If you’re considering an income trust, there are a few things you should know about community property. This case gives some information on what you need to know about this type of trust and how it can benefit you.
Cleaver v. George Staton Co., 908 S.W.2d 468 (Tex. App. 1995)
Cleaver: Appellant Husband
George Staton Co.: Appellee Trustee and Trust Property Company
Facts and Procedural History
Facts: George Staton, Sr. died in 1966 and left a trust naming his wife as the sole beneficiary of the income from that trust for life. She was then single. The trust consisted of one twelfth of the assets of Staton lumber yard, subsequently incorporated as George Staton Company, Inc. and Staton Materials, Inc. In 1971, prior to reaching her twenty-first birthday, she married appellant husband. Jimmy Maurice Cleaver, appellant husband, and his wife were in the process of divorcing when Cleaver filed suit against George Staton Company, Inc. for fraud, conversion as well as breach of fiduciary duty and the Texas Trust Code. Cleaver, alleged appellees wrongly withheld trust payment from his wife. In his first amended petition, Cleaver attempted to name wife as an “involuntary plaintiff” under Tex. R. Civ. P. 39(a). The trial court dismissed his case for lack of standing and the court affirmed. The court found that the income his wife was to receive from the trust was likely separate property which the appellant husband had no claim to. In addition, if any interest in the trust income was community property, the court found it would be “special community” to the wife and she would have sole management of the property under Tex. Fam. Code Ann. § 5.22(a)(2) (1993). Therefore, the court found, only the wife had the authority to sue to recover the property and the “involuntary plaintiff” procedure united by Cleaver could not be used to erode that control.
Procedural History: The District Court of Cherokee County, Texas, dismissed husband’s suit against appellees. Appellant, husband, then challenged the order and claimed he did have standing and that appellees wrongly withheld trust payment from his wife. This court affirmed the lower court’s dismissal of appellant husband’s suit against appellees, trustee and trust property company.
Did Mr. Cleaver have standing?
No. The trust provided for mandatory payments of income to the Wife for life. She was conveyed no ownership interest in the cooperation of the trust and has no present possessory interest in the cooperation. The trust income payments to the Wife are therefore her separate property.
Lack of “capacity” to sue pertains to the legal right to prosecute a lawsuit in one’s own name, and arises from the disability of minority or mental incompetency.
On the other hand, “standing” is an element of subject matter jurisdiction. The “standing” doctrine requires that the plaintiff have a justiciable interest in the matter being disputed.
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Is trust income community property in California?
In California, community property is defined as any property that is acquired during a marriage or domestic partnership. This includes income from trusts, regardless of whether the trust is created during the marriage or partnership.
Are trusts protected in a divorce?
In a divorce, property that is held in a trust may be classified as either community property or separate property. The classification of trust property will affect how the property is divided in a divorce.
Is trust income community property in Texas?
When it comes to dividing up property in a divorce, community property states have a few extra rules. Texas is a community property state, which means that any property—including income—that either spouse acquires during the marriage is considered community property and belongs to both spouses equally.
Is trust money community property?
When it comes to money and property, the law is clear: what’s yours is yours, and what’s mine is mine. But what happens when the lines between “yours” and “mine” start to blur? In the case of divorce, for example, the court will often divide property between the two spouses. But what about trust money? A trust is a legal arrangement in which one person (the “trustee”) manages property for the benefit of another (the “beneficiary”). If a beneficiary is married, the trustee must determine how much of the money to allocate to each spouse.
Is California a community property state?
California is a community property state, which means that certain property and assets acquired during a marriage are jointly owned by both spouses. This can have implications for how income and assets are taxed, as well as how they are divided in the event of a divorce.
Are trusts considered marital property?
If you’re considering getting a trust, you may be wondering if it will be considered marital property. Trusts can be an important part of financial planning, but it’s important to understand how they may be impacted by divorce.