In Re J.Y.O., a Child

Supreme Court of Texas
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No. 22-0787
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In re J.Y.O., a Child

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On Petition for Review from the
Court of Appeals for the Fifth District of Texas
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Argued September 10, 2024

CHIEF JUSTICE HECHT delivered the opinion of the Court.

The principal issue here is whether a discretionary bonus paid to
a spouse after divorce for work performed during marriage is community
property. Consistent with Cearley v. Cearley, 1 we hold that it is. Because
0

the court of appeals ruled otherwise, 2 we reverse that part of its
judgment.
We agree with the court of appeals that because the refinancing
deed on the marital home naming wife as a grantee gave rise to the gift
presumption, which was not rebutted, the trial court should have
awarded husband and wife each an undivided one-half interest in the

1 544 S.W.2d 661 (Tex. 1976).

2 684 S.W.3d 796, 806 (Tex. App.—Dallas 2022).
home as tenants in common. 3 We affirm that part of the court of appeals’
2

judgment.
Finally, we agree with the court of appeals that the trial court
erred in its characterization and calculation of the 401(k) account. 4 We
3

affirm that part of its judgment and remand to the trial court.
I
Hakan and Lauren Oksuzler married in 2010. After a bench trial,
the trial court granted them a divorce on December 9, 2019. But
litigation continued relating to the division of the marital estate.
Hakan worked for Bank of America during the marriage. His
compensation included an annual bonus of cash and stock, paid around
February 15 each year, contingent on his and the Bank’s performance
during the previous calendar year.
Shortly after the divorce, Lauren filed a motion to have Hakan’s
2019 bonus tendered to the registry of the court. The trial court held a
hearing on February 12, 2020, a few days before the bonus was expected
to be paid. Lauren called the hearing’s sole witness, Andrea Laporta, the
compensation executive for the Bank’s consumer and small business
department. He confirmed that Hakan would receive a bonus of
$140,000—split between cash and equity—on February 15. Laporta
further testified that:
• the bonus was based on Hakan’s performance in 2019;
• the bonus amount was recommended by Hakan’s manager in
November 2019 and approved by the board of directors in January

3 See id. at 803, 810.

4 See id. at 807.

2
2020;
• the bonus is completely discretionary on the Bank’s part—no
employee is entitled to a bonus—as made “clear within all of the
[Bank’s performance] incentive [plan] documents”; and
• an employee is not entitled to receive a bonus if he is not employed
by the Bank on the date of its distribution, regardless of whether
the employee resigned or was fired.
In the decree, the trial court found that the bonus is Hakan’s separate
property.
The court of appeals agreed, 5 relying on our decision in Loya v.
4

Loya. 6 The “central issue” in Loya was whether the performance bonus
5

husband received in 2011 was partitioned by the parties’ mediated
settlement agreement in 2010. 7 Like Hakan, the husband in Loya “was
6

eligible for, but not entitled to, an annual discretionary bonus.” 8 During
7

the marriage, husband received a bonus each spring for work performed
during the previous calendar year. After wife filed for divorce, the
parties agreed to a division of some assets, but disputes remained. The
trial court ordered mediation, which resulted in a June 2010 agreement.
The MSA expressly partitioned certain enumerated assets and then
stated that “[a]ll future income of a party and/or from any property
herein awarded to a party is partitioned to the person to whom the
property is awarded”. 9 The trial court rendered judgment on the MSA
8

5 Id. at 805-806.

6 526 S.W.3d 448 (Tex. 2017).

7 Id. at 449-450.

8 Id. at 449.

9 Id.

3
in June 2010, the day after it was executed.
Later, the parties disputed whether the MSA partitioned a
$4.5 million bonus that husband received in March 2011 for work
performed in 2010. The trial court granted summary judgment for
husband on wife’s petition for a post-divorce division of the bonus, but
the court of appeals reversed and remanded.
We reversed the court of appeals’ judgment and rendered
judgment for husband. 10 We began by noting wife’s reliance on
9

“well-settled law”—specifically, our decision in Cearley v. Cearley—for
her “argu[ment] that the bonus was community property because it
compensated [husband] in part for services performed during the
marriage.” 11 We then said that “[w]hether the portion of a purely
0

discretionary bonus based on services performed during the marriage
constitutes community property is an important issue” but one we did
not need to reach. 12 That was because the parties’ dispute turned
entirely on the language of the MSA, which awarded all of husband’s
“future income” to him. And to clarify the scope of our analysis, we added
that “[w]hether the bonus qualifies as community property [did] not
affect” our decision that the MSA resolved the parties’ dispute. 13
2

We then examined the meaning of “future income”, which the
MSA did not define. After surveying dictionary definitions, we concluded
that “[t]he plain meaning of these terms clearly encompasses the 2011

10 Id. at 453.

11 Id. at 451.

12 Id.

13 Id.

4
bonus” because it was “an amount of money received by [husband]
months into the future, after the divorce was final.” 14 “[W]hether part
3

of the bonus compensated for work done during marriage” was
“irrelevant”, we said, because we were interpreting the “broad” phrase
specifically used in the MSA, “future income”, rather than applying the
default rules of community-property law. 15
4

