following as a matter of law:

• The Marital Trust is an irrevocable, testamentary trust.

• The trustee of the Marital Trust must distribute the income on the corpus of the Marital Trust to Timothy, at least quarterly.

• Under Alice's will, Timothy has no interest in the remainder of the Marital Trust, which expires upon his death.

According to the majority, Lisa disputes that the Marital Trust named a remainder beneficiary. See ante at p. 2, n. 1. This statement is incorrect. Lisa does not argue that Alice's will fails to name a remainder beneficiary for the Marital Trust. Under the unambiguous language of Alice's will, the remainder of the Marital Trust must be distributed to the Timothy and Alice Sharma Foundation f/k/a The Upward Reach Foundation. Instead, Lisa asserts that there is disputed evidence as to whether this foundation or Timothy is entitled to the remainder of the Marital Trust, in light of an unaudited statement of Timothy's financial condition and testimony of Deo Shanker, who prepared the statement. However, as a matter of law, this parol evidence cannot be used to create an ambiguity or vary the terms of Alice's unambiguous will. See Universal C.I.T. Credit Corp v. Daniel, 243 S.W.2d 154, 157 (Tex. 1951) (holding that Texas courts must enforce an unambiguous written instrument as written and parol evidence will not be received for the purpose of creating an ambiguity or varying the meaning of the instrument); Fein v. R.P.H., Inc., 68 S.W.3d 260, 265-66 (Tex.App.-Houston [14th Dist.] 2002, pet. denied) (same); see also Appling v. Jay, 390 S.W.2d 799, 803 (Tex.Civ.App.-Texarkana 1965, writ ref'd n.r.e.) (rejecting effort by one party interested in a trust to modify a term of the trust by unilateral interpretation of the trust instrument that clashes with its specific language). Therefore, any conflict or dispute created by this parol evidence is of no moment, and, under the unambiguous language of the will, the Timothy and Alice Sharma Foundation is the sole remainder beneficiary of the Marital Trust.

• The only potential right that Timothy has to access the corpus of the Marital Trust is the will's requirement that the trustee of the Marital Trust "distribute such amounts of trust principal to [Timothy] as are necessary, when added to the funds reasonably available to [Timothy] from all other sources known to my Trustee (excluding the Article VI trust property), to provide for [Timothy's] health, support and maintenance in order to maintain him, to the extent reasonably possible, in accordance with the standard of living to which [Timothy] is accustomed at the time of [Alice's] death" (hereinafter "Support Provision").

• At the time the trial court granted divorce on January 26, 2006, Timothy had not received any distributions of any part of the corpus of the Marital Trust.

In addition to mistakenly concluding that Timothy as trustee made distributions of trust corpus to himself, the majority also relies on a provision of the Marital Trust that is not triggered until after Timothy dies. See ante at p. 9. Because Timothy is still alive and did not die while married to Lisa, this provision could not have given Timothy any present, possessory right to any part of the Marital Trust corpus. The majority further suggests that, because a provision in the Marital Trust appears to anticipate that the corpus of the trust will be included in Timothy's gross estate for the purpose of calculating estate taxes, Timothy must have a right to the trust corpus for marital-property purposes. The majority does not cite any case for the proposition that a hypothetical calculation of estate taxes that would be due upon Timothy's death should be employed to determine whether Timothy has a right to the trust corpus or in characterizing the trust income at issue in this case. The obvious difference between the two contexts counsels against using estate-tax principles in a marital-property analysis.

• At no time during his marriage to Lisa did Timothy have a present possessory right to any part of the corpus of the Marital Trust.

Based on the unambiguous language of Alice's will, Timothy would have a present possessory right to receive distributions of corpus only if he, as trustee of the Marital Trust, determined that such distributions were necessary for his maintenance under the Support Provision. The record contains no evidence that Timothy ever made such a determination or that he ever was entitled to receive distributions of trust corpus from the Marital Trust.

Under the unambiguous meaning of Section 15 and of Alice's will, Timothy acquired the Marital Trust Income by devise. See Arnold, 273 S.W. at 801-03; McClelland, 37 S.W. at 358-59; BLACK'S LAW DICTIONARY 483 (8th ed. 2004). Because Timothy had no present, possessory right to any part of the Marital Trust corpus, the court should hold that Timothy was not effectively an owner of the trust corpus during his marriage to Lisa, and the Marital Trust Income, as a matter of law, is not community property. See McClelland, 37 S.W. at 358-59.

