Consider the legal consequences of Trusts regarding the characterization of marital property, especially Trusts created by separate property prior or after marriage. A Trust can be a creative and useful tool depending on the perspective and actual need of the parties. To a spouse owning substantial separate property, an irrevocable Trust may be a safe haven that will guard the separate property and potentially the income from the separate property against property divisions in a Divorce Court. On the other hand, in some cases, a spouse that has no separate property may be defrauded by the other spouse.
The Texas Courts have indicated that separate Trusts created prior to marriage, that are irrevocable spendthrift Trusts are a valid means to shelter separate property of the marriage and the income from the trusts are not subject to division during the divorce proceedings. The beneficiary of the separate Trust (the spouse with the separate trust or beneficiary of a separate trust) do not have a present possessory right to any asset within the corpus of the Trusts. If the spouse is granted a present possessory right to any portion of the trust in the trusts, then the income from the Trusts may be divided in a Divorce Court as community property.
This is an area of concern to the other spouse. If you are married to an unsavory spouse, where separate property assets owned prior to the marriage are put into an irrevocable spendthrift trust, take measure to insure no money or other property acquired during the marriage is siphoned into those separate Trusts. One spouse may siphon community property throughout the marriage into separate Trusts in order to deplete the community estate. This constitutes fraud on the community estate and the innocent spouse may seek adequate compensation.
It is important to hire an experienced attorney that understand the intricacies of Trusts and the part Trusts can play in sheltering community funds from a spouse during the marriage. Many wealthy men or women may abuse the Trust formation to defraud their spouses from fair community property allocation. Wealthy spouses may use irrevocable or discretionary Trusts created prior to the marriage for asset protection instead of using prenuptial agreements or post marriage property agreements. The case law is still not completely settled in Texas regarding irrevocable Trust as they pertain to divorce and it is important to hire an attorney that can help guide you through these complexities and insure you are not being defrauded or taken advantage of in a divorce proceeding.
One the most complicate and transparent ways an individual may defraud a spouse during a marriage is with the use of a trust. A trust is an entity that separates equitable and legal title of all property or money placed within it. Prior to, during, or after marriage, a spouse may create a trust and name the children of the marriage or others, as the beneficiaries. The spouse then may start siphoning community property and separate property into the trust removing the property from the community. This is a tactic commonly practiced when a spouse has failed to sign a pre-nuptial agreement.
Circumstances like this happen in High Asset Divorces because a trust may be used to protect properties from the other spouse. Attack the trust as a party of the case and request an accounting. It takes an experienced lawyer to understand which trusts can be attacked and which trusts are impenetrable.
Trust busting consists of complex and arduous litigation depending on the circumstances. The circumstances of a trust are important in divorce cases. Here are a few questions you should ponder when assessing any trusts during a divorce:
- Determine when the trust was created;
- Determine if the trust is revocable trust or irrevocable trust ;
- Determine who the beneficiary of the trust is;
- Determine who the trustee of the trust is;
- Determine who the settlor of the trust is;
- Determine the type of property or money that is placed within the trust; and
- Determine when the property or money was placed in the trust.
These are just a few inquiries you should make prior to meeting with your lawyer. It will save you time and money. Depending on the answers to the seven inquires stated above, an experienced lawyer may be able to bust the trust opening the property and monies for the final hearing in a divorce case. There are many defenses and unsettled law in connection with trust busting and an experienced attorney must be sought.
Julian Nacol, Attorney
Nacol Law Firm P.C.
Are you the father of a child in Texas and Mom is refusing to let you see or communicate with your child? Are you paying child support in Texas for your child, yet Mom tries to dominate all interaction between you and the child to suit her needs. Is this Parental Alienation in the present or a step commencing down that path?
Fathers have rights in Texas and because this is one of the more frequent calls we receive from Dads, I thought it was time to discuss some specific law from the Texas Family Code regarding the rights and duties afforded to a Parent, whether Mom or Dad!