Even though the bonus’ purpose was “irrelevant”, we commented
that “[t]he known terms of [husband’s] employment . . . len[t] further
context to our interpretation of the MSA.” 16 We pointed to the evidence
5

that payment of a bonus was at the discretion of husband’s employer;
that the board of husband’s company decided on the bonus at a March
2011 meeting; and that, “[q]uite simply, when the parties signed the
MSA in June 2010, no 2011 bonus existed.” 17 “As such,” we reasoned,
6

“the purely discretionary bonus constitute[d] future income.” 18
7

II
A
The court of appeals here acknowledged our statements in Loya
that “whether the bonus qualified as community property did not affect
[our] determination”; that our decision was “based on the MSA”; and
that we were leaving open the question “whether the portion of a purely
discretionary bonus based on services performed during the marriage

14 Id. at 452.

15 Id.

16 Id.

17 Id. at 452-453.

18 Id. at 453.

5
constitute[s] community property”. 19 Nonetheless, the court pointed to
8

our commentary on the discretionary nature and post-MSA timing of the
bonus and said that it found this “dicta instructive.” 20 Because Hakan’s
9

bonuses are “completely discretionary”, “typically paid in February”,
and “contingent on the [Bank] board’s approval and [Hakan’s] continued
employment”, the court concluded that Lauren is not entitled to any part
of the 2019 bonus. 21
20

The court declined to apply our decision in Cearley—the case we
identified in Loya as “well-settled law” bearing on the “important issue”
we left open there. 22 In Cearley, the question was whether husband’s
2

military retirement benefits, which had not matured at the time of
divorce, were part of the community estate. 23 The court of appeals here
22

did “not find . . . [Cearley] to be of assistance to the facts of this case”. 24
23

We disagree. Cearley is controlling.
In Cearley, husband served in the Air Force for nineteen years
before divorce and all eighteen years of marriage. At the time of the June
1975 divorce, husband was on track to complete the twenty years’
service necessary for receipt of retirement benefits in May 1976—about
eleven months later. The trial court ruled that wife would receive half
the retirement benefits attributable to eighteen years’ service if and

19 684 S.W.3d at 805.

20 Id.

21 Id.

22 Loya, 526 S.W.3d at 451.

23 See 544 S.W.2d at 661-662.

24 684 S.W.3d at 806.

6
when husband retired. The court of civil appeals reversed. We reversed
its judgment and reinstated the judgment of the trial court. 25 24

We started with the “firmly established” law 26 “that matured
25

private retirement, annuity, and pension benefits earned by either
spouse during the marital relationship are part of the community estate
and thus subject to division upon dissolution.” 27 We had extended this
26

rule to military retirement benefits in Busby v. Busby. 28 There, husband
27

became eligible for retirement before the divorce and then retired
shortly after the divorce. We “held that the retirement benefits . . . were
community property at the time of the divorce” and should have been
partitioned in the divorce decree. 29
28

In Cearley, we observed that “the decisions in [Texas] and other
community property States have differed as to whether the pension
payments must have vested or matured before they are subject to
apportionment by a divorce court”. 30 Husband argued—backed by the
29

decision below—that the Busby rule should not be extended to
retirement benefits that are not “acquired or vested during the

25 Cearley, 544 S.W.2d at 666.

26 Id. at 663.

27 Id. at 662 (collecting cases). In Lee v. Lee, 247 S.W. 828 (Tex. [Comm’n

Op.] 1923), we jettisoned the “earlier view that retirement and pension plans
[are] gifts bestowed by benevolent employers on retiring employees” and
adopted the modern view “regard[ing] [these benefits] as a mode of employee
compensation earned during a given period of employment.” Cearley, 544
S.W.2d at 662 (discussing Lee, 247 S.W. at 833).
28 457 S.W.2d 551 (Tex. 1970).

29 Id. at 554.

30 544 S.W.2d at 663.

7
marriage.” 31 After assessing the caselaw from Texas and elsewhere, we
30

rejected husband’s approach.
“[M]ost of the objections to the[] treatment [of unaccrued and
unmatured retirement benefits earned wholly or partially during
marriage] as a contingent property interest were anticipated and
answered . . . in [Busby]”, we explained. 32 “[T]he husband there argued
3

that he never possessed a property right in his disability retirement
benefits during the marriage”; that the benefits “were a mere
expectancy[] because he had not retired prior to the divorce”; and that
his right to the benefits was “subject to forfeiture by death or
dishonorable discharge prior to his retirement.” 33 We “overruled” those
32

arguments and “held [instead] that the benefits were community
property at the time of the divorce even though they had not matured
and were not at that time subject to possession and enjoyment.” 34 33

Further, “the fact that the benefits were subject to divestment under
certain conditions did not reduce [them] to a mere expectancy.” 35 34

Cearley also pointed to our decision in Herring v. Blakely, 36 where we
35

“held that profit sharing and retirement plans may be classed as
community property even though none of the funds [are] available or

31 Id. (quotation marks omitted).

32 Id. at 665.

33 Id. (quotation marks omitted).

34 Id.

35 Id. (quotation marks omitted).

36 385 S.W.2d 843 (Tex. 1965).