Lisa asserts that Timothy could not possibly have acquired the trust income by devise because Timothy acquired it during marriage and after Alice's death. Lisa cites no case in this regard; however, all devises occur after the death of the person making the devise. In addition, the passage of time following Alice's death does not change the fact that the only reason that trust income was distributed to Timothy was because of the commands of Alice in her will. See McClelland, 37 S.W. at 358-59 (stating that monthly income distribution was acquired by devise). In any event, Timothy's acquisition of the Marital Trust Income also satisfies the essential elements of a gift. See Hilley v. Hilley, 342 S.W.2d 565, 569 (Tex. 1961) (stating a gift is a transfer of property made voluntarily and gratuitously); Cleaver, 935 S.W.2d at 493 (concluding that wife's acquisition of income from testamentary trust was either by gift or devise). This court should hold that Timothy acquired the income in question by devise or gift during marriage. Such a holding would be based on the plain meaning of the definition of separate property in the Texas Constitution and would not enlarge or go beyond the definition of separate property in the Texas Constitution.

Lisa cites an obiter dictum from the Ridgell case that the beneficiaries of a valid trust are the owners of the equitable title to the trust property and are considered the "real owners." See Ridgell, 960 S.W.2d at 147. Though the court, in making this general statement, does correctly contrast the bare legal title held by the trustee with the equitable title of beneficiaries, it does not distinguish between remainder beneficiaries and income beneficiaries who do not have a present possessory interest in the trust corpus. This distinction is significant in the marital-property characterization under Section 15 and the Arnold case.

Lisa argues that, if an income beneficiary is also the trustee, then, because the trustee holds legal title and right to control the trust corpus, the trustee/beneficiary must be deemed the owner of the trust corpus for purposes of characterizing the trust income. Lisa cites language from the Wilmington Trust Co. case, in which the court states that the income beneficiary was not the trustee and therefore lacked the right to possess and control the trust corpus. See 4 Cl. Ct. at 14. The Wilmington Trust Co. court noted that the income beneficiary was not the trustee; however, the court, in concluding that the income distributions were separate property, also noted and strongly emphasized that the income beneficiary had no right to access the trust corpus. See id. at 8-14. The Wilmington Trust Co. court did not need to decide whether an income beneficiary's service as trustee would be a controlling factor in the marital-property characterization of the trust income.

Lisa also relies on Wilson, 279 S.W.2d at 651-54. However, that case is not on point. Because the trust in Wilson was an inter vivos trust, there was no possibility of a devise. See Wilson, 279 S.W.2d at 651-54. Likewise, because the wife was the sole settlor and sole beneficiary of the trust, there was no possibility that she could receive a gift, given that she could not make a gift to herself.

In her trial court pleadings, Lisa did not allege, and Lisa does not assert on appeal, that the trusts were created, funded, or operated in fraud of her rights, nor has she pleaded that the trusts should be disregarded or that the trusts are Timothy's alter egos. See Lemke v. Lemke, 929 S.W.2d 662, 664 (Tex.App.-Fort Worth 1996, writ denied). Timothy may serve as trustee even though he is one of the beneficiaries under the trusts. See TEX. PROP. CODE ANN. § 112.008(b) (Vernon 2006). However, Timothy, as trustee of the trusts, holds bare legal title and the right to possession of trust assets. Burns v. Miller, Hiersche, Martens Hayward, P.C., 948 S.W.2d 317, 322 (Tex.App.-Dallas 1997, writ denied). Therefore, the fact that an income beneficiary also holds legal title to the corpus in his capacity as trustee should not be a controlling factor in the marital-property characterization of the trust income.

As noted above, Lisa requested leave to file a trial amendment containing a pleading of alter ego, but the trial court denied leave. Lisa has not challenged the trial court's ruling in this appeal. Thus, there are no pleadings to support any alter ego theory. Despite the trial court's refusal to allow Lisa to assert that Timothy's actions as trustee of the trusts should be considered the same as his actions on behalf of himself in his individual capacity, the majority concludes that evidence that Timothy received principal payments on the Notes as trustee and deposited these payments in his personal bank account is evidence that Timothy received distributions from the trust corpus. A trustee's depositing of trust corpus into his personal bank account, even if imprudent or wrongful, does not in and of itself withdraw the property from the corpus and constitute a distribution of corpus to any trust beneficiary, including the trustee in his personal capacity. The record contains trial testimony that this depositing of trust corpus into Timothy's personal bank account was done in error by staff. Eventually, Timothy arranged for a professional to perform a reconciliation; the trust corpus was returned to separate accounts for both of the trusts. The record contains no evidence that Timothy, as trustee, ever declared or determined that he was entitled to receive or had received distributions of corpus from the Marital Trust or the Family Trust. Moreover, the trial court did not find that, by depositing this trust corpus into his personal bank account, Timothy as trustee distributed trust corpus to Timothy in his individual capacity.