Under the Texas Family Code a “Parent” is defined as the mother, a man presumed to be the father, a man legally determined to be the father, a man who has been adjudicated to be the father by a court of competent jurisdiction, a man who acknowledged his paternity under applicable law or an adoptive mother or father.
Tex. Fam. Code Sec. 160, otherwise known as the Uniform Parentage Act, states that a man is presumed to be the father of a child if:
1. he is married to the mother of the child and the child is born during the marriage;
2. he is married to the mother of the child and the child is born before the 301st day after the date the marriage is terminated by death, annulment, declaration of invalidity, or divorce;
3. he married the mother of the child before the birth of the child in apparent compliance with law, even if the attempted marriage is or could be declared invalid, and the child is born during the invalid marriage or before the 301st day after the date the marriage is terminated by death, annulment, declaration of invalidity, or divorce;
4. he married the mother of the child after the birth of the child in apparent compliance with law, regardless of whether the marriage is or could be declared invalid, he voluntarily asserted his paternity of the child, and:
a)the assertion is in a record filed with the bureau of vital statistics;
b) he is voluntarily named as the child’s father; or
c) he promised in a record to support the child as his own; or
5. during the first two years of the child’s life, he continuously resided in the household in which the child resided and he represented to others that the child was his own.
If the above applies to you and you have established legal standing to support that you are “the father,” what are your rights and duties as the Texas Family Code Sec. 151.001 states:
§ 151.001. Rights and Duties of Parent
(a) A parent of a child has the following rights and duties:
(1) the right to have physical possession, to direct the moral and religious training, and to designate the residence of the child;
(2) the duty of care, control, protection, and reasonable discipline of the child;
(3) the duty to support the child, including providing the child with clothing, food, shelter, medical and dental care, and education;
(4) the duty, except when a guardian of the child’s estate has been appointed, to manage the estate of the child, including the right as an agent of the child to act in relation to the child’s estate if the child’s action is required by a state, the United States, or a foreign government;
(5) except as provided by Section 264.0111, the right to the services and earnings of the child;
(6) the right to consent to the child’s marriage, enlistment in the armed forces of the United States, medical and dental care, and psychiatric, psychological, and surgical treatment;
(7) the right to represent the child in legal action and to make other decisions of substantial legal significance concerning the child;
(8) the right to receive and give receipt for payments for the support of the child and to hold or disburse funds for the benefit of the child;
(9) the right to inherit from and through the child;
(10) the right to make decisions concerning the child’s education; and
(11) any other right or duty existing between a parent and child by virtue of law.
Both parents have these rights unless a court order has created, modified, ordered, or delegated the statuary rights of a parent. The rights you have will support and empower you in a hands on relationship with your child.
All parents have the right to have a relationship with their children! One misguided parent may attempt to employ parental alienation to hurt the other parent and cause the child to be denied a loving relationship with the other parent. Know your rights and contact an attorney who can help you and your child fulfill a meaningful relationship!
Many professions create impositions on conservators making a standard possession order inapplicable and unworkable. The Court may deviate from a standard possession order if the order is inappropriate or unworkable in reference to the schedules of both the conservators and the child. Unique professions and irregular school schedules for children allow the Court to have flexibility to deviate from a standard possession order that is in the Best Interest of the Child. There are multiple ways in which the Court may depart from a standard possession order to fulfill the needs of all parties involved with the custody of the child.
First, the Family Code § 153.254 states that the Court will be allowed deference to modify the standard possession order if work schedules of either conservators or the school schedule of the child is irregular. The Court must attempt to narrowly tailor the modifications to keep the new possession order as similar to the standard possession order as possible. This instance most commonly occurs when the Managing Conservator and the Possessory Conservator cannot reach an agreement and one of the two Conservators has a unique profession such as a firefighter, police officer, or airline pilot. The working hours of these jobs allow the Court to modify the standard possession order even if both of the parties do not comply with the changes. The modifications must be made only if it is in the Best Interest of the Child.