8
subject to possession at the time of the divorce.” 37
36

The takeaway from these authorities, we established in Cearley,
is that a serviceman’s military pension is not “earned” on the date of its
maturity. 38 “Rather it is a form of deferred compensation which is
37

earned during each month of his military service”, and the portion
earned during marriage becomes “contingent earnings of the community
which may or may not bloom into full maturity at some future date.” 39 38

Accordingly, we held that a serviceman’s pension “rights, prior to
accrual and maturity, constitute a contingent interest in property and a
community asset subject to consideration along with other property in
the division of the [marital] estate”. 40
39

B
Hakan contends that the Loya MSA divided the community estate
as of the date of the agreement and so our classification of husband’s
bonus as future income equates to deeming it separate property. Hakan
misreads Loya. The MSA did not purport to partition, as a broad
category, everything that would be considered community property
under Texas law. Rather, as our opinion recounts, “[t]he MSA explicitly
partitioned numerous bank accounts, retirement plans, motor vehicles,
furnishings, jewelry, antiques, household items, and liabilities” to one
spouse or the other. 41 Indeed, as the parties stipulated, the last bonus
40

37 Cearley, 544 S.W.2d at 665.

38 Id.

39 Id. at 665-666.

40 Id. at 666.

41 Loya, 526 S.W.3d at 449.

9
husband received during the marriage was deposited into a bank
account partitioned to wife. 424

Hakan further argues that Cearley and Busby do not apply
because “retirement benefits are completely different than a
discretionary bonus.” To the contrary, we see no meaningful distinction
in this context. Both are forms of compensation. 43 Cearley teaches that
42

the key question is when the compensation is earned, not when all
contingencies for payment have been met. 44 And the record establishes
43

that the bonus Hakan received in February 2020 was compensation for
his performance in 2019, when he was still married. At the hearing,
Bank representative Laporta answered “yes” when asked whether the
bonus is “based on work that [Hakan] performed during the 2019 fiscal
year”. Laporta also testified that the amount of the bonus “is essentially
a decision made by Hakan’s manager during the enterprise year-end
compensation process.” Hakan’s continued employment on the date of
payment was merely a contingency that had to be met before the
payment was made.
In Loya, we did not make it a point to expressly reserve “an
important issue” 45 and nonetheless go on to implicitly decide it. Loya is
44

inconsequential to this case because it addressed a different question.

42 Id.

43 See TEX. FAM. CODE § 7.003 (“In a decree of divorce or annulment, the

court shall determine the rights of both spouses in a pension, retirement plan,
annuity, individual retirement account, employee stock option plan, stock
option, or . . . bonus . . . .”).
44 See 544 S.W.2d at 665-666.

45 526 S.W.3d at 451.

10
Consistent with Cearley and Busby, we hold that the characterization of
a bonus—like any compensation—depends on when it was earned and
that a discretionary bonus paid after divorce for work performed during
marriage is community property. The opposite rule would promote
gamesmanship by a bonus-earning spouse who can orchestrate
deferring the bonus’ payment until after divorce. The trial court erred
by characterizing the bonus paid in February 2020 as Hakan’s separate
property, and the court of appeals erred in its judgment that this was
not an abuse of discretion. 46
45

III
Hakan challenges the court of appeals’ decision reversing the trial

46 Hakan relies on Cunningham v. Cunningham, 183 S.W.2d 985 (Tex.

Civ. App.—Dallas 1944, no writ), and Loaiza v. Loaiza, 130 S.W.3d 894 (Tex.
App.—Fort Worth 2004, no pet.). The latter was cited by the court of appeals
below. 684 S.W.3d at 805. In Cunningham, wife argued that husband’s
expected commissions for insurance policies sold by husband during the
marriage should be characterized as community property. The court of civil
appeals disagreed, reasoning that because the commissions were contingent on
future events, including husband’s “remain[ing] in the active service of the
company”, “the right of the community estate . . . to these renewal commissions
is not a vested right, but a mere expectancy.” Cunningham, 183 S.W.2d at 986.
In Loaiza, the court relied on Cunningham to hold that husband’s post-divorce
payments under a “guaranteed” Major League Baseball contract signed during
marriage “constitute[d] future earnings” and thus were husband’s separate
property. Loaiza, 130 S.W.3d at 906, 909.
Cunningham was decided three decades before Busby and Cearley and
appears to be inconsistent with those cases and with our holding here. Loaiza
may also be distinguishable because husband’s “guaranteed” contract provided
that the club was not obligated to continue payments if husband refused to
render services, id. at 906, and the court of appeals held that he “was required
to perform his services as a skilled baseball player before he was entitled to
payment under the contract”, id. at 908-909. In that way, specifically, the
contract payments may have been functionally similar to the paycheck
received by any ordinary employee.

