For better or worse,
For richer or poorer,
Until . . . a divorce is filed.
When there are several zeros at the end of your bank balance, as in $500,000.00; $5,000,000.00 or more, the financial aspects of divorce can be high risk.
Texas divorce laws are the same regarding the division of property whether the money and assets in a marital estate are a lot or a little; however, the courts will inevitably encounter and address more complex issues regarding the property division in a divorce case with substantial financial and business assets.
Texas is a community property state. What does that mean, as a practical matter, when divorce occurs?
1. The law presumes that all property owned by either spouse is community property, meaning that both spouses own an undivided one-half interest.
2. The court cannot divest a spouse of his or her separate property in divorce.
In a very simple explanation: Texas community property is everything earned or acquired during the marriage other than inheritances or gifts. Your paycheck is community property, your rental income is community property, the cars you purchase are community property, retirement funds accumulated during marriage are community property.
At the time of the divorce, the court will make a just and right division of the community property. “Just and right” does not mean 50/50. Often the courts will split the community property equally, but many factors may affect this division including:
1. The spouses’ earning abilities and education.
2. The spouses’ actual earnings.
3. Who has care and primary custody of the children.
4. The value of separate property owned by the spouses. If the wife inherited $3,000,000.00, should the husband be awarded more of the community property?
5. Fault in the break up of the marriage, especially if a cheating spouse spent substantial assets dating or cavorting with others.
6. The debts of the spouses.
7. Tax consequences.
The bigger the marital pocketbook, the bigger the risk to assets in play.
Texas Child Support and High Asset Divorces:
The court also has discretion in setting child support when the parents are wealthy. The Texas Family Code provides guidelines and the guidelines are presumably in the best interest of the child.
The law caps the Texas child support amount guidelines to a percentage of the first $7,500.00 of the paying parent’s earnings. However, the cap is not made of steel. The law is a guideline.
The court has the discretion to order child support in excess of the guidelines based on the children’s best interest which includes an examination of the proven needs of the children. In the case of children growing up in a high-income household, do not expect the court to necessarily limit its consideration to basic food and shelter. The court may consider many factors in setting child support, including the children’s current living standards, such as private education, nannies, medical issues, emotional issues, sports and other extracurricular activities and, in the rare case, a body guard.
When setting child support within a wealthy family undergoing divorce, the court has discretion, based on the evidence, to set order child support above the presumptive amount in the guidelines. The court’s determination is subjective and is reversed by higher courts only if the trial court “abused its discretion,” a high threshold indeed.
With so much at stake, you should hire an experienced family law attorney who can present your case clearly, and persuasively.
When couples says “I do” one must be thoughtful of the potential consequences to a Small Business owner. A Small Business owner without proper preparation and/or knowledge may soon be saying “our assets” instead of “my assets”. Small Business owners should closely examine their fiduciary duties to their spouse in reference to community assets that may arise when two individuals acquire a marriage license and marry or marry by common law. A small business owner can protect his/her premarital property by keeping it under their control rather than risking community characterization.
Pre-Nuptial agreements are binding technical contracts that safe-guard an individual’s properties, monies, and business belongings in detail. These contracts may be specific, complex, and meticulous. An attorney should be consulted. The Pre-Nuptial agreement can dictate, regulate or mitigate manage next of:
- The entitlements of spousal support
- The inheritance regarding Insurance Policies
- The specific allocation of resources and properties in a Will, Trust, or Business
- The marital property claims in reference to both parties
- The ability to Own, Sell, Purchase, Rent, Mortgage, and Regulate any Separate or Community Properties
If an individual has married before a Pre-Nuptial contract is executed there is still hope and a path to take in order to insure protection of your small business. A Post-Nuptial agreement protects a Small Business owner’s property after the fact and should be utilized if required or desired. The Post-Nuptial agreement is similar to the Pre-Nuptial agreement but more care and specificity is required since some or all an individual’s assets may have taken on the attributes of community property because of the spouse’s inherent property rights after the marriage has taken place.
There are three major Ante-Nuptial agreements:
1.) Partition and Exchange Agreement: This Agreement regulates the financial allocation of a Small Business allowing monies and stock to remain separate property rather than becoming community property over time. It also separates and characterizes each spouse’s future income. The agreement allows Small Business owner’s the ability to have independent control over their business without empowering or including their spouse in decision making or management.
2.) Agreement Concerning Income from Separate Property: The principal feature of this agreement is to protect an individual’s corpus & income that exists or is produced by their Small Business. Even If there is an existing Post-Nuptial agreement that inhibits a spouse from attaining stocks or money within a specific Small Business, the actual income the Small Business produces may become community and the other spouse is entitled to their share upon dissolution of the marriage. This is tricky, for a Small Business owner is right in believing that the property and assets of the business itself is independently theirs, but he/she is wrong in the assumption that the profit made by their business is independently theirs as well. This Agreement allows a Business Owner to control, manage, and personally own all the income that is realized through his/her company. This Agreement must be signed by the owner and his/her spouse and should be as concrete as possible to avoid problems in any type of litigation process.
3.) Complex Estate Planning: Estate planning is helpful and smart. Many Post-Nuptial agreements allow independent properties to modify the community status of property to attain certain tax breaks that are applied to married couples. This may put a smile on a Small Business owner’s face for a while as he/she reaps the benefits of tax-deductions, but if a divorce occurs these tax exemptions could become proof of the existence of community property to be awarded to his/her spouse. Pre and post marital agreements may not be necessary dependent on specific situations, but if they are necessary the agreements will ensure the control of one’s business assets, income, and properties. The law was created to help ensure the protection of people’s premarital rights. If you are a Small Business owner read up on yours rights and avoid not being taken advantage of by a once loving spouse in the future.
During the Holiday season many Texas parents become very concerned over sending their child to the non-primary conservator parent’s home for a visit. Many Children will cross state lines to see their non-primary conservator parent and there is always a fear that the child may not be returned to his/her home state. What can you do if this does happen?
The State of Texas follows a uniform law regarding determination of appropriate state jurisdiction in custody matters known as the Uniform Child Custody Jurisdiction and Enforcement Act (UCCJEA), and related statutes which enforce or set procedures regarding proper jurisdiction such as the Parental Kidnapping Prevention Act. Texas has adopted these statutes. The Uniform Child Custody Jurisdiction Enforcement Act defines which state has or may maintain jurisdiction in a particular case and often mandates that other states recognize decisions handed down by the state determined to have jurisdiction.
The Act states, among other things, that a court may rule on custody issues if the Child:
• Has continually lived in a home state for 6 months or longer
• Was living in the state before being wrongfully taken elsewhere by a parent seeking custody in another state
• Has an established relationship with people (family, relatives or teachers), ties, and attachments in the state
• Has been abandoned: or is safe in current state, but could be in danger of neglect or abuse in the home state
How can Continuing Exclusive Jurisdiction be lost?
1. When A Texas Court determines that neither the child, or a child and one parent have a significant contact with Texas, and substantial evidence is no longer available in Texas concerning the child’s care, protection, and personal relationships
2. Texas or another state determines that the child and the child parents do not presently reside in Texas.
What about Jurisdiction to Modify an Existing Order?
In the absence of temporary emergency jurisdiction, Texas cannot modify a child custody decision made by another state’s court unless or until a court of this state has jurisdiction to make an initial custody determination and one of the following occurs:
1. Another State determines it no longer has continuing jurisdiction or finds that Texas would be a more convenient forum.
2. A court determines that the child and the child’s parents do not presently reside in