Secondly, the standard possession order may always be modified if it is by the mutual agreement of both the Managing Conservator and Possessory Conservator. Family Code § 153.007 is the Agreed Parenting Plan Statute and allows for both parties to agree on a standard possession order for the child. This statute was passed to promote amicability in settlement for child custody issues and to give flexibility to the parents if they are willing to agree on custody terms. The Agreed Parenting Plan must be in the Best Interest of the Child for the Court to approve. If the Court grants the Agreed Parenting Plan then the Managing or Possessory Conservator will have a remedy as a matter of law for any violation of the agreement committed by either party.
Finally, both Conservators may enter into a Mediated Settlement Agreement under Family Code § 153.0071. A Mediated Settlement Agreement is the only time in which the Court will NOT look at the Best Interest of the Child when granting the custody agreement.
The Mediated Settlement Agreement § 153.0071 must be:
- In bold, underlined, and capital letters that the agreement is NOT REVOCABLE
- Signed by Both Parties to the agreement
- Signed by the lawyers (if represented) of each party
The Mediated Settlement Agreement is binding and not revocable so if the Conservators wish to go this route they must understand that what is in the agreement will be held as binding. This method can be used to modify or change a standard possession order and the Court will not look at the Best Interest of the Child regarding the agreement, unless there exists a credible threat of domestic violence.
These are the methods in which a unique possession order may be obtained to accommodate irregular schedules or working hours of both the conservators. Any possession order must be correctly drafted and all future contingencies must be accounted for. An experienced lawyer must be contacted to safeguard an individual’s custody rights of their children and to make sure that a fair custody arrangement is obtained.
A divorce can be grueling is transformed by law, probate, and insurance decisions made prior to divorce. It is important to know exactly what will happen to your will and life insurance if this misfortune happens to befall your family. The family unit is important and if it is fractured the question of what happens to “my will”, “my life insurance”, or “my trust” is a relevant and important one that needs to be answered.
If you are divorced from your spouse then your previous will may be in many aspects considered revoked automatically. Under the Texas Estate Code § 123.001 after a valid divorce, all provisions in a will, including all fiduciary appointments, shall be read as if the former spouse and each relative of the former spouse who is not a relative of the testator failed to survive the testator, unless the will expressly provides otherwise. The translation of this states: if you receive a valid divorce then your will is in many respects revoked and your spouse and stepchildren will receive nothing from the previous will. The one exception is if the will explicitly states that in case of divorce the previous spouse or children will still inherit. This revocation applies to fiduciary appointments as well. For instance if you have a trust and your spouse is the trustee, then she will be revoked from the trust in its entirety.
If you divorce your spouse, then your spouse’s beneficiary status pertaining to your life insurance will be automatically revoked. Texas Family Code § 9.301 states an automatic revocation upon divorce and lists three exceptions:
- If the divorce decree names the former spouse as a beneficiary
- The individual adds the divorced spouse as a beneficiary to the policy after the divorce
- The former spouse receives the life insurance as a “guardian” of the children
These are the exceptions for life insurance. If you decide to divorce your spouse unless further action is taken, the spouse will not benefit from your death regarding the life insurance.
Finally, the inheritance of a divorced spouse in reference to a trust depends on whether the trust is revocable or irrevocable. If you have set up a Revocable Trust then after the divorce your prior spouse will automatically lose his/her beneficiary status within the trust. On the other hand, if you set up an Irrevocable Trust then regardless of a divorce the prior spouse will still inherit and be considered a valid beneficiary. A divorce will have no effect on an Irrevocable Trust. If you decide to create an irrevocable trust, be sure to understand that your spouse will inherit the assets in the trust even after a divorce.
In a Texas divorce, the law protects you from unchecked gifts to your prior spouse and stepchildren with regard to your will, life-insurance, and revocable trusts. The prior spouse will not take from these unless one of the few exceptions apply. Divorces are riddled with complexities and it is prudent to seek advice from an experienced Texas divorce attorney during these proceedings to ensure that the divorced spouse is removed completely from your will and does not reserve an argument to acquire your assets post-divorce .