11
court’s award to Hakan of 100% of the marital residence as his separate
property.
A
Five years before marrying Lauren, Hakan purchased the home
the parties lived in throughout their marriage. Hakan refinanced the
home during marriage in 2016. The general warranty deed lists both
Hakan and Lauren as the grantors and the grantees:
Hakan Oksuzler, joined herein by his wife, Lauren M
Oksuzler[,] hereinafter called ‘Grantor,’ . . . for and in
consideration of the sum of zero dollars ($0.00) cash, and
other good and valuable consideration . . . paid to Grantor
by Hakan A Oksuzler and Lauren M Oksuzler, Husband
and Wife, hereinafter called Grantee, . . . does hereby
grant, sell, and convey unto Grantee, the real property
described as follows . . . .
The parties simultaneously executed a deed of trust that defined
“borrower” as “Hakan Oksuzler and Lauren Oksuzler, Husband and
Wife”, and made them jointly obligated to pay the mortgage.
Lauren testified at trial that she and Hakan had conversations
about ownership of the home. Lauren said that because Hakan owned
the home prior to marriage, she “just never felt like it was [their] home
and [she] expressed those concerns to Hakan.” Lauren preferred that
they buy another home together, but Hakan did not want to move. But,
Lauren testified, Hakan “assured [her] that he was going to take care of
it and make sure that [she] knew that it was [her] home.” According to
Lauren, Hakan “said he was going to gift [her] part of the house and put
[her] name on the deed and just give [her] that security.” Then, to make
the house jointly owned, they “put the home under both of [their] names
and refinanced.” When asked whether she paid Hakan money “for the

12
interest he gave [her] in the house”, Lauren responded: “No. It was a
gift.”
Hakan testified that he noticed Lauren’s name listed as both a
grantor and a grantee on the deed but that she never owned the
property. He said that the inclusion of her name was “strange” to him,
and he answered “yes” when asked whether he was “concern[ed] that
there may have been some confusion down at the title office”. But Hakan
never testified that he did not intend to gift Lauren an interest in the
home.
The trial court characterized the home as Hakan’s separate
property. The court of appeals reversed and rendered judgment that
Hakan and Lauren each own as separate property an undivided one-half
interest in the home. 47 The court began with the principle recognized in
46

Texas caselaw that when one spouse conveys real property to the other,
there is a presumption that the conveyance is a gift to the grantee
spouse. 48 The court then explained that Hakan simply “failed to present
47

any evidence rebutting the presumption he gifted one half of the marital
residence to [Lauren].” 49 Specifically, Hakan “never asserted his lack of
48

intent to gift her the property, only that it was ‘strange’ she was on the
deed.” 50 The court thus held that “the trial court had insufficient
49

47 684 S.W.3d at 800, 803.

48 See id. at 802 (“[R]eal property gifted by one spouse to another during

marriage is the recipient spouse’s separate property.” (citing TEX. CONST.
art. XVI, § 15)).
49 Id. at 803.

50 Id.

13
evidence upon which to exercise its discretion”, and “it erred in its
application of that discretion.” 51
50

B
Texas caselaw has recognized multiple fact patterns involving a
real property deed that result in what courts have termed a “gift
presumption”. 52 The most basic scenario is when a married couple lives
5

51 Id.

52 Some caselaw also discusses a “separate property presumption” that

“arises when the conveying instrument contains a separate property recital.”
In re Marriage of Crist, 661 S.W.3d 623, 627 (Tex. App.—El Paso 2023, no pet.);
see also Roberts v. Roberts, 999 S.W.2d 424, 432 (Tex. App.—El Paso 1999, no
pet.) (“Presumptions of separate property also arise where . . . the instrument
of conveyance contains a ‘separate property recital.’”).
The leading case is our decision in Henry S. Miller Co. v. Evans, 452
S.W.2d 426 (Tex. 1970). During marriage, wife purchased property on Amanda
Street with a mortgage. The deed recited that the consideration was “paid out
of [wife’s] ‘sole and separate estate[]’ and that [the] property was conveyed to
her as her ‘sole and separate estate.’” Id. at 429. Later, husband defaulted on
a note to Henry S. Miller Co., which eventually sued the sheriff for failing to
levy execution on the Amanda Street property. The question before us was
whether that property was wife’s separate property or, because it was
purchased during marriage, part of the community estate and therefore subject
to community debts. See id. at 430. We explained that “[a]s a result of the
recitals in the deed, no presumption of community property existed.” Id.
Rather, the recitals were prima facie evidence that the Amanda Street
property became wife’s separate property, even against creditors of husband or
the community. See id. at 431 (discussing Kahn v. Kahn, 58 S.W. 825, 826 (Tex.
1900)). We went on to examine when parol evidence is admissible to contradict
an express separate property recital in a deed. See id. at 431-433.
Hakan argues that the 2016 refinance deed does not create any
presumption of a separate-property gift to Lauren because it fails to contain a
separate-property recital. But Henry S. Miller does not apply here. The rule
established there is that a separate-property recital can overcome the
community-property presumption that would otherwise apply when one
spouse purchases property during marriage. The absence of a