Lisa asserts that Timothy's trial counsel agreed in his opening statement that the trust corpus is Timothy's separate property. However, in the cited passage, Timothy's counsel first stated that there would be evidence that Timothy's permanent possessory interest in the trust is only in the interest income, not in the corpus. Counsel then stated that the trust itself owns the corpus and that Lisa is trying to obtain "monies that were generated from that trust, which is [Timothy's] separate property." In context, it is apparent that the latter clause modifies "monies" rather than "trust" and that Timothy's counsel was saying that the trust income was Timothy's separate property. Timothy's counsel had just asserted that Timothy did not have a possessory interest in the trust corpus. In addition, in a subsequent discussion between trial counsel and the trial court regarding Timothy's alleged failure to produce documents in response to Lisa's discovery requests, Timothy's counsel first asserted that the trust owned the trust corpus such that the corpus was not Timothy's separate property. Lisa's counsel then stated that Timothy claimed the Marital Trust Income was his separate property. Timothy's counsel then made a statement indicating that the Marital Trust Income is community property. In any event, the statements of Timothy's trial counsel in these two instances certainly were not a clear, deliberate, and unequivocal statement that the trust corpus is Timothy's separate property or the trust income is community property. Therefore, these statements of counsel do not constitute judicial admissions. See Regency Advantage Ltd. P'ship v. Bingo Idea-Watauga, Inc., 936 S.W.2d 275, 278 (Tex. 1996).

For the foregoing reasons, this court should hold that the trial court reversibly erred in characterizing the Marital Trust Income as community property rather than Timothy's separate property and by awarding part of this property to Lisa.

See Eggemeyer, 554 S.W.2d at 142; Gana, 2007 WL 1191904126, at *4. Though Timothy raises numerous issues and arguments on appeal, including the "constructive receipt" argument, he also asserts that the Marital Trust Income and the Family Trust Income are his separate property because he acquired them by devise or gift. Timothy conditions his "constructive receipt" argument on this court's determining that the trial court correctly characterized the Marital Trust Income and the Family Trust Income as community property. Because the trial court did not correctly characterize the income, this court need not and should not address Timothy's "constructive receipt" argument. Timothy's "constructive receipt" argument has nothing to do with the depositing of trust corpus into Timothy's personal bank account by Timothy's staff in error. Rather, in the "constructive receipt" argument, Timothy asserts that, because he donated distributions of trust income to the Cambridge Foundation without taking actual receipt of any money, Timothy never acquired this income and therefore this income is not separate or community property. The majority incorrectly states that this dissent adopts Timothy's "constructive receipt" argument. See ante at p. 11. This dissent takes no position on that argument.

***The evidence proves, as a matter of law, that the husband acquired* the Family Trust Income by devise or gift so that this income is his *separate property.***

The trial evidence shows that Timothy also received distributions of income from the Family Trust. These distributions were significantly smaller than the income distributions from the Marital Trust. The record contains no evidence that trust corpus has been distributed. The trial court concluded that $32,955 in community property was attributable to income from the Family Trust Note. Timothy asserts that the trial court erred as matter of law and should have characterized this income as his separate property. The unambiguous language of Alice's will and the trial evidence prove the following as a matter of law:

• The Family Trust is an irrevocable, testamentary trust.

• Under Alice's will, Timothy has no interest in the remainder of the Family Trust, which expires upon his death.

Lisa suggests that the evidence is unclear as to whether there are beneficiaries of the Family Trust other than Timothy based on an unaudited statement of Timothy's financial condition stating that Timothy is the sole beneficiary of the Family Trust. Lisa also cites testimony from a witness who stated that Timothy is the sole beneficiary of the Family Trust and that there is no remainder beneficiary under "that will." However, as previously noted, a financial statement prepared at Timothy's request and the legal opinion of a nonlawyer witness, as a matter of law, cannot change the terms of Alice's will. See Appling, 390 S.W.2d at 803.

• The only potential right that Timothy has to access the corpus of the Family Trust is the will's requirement that the trustee of the Family Trust distribute such amounts of income and principal as shall be necessary for Timothy's support and maintenance as determined by a standard substantially similar to the Support Provision of the Marital Trust.

This court need not address whether, under the Support Provision of the Family Trust, it, in fact, was necessary to distribute the Family Trust Income to Timothy.

• At the time the trial court granted Timothy and Lisa a divorce on January 26, 2006, Timothy had not received any distributions of any part of the corpus of the Family Trust.