14
in a home purchased by one spouse before marriage, and the owner
spouse executes a deed conveying an undivided one-half interest in the
property to the other spouse. 53 A variation is when the couple refinances
52

the marital home acquired by one spouse before marriage, and the new
deed lists both spouses as grantees. 54 In each of these scenarios, a
53

“presumption is raised that the [owner] spouse intended to give the
other spouse an undivided one-half interest in the property as a gift.” 55
54

The leading case from this Court is Cockerham v. Cockerham. 56 55

There, before marriage, husband and his brother each owned an
undivided one-half interest in a 320-acre tract of land on which they
conducted farming operations. 57 After he married, husband wanted to
56

buy out his brother but needed a loan. Husband and brother consulted
a lawyer, who filed a partition suit on husband’s behalf. The trial court
appointed a receiver, who sold the tract to husband and his wife. The
receiver’s deed listed both husband and wife as grantees. 58 The deed
57

also reflected a total consideration of $22,700, about half of which was
said to have been paid by husband and wife in cash, with the remainder

separate-property recital does not affect the presumption that property
conveyed from one spouse to another during marriage is a gift that becomes
the recipient’s separate property.
53 See Raymond v. Raymond, 190 S.W.3d 77, 79 (Tex. App.—Houston

[1st Dist.] 2005, no pet.); see also Roberts, 999 S.W.2d at 431.
54 See Marriage of Crist, 661 S.W.3d at 625-626.

55 Raymond, 190 S.W.3d at 81.

56 527 S.W.2d 162 (Tex. 1975).

57 Id. at 166-167.

58 Id. at 167.

15
paid in cash by a bank that received a vendor’s lien. 59 “It was 58

undisputed, however, that [husband and wife] actually made no cash
payment at all” and that the amount they were said to have paid was
the value of husband’s undivided one-half interest in the property. 60 59

When the parties later sued each other for divorce, wife’s
bankruptcy trustee intervened, seeking to require the payment of debts
from the community estate before its division. 61 The lower courts
60

concluded that there was a tenancy in common between husband’s
one-half separate property interest that he owned before marriage and
the remaining one-half interest purchased by the community. 62 We 6

affirmed. 6362

The trustee first argued that the entire 320-acre tract was
community property. 64 We rejected that contention, reasoning that the
63

facts surrounding the transaction were sufficient to justify the trial
court’s findings that husband “put up the interest he owned prior to
marriage as partial consideration for the purchase” and that the

59 Id.

60 Id.

61 Id. at 164.

62 Id. at 167.

63 See id. at 168. The Cockerham transaction differs from the
conveyance and refinance scenarios described above because its net effect was
that the Cockerhams purchased a new property interest (brother’s one-half
interest) during marriage. Thus, brother’s one-half interest became part of the
Cockerhams’ community estate.
64 Id. at 166.

16
“undivided one-half interest remained his separate property.” 65 64

The trustee argued in the alternative that even if husband
retained a separate property interest in the tract, the partition
transaction resulted in a gift from husband to wife of an undivided
one-half interest in his separate property—making the gifted interest
eligible to pay wife’s debts. 66 The trustee relied on the “well established”
65

rule that “when a husband uses separate property consideration to pay
for land acquired during the marriage and takes title to the land in the
name of husband and wife, it is presumed he intended the interest
placed in his wife to be a gift.” 67 We acknowledged the presumption but
66

said that it “can be rebutted by evidence clearly establishing there was
no intention to make a gift.” 68 67

And that is what happened in Cockerham. Wife testified that “she
never paid any attention to the purchase of the 320 acres” and that “she
never even saw the deed to the property until the preparation for . . .
litigation.” 69 There was evidence that wife’s “attitude toward the
68

320-acre tract ha[d], until [then], been largely one of complete
disinterest”. 70 Furthermore, wife “offered no testimony in support of the
69

presumption that her husband meant to make a gift to her of part of his
interest in the 320-acre tract”, and there was “nothing in her testimony

65 Id. at 167.

66 Id. at 167-168.

67 Id. at 168 (collecting cases).

68 Id. (collecting cases).

69 Id.

70 Id.

17
which would indicate any understanding that a gift had been made to
her.” 71
70

Husband’s testimony “also tend[ed] to negate any idea that he
intended a gift [of his separate property] to his wife.” 72 Husband
7

testified that “[t]he structure of the transaction whereby he bought his
brother’s interest . . . was of no concern to him” and that “he left the
transaction entirely to his lawyer.” 73 Brother “corroborated the
72

testimony that the purchase was structured as it was solely to enable
the husband to buy the property.” 74 73

Based on this evidence and the findings issued by the trial court,
we said the court had “impliedly found that the presumption the
husband intended a gift to the wife was sufficiently rebutted and that,
in fact, there was no such intention.” 75 “Considering the record before
74

us,” we were “unable to say there [was] no evidence to uphold [this]
implied finding”. 76 We thus held that husband had “sufficiently rebutted
75

the presumption which arises from the fact that title was taken in the
name of himself and his wife”. 77 76

71 Id.

72 Id.

73 Id.

74 Id.

75 Id.

76 Id.

77 Id.

18
C
Hakan argues that under Cockerham, the gift presumption can
be rebutted by evidence that a gift was not intended. Hakan points to a
court of appeals decision, Raymond v. Raymond, which distinguished
between a case like Cockerham—where one party uses separate
property to purchase real estate during marriage, and both spouses’
names appear as grantees on the deed from that sale—and a case where
one party owned the property before marriage and then executes a deed
during marriage conveying the property to the other spouse as the sole
grantee. 78 The Raymond court observed that in the former case, the gift
77

presumption can be rebutted by evidence that a gift was not intended, 79 78

but it held that in the latter case, parol evidence is not admissible unless
the spouse challenging the deed “first tender[s] evidence of fraud,
accident, or mistake” or the court finds “a latent or patent ambiguity.” 80 79

Some courts have declined to follow Raymond. 81 80

The distinction drawn by the Raymond court is incorrect.

78 See Raymond, 190 S.W.3d at 81.

79 See id.

80 Id.

81 See Stearns v. Martens, 476 S.W.3d 541, 548 (Tex. App.—Houston

[14th Dist.] 2015, no pet.) (“[W]e agree with the body of cases in which courts
of appeals hold that, if the instrument contains no separate-property recitals,
then parol evidence is admissible regarding the marital-property issue.” (citing
Raymond as going the other way)). But see Magness v. Magness, 241 S.W.3d
910, 912-913 (Tex. App.—Dallas 2007, pet. denied) (citing Raymond for the
rule that the gift “presumption may be rebutted by proof the deed was procured
by fraud, accident, or mistake” and affirming the trial court’s conclusion that
wife “did not establish fraud, accident, or mistake in the execution of the
[refinancing] deed”).

19
Raymond relied in part on our opinion in Henry S. Miller Co. v. Evans. 82 8

At issue there was the characterization of property conveyed by a deed
containing separate-property recitals. We stated our agreement with the
court of civil appeals “that the extrinsic evidence offered to contradict
the express recitals in the deed that the property was to be the separate
property of [wife] was inadmissible.” 83 We said that husband’s creditor
82

“was unable to introduce extrinsic evidence”, such as evidence about the
“subjective intention of the parties”, to “contradict the express recitals in
the deed . . . without first tendering competent evidence that there had
been fraud, accident and mistake in the insertion of the recitals in the
deed.” 84 And we held that based on the record, “[t]here was no fraud,
83

accident or mistake in the insertion of these recitals in the deed.” 85 We
84

went on to define fraud, accident, and mistake and to discuss what kind
of evidence is necessary to meet those standards. 86 85

Cockerham was decided five years after Henry S. Miller.
Cockerham did not involve a separate-property recital but rather a deed
naming both husband and wife as grantees. 87 In Cockerham, we did not
86

cite Henry S. Miller. We cited many other authorities for the rule that
when the gift presumption arises because “title to the land [is taken] in

82 Raymond, 190 S.W.3d at 81 (citing, among other authorities, Henry

S. Miller, 452 S.W.2d at 431-432).
83 Henry S. Miller, 452 S.W.2d at 431 (emphasis added).

84 Id. (emphases added).

85 Id. (emphasis added).

86 See id. at 431-432.

87 See 527 S.W.2d at 167.

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the name of husband and wife”, the presumption can be rebutted by
evidence that no gift was intended. 88 Taken together, these cases
87

establish that the rule against parol evidence we applied in Henry S.
Miller is limited to cases where there is an express separate-property
recital in the deed.
D
We turn to the issue whether Hakan presented
clear-and-convincing evidence to rebut the presumption that he
intended to gift Lauren an undivided one-half interest in the marital
home as her separate property. Consistent with Cockerham, the court of
appeals considered all the evidence that Hakan presented and held that
he had not presented “any evidence rebutting the presumption”. 89 We 88

agree that Hakan did not rebut the gift presumption and that, therefore,
the trial court abused its discretion by awarding 100% of the marital
residence to Hakan as his separate property.
Hakan argues that the following facts and evidence are sufficient
to support the trial court’s property characterization:
• his testimony that he thought it was “strange” that the deed
names Lauren as a grantee;
• the deed’s incorrectly naming Lauren as a grantor, when it is
undisputed she had no interest to grant before the refinancing;
• the deed’s arising from a refinancing; and
• “the fact that neither party was an attorney with knowledge of
gift presumptions”.
We disagree. To overcome the gift presumption, Hakan was required to

88 Id. at 168.

89 684 S.W.3d at 803.