• At no time during his marriage to Lisa did Timothy have a present possessory right to any part of the corpus of the Family Trust.

Under the unambiguous meaning of Section 15 and of Alice's will, Timothy acquired the Family Trust Income by devise or gift. In addition, because Timothy had no present, possessory right to any part of the Family Trust corpus, Timothy was not effectively an owner of the trust corpus during his marriage to Lisa, and the Family Trust Income, as a matter of law, was not community property.

See Hilley, 342 S.W.2d at 569 (stating a gift is a transfer of property made voluntarily and gratuitously); Arnold, 273 S.W. at 801-03; Cleaver, 935 S.W.2d at 493 (concluding that wife's acquisition of income from testamentary trust was either by gift or devise); McClelland, 37 S.W. at 358-59; BLACK'S LAW DICTIONARY 483 (8th ed. 2004).

See McClelland, 37 S.W. at 358-59.

Therefore, the trial court reversibly erred in characterizing the Family Trust Income as community property rather than Timothy's separate property and by awarding any part of this property to Lisa. This error requires a reversal and remand to the trial court.

The total amount of Marital Trust Income and Family Trust Income during the marriage is $2,305,018.

See Eggemeyer, 554 S.W.2d at 142; Gana, 2007 WL 1191904, at *4.

CONCLUSION

The flaws in the majority's analysis are twofold. The majority misses the mark both in its adoption of the governing legal standard and in its determination that this newly adopted standard was satisfied under the facts of this case.

The majority's "interest in the corpus" legal standard lacks precision and is too vague to provide a meaningful touchstone by which Texas courts and practitioners can assess ownership of income distributions under an irrevocable trust during marriage. The nebulous measure the court adopts today holds little promise for uniformity or ease in application. A more precise and concrete criterion not only would provide clear guidance to courts and practitioners but also would enhance the prospects for consistency, fairness, and predictability in the law governing the characterization of distributions from trusts during marriage. For these reasons, our jurisprudence would be better served by a clearer, more workable legal standard.

This court should hold that, under the plain meaning of Section 15 and of the applicable sections of the Family Code, in the context of income distributions under an irrevocable trust during marriage, these distributions are community property only if the recipient has a present possessory right to part of the corpus, even if the recipient has chosen not to exercise that right. Under these circumstances, the recipient's possessory right to access the corpus means that the recipient is effectively an owner of the trust corpus. Under this standard, the trial court erred in characterizing the Marital Trust Income and the Family Trust Income as community property because Timothy acquired this property by devise or gift rather than by the receipt of income on property he owned. Thus, under either legal standard, this court should hold that the trial court reversibly erred in characterizing the trust income as community property rather than as Timothy's separate property.

Sharma v. Routh

Opinion

MAJORITY OPINION

I. FACTUAL BACKGROUND

A. The Marital Trust

B. The Family Trust

C. Sale of Corpus in the Marital Trust

D. Divorce Proceedings

E. Issues on Appeal

II. STANDARD OF REVIEW

III. CHARACTERIZATION OF TRUST INCOME

A. Definition of Separate and Community Property

B. Characterization of Trust Income

1. Sharma Has an Interest in the Trust Corpus

2. Sharma Received Trust Income

C. Sharma Did Not "Constructively Receive" the Income

D. The Interest Payments Were Not Acquired by Gift or Devise

IV. REIMBURSEMENT

V. RELIABILITY OF EXPERT TESTIMONY

VI. REQUEST FOR ADDITIONAL FINDINGS OF FACT AND CONCLUSIONS OF LAW

CONCLUSION

DISSENTING OPINION

THE LEGAL STANDARD

The rationale for this court's holding is not clear.

OVERVIEW OF FACTS RELEVANT TO CHARACTERIZATION OF THE TRUST INCOME

Husband's Prior Marriage and Rights to Trust Property

Trial Court Proceedings

Analysis of Appellate Issues

The evidence proves, as a matter of law, that the husband acquired the marital trust income by devise or gift so that this income is his separate property.

The evidence proves, as a matter of law, that the husband acquired the Family Trust Income by devise or gift so that this income is his separate property.

CONCLUSION

Sharma v. Routh

Sharma v. Routh

Case Details

CitationsCopy Citation

***D. The Interest Payments Were Not Acquired by Gift or* *Devise***

***The evidence proves, as a matter of law, that the husband acquired* the marital trust income by devise or gift so that this income is his *separate property.***

***The evidence proves, as a matter of law, that the husband acquired* the Family Trust Income by devise or gift so that this income is his *separate property.***

Citations