21
put on evidence “clearly establishing there was no intention to make a
gift.” 90 Cockerham shows what kind of evidence can meet this
89

standard. 91 Hakan’s evidence falls far short. 92 Consistent with the
90 9

presumption, Lauren testified that Hakan “said he was going to gift
[her] part of the house and put [her] name on the deed” to give her
financial and emotional security and that the purpose of the refinance
transaction was to accomplish that gift. Hakan did not address, much
less dispute, Lauren’s testimony in any way—even during the colloquy
in which he described the deed as “strange”. In fact, Hakan did not
testify about his intentions for refinancing at all. Further, we agree with
Lauren that the deed’s error naming her as a grantor is not evidence

90 Cockerham, 527 S.W.2d at 168 (emphasis added).

91 See id.; see also Marriage of Crist, 661 S.W.3d at 629 (affirming the

trial court’s finding that wife overcame the gift presumption by testifying that
she never intended to gift an interest in her home to husband and that she only
intended to refinance the home to pay off debts, despite husband’s conflicting
testimony).
Hakan argues that the abuse-of-discretion standard mirrors the
92

legal-sufficiency standard and that, therefore, a trial court’s property
characterization can be reversed on appeal only if there is legally insufficient
evidence to support it. Hakan cites Bradshaw v. Bradshaw, which is
inapposite. See 555 S.W.3d 539, 543 (Tex. 2018) (stating merely that whether
the trial court abused its discretion in dividing the community estate is a “legal
question” for the appellate court). As the court of appeals recognized: “In family
law cases, the traditional sufficiency standard of review overlaps with the
abuse of discretion standard of review; therefore, legal and factual
insufficiency are not independent grounds of error but are relevant factors in
[an appellate court’s] assessment of whether the trial court abused its
discretion.” 684 S.W.3d at 802 (citing Sink v. Sink, 364 S.W.3d 340, 343 (Tex.
App.—Dallas 2012, no pet.)). Furthermore, the standard Hakan proposes
would make no difference in this case because the court of appeals found
Hakan’s evidence to be legally insufficient, not factually insufficient. See id. at
803.

22
rebutting Hakan’s subjective intent to gift her half the home as a
grantee.
We thus affirm the part of the court of appeals’ judgment that
awards Hakan and Lauren each as tenants in common an undivided
one-half interest in the home.
IV
Hakan also challenges the court of appeals’ judgment reversing
the trial court’s characterization of the majority of funds in a 401(k)
account as Hakan’s separate property.
A
Hakan began working at the Bank in 2002. As part of his
compensation, Hakan participated in a defined-contribution retirement
plan. Both Hakan and the Bank made contributions to a 401(k) account
beginning before Hakan’s 2010 marriage to Lauren. At trial, Lauren
introduced evidence that Hakan contributed $20,648.23 between 2005
and 2010 to an account held by Fidelity, but there is no evidence what
the balance of this account was at the time of marriage or what
contributions were made between 2002 and 2005.
In 2015, during marriage, and while still employed by the Bank,
Hakan opened a new 401(k) account with Merrill Lynch with an initial
deposit of $124,323.36. This is the account at issue here. Hakan
introduced pay stubs from 2012 to 2018 reflecting that he had made
contributions totaling $62,042.77 to the two consecutive 401(k) accounts
during marriage. 93 At the time of divorce, the balance of Hakan’s Merrill
92

93 Pay stubs for the first two years of marriage, 2010 to 2012, were not

offered into evidence.

23
Lynch 401(k), including employer contributions and investment returns,
had increased to $353,091.43.
The trial court found that “[p]rior to the marriage, total
contributions made by [Hakan] to his Bank of America 401(k), plus any
gains and losses on those contributions, totaled approximately
$311,778.24 as of December 9, 2019.” The court did not explain the
calculation used to arrive at that number.
The court of appeals rejected the trial court’s math and
methodology. The court explained that Hakan did not meet his burden
to “trac[e] the character of the funds deposited in 2015.” 94 “It was not
93

enough to show that the $124,323.36 deposit could have been separate
funds and could have included the $20,648.23 from the retirement
account [Hakan] had prior to marriage”, the court explained. 95 The court
94

thus held that Hakan “failed to overcome the community property
presumption with legally sufficient evidence” and that “[t]o the extent
that the trial court simply took the value of the account on the date of
divorce, subtracted [Hakan’s] contributions during marriage and then
awarded the remaining $311,778.24 as his separate property, the trial
court abused its discretion in its characterization and division of the
property.” 96 The court further concluded that this “abuse of discretion
95

affected the just and right division of the community estate”. 97 The court
96

reversed and remanded “for the trial court to reconsider division of the

94 684 S.W.3d at 807.

95 Id.

96 Id.

97 Id.

24
community estate.” 98 97

B
A 401(k), 99 a type of defined-contribution plan, allows an
98

employee to elect to defer a portion of earned wages by placing them into
a retirement account, which in turn can hold investments of those
earnings. 100 The account is held by the employee. 101 With a traditional
99 00

account, as here, the deferral and any gains on investment are not
subject to federal income tax until they are distributed and 100%
vested. 102 Employers may also contribute to these accounts on behalf of
0

their employees or match employees’ elective deferrals. 103 The IRS
02

limits the amount of compensation that may be deferred each year. 104 03

98 Id.

99 See 26 U.S.C. § 401(k).

100 See Shanks v. Treadway, 110 S.W.3d 444, 445 n.1 (Tex. 2003) (“A

defined contribution plan . . . is funded by contributions of a specified amount
that are invested or placed in a trust fund, and the employee is entitled upon
retirement to those contributions plus the earnings thereon.”).
101 26 U.S.C. § 401(k)(2).

102 401(k) Plan Overview, IRS (Aug. 2, 2024),
https://www.irs.gov/retirement-plans/plan-participant-employee/401k-
resource-guide-plan-participants-401k-plan-overview. There are also Roth
401(k) plans, which do not defer taxes on the amount contributed, but under
current law, gains on those amounts are not subject to taxation upon
withdrawal. Id. More than one third of working-age Americans had retirement
savings in a 401(k), 403(b), or 503(b) account in 2020. Maria G. Hoffman, et al.,
Who Has Retirement Accounts?, U.S. CENSUS BUREAU (Aug. 31, 2022),
https://www.census.gov/library/stories/2022/08/who-has-retirement-
accounts.html.
103 401(k) Plan Overview, supra, note 102.

104 26 U.S.C. § 402(g).

25
A 401(k) account possessed during marriage is presumed
community property incident to employment during marriage. 105 04

However, the Family Code provides that “[t]he separate property
interest of a spouse in a defined contribution retirement plan may be
traced using the tracing and characterization principles that apply to a
nonretirement asset.” 106 Any contributions made to the 401(k) before
05

marriage, along with any investment return attributable to the separate
contribution, is separate property if proved by clear-and-convincing
evidence. 107
06 Litigants may trace separate property through
documentary evidence, including bank or business records 108 or, as 07

here, may prove contribution amounts with pay stubs. Expert

105 See TEX. FAM. CODE § 3.003(a); see also Cearley, 544 S.W.2d at 662.

106 TEX. FAM. CODE § 3.007(c). This treatment is in keeping with the

distribution of defined-contribution plans in other community-property states.
In Louisiana, defined-contribution plans are distributed during divorce in
proportion to the contributions made during the marriage. Sims v. Sims, 358
So. 2d 919, 923 n.5 (La. 1978). In Idaho, a defined-contribution plan is similarly
distributed in accordance with evidence showing contributions and accrual
during the marriage. Maslen v. Maslen, 822 P.2d 982, 986-988 (Idaho 1991).
107 See TEX. FAM. CODE § 3.003(b); see also BRETT R. TURNER, Equitable

Distribution of Property § 6:24 (4th ed. 2024) (“The marital interest includes
contributions from marital funds and contributions made by the employer as
compensation for marital efforts, plus passive investment return. The separate
interest includes contributions from separate funds, as well as contribution
made by the employer as consideration for premarital or postdivorce efforts,
plus passive investment return.”).
108 See McKinley v. McKinley, 496 S.W.2d 540, 543 (Tex. 1973) (referring

to bank records to determine the character of particular assets including
savings certificates); see also Vallone v. Vallone, 644 S.W.2d 455, 464 & n.8
(Tex. 1982) (Sondock, J., dissenting) (citing cases in which accurate
bookkeeping or detailed business records facilitated tracing of separate
property).

26
testimony, including summaries or models, may establish account
balances and allocate gains on invested contributions made before and
during marriage. 109 The employee spouse is competent to testify
08

regarding the details of his employment and any history of
contributions. 110
09

C
Hakan’s 401(k) includes contributions from his wages earned
during marriage and, thus, the account is presumptively community
property. Any separate property within the account must be traced to
contributions made before marriage. A transfer of $124,323.36 from the
existing Fidelity 401(k) to open the Merrill Lynch 401(k) in 2015 is
insufficient to establish that the entire amount was his separate
property. To the extent that the trial court deemed the $62,042.77
contributed during marriage community property and awarded the
remaining $311,778.24 to Hakan as separate property, it lacked legally
sufficient evidence to do so. The only separate property Hakan can trace
is $20,648.23 contributed to the Fidelity 401(k) before marriage. Hakan
did not prove that $311,778.24 came from contributions before marriage;
nor did he separate the earnings on his premarriage contributions from
investment gains on contributions made during marriage.
The trial court’s calculation is infirm for two reasons. First,

109 See Kelly v. Kelly, 634 S.W.3d 335, 351-352 (Tex. App.—Houston [1st

Dist.] 2021, no pet.) (holding that a spouse could trace separate property in a
401(k) with expert witness testimony demonstrating the balance of the account
at marriage, even though original account statements were no longer
available).
110 See id. at 351.

27
account funds not traced to either separate or community contributions
are presumed to be community property. Hakan did not account for the
funds contributed before marriage in accounts that held both separate
and community contributions. Second, the trial court did not account for
earnings on these contributions. Had Hakan proved contributions made
during marriage and the earnings attributable to those contributions,
the remainder of the 401(k) could be reasonably traced to Hakan’s
separate contributions as funds originating from employment before
marriage. Hakan did not, however, provide a basis to divide 401(k)
contributions made before and during marriage in 401(k) accounts that
held both.
Accordingly, we affirm the part of the court of appeals’ judgment
remanding this issue to the trial court.
* * * * *
We reverse the court of appeals’ judgment with respect to the
bonus, affirm its judgment with respect to the marital home and
Hakan’s 401(k), and remand the case to the trial court for further
proceedings consistent with this opinion.

Nathan L. Hecht
Chief Justice

OPINION DELIVERED: December 31, 2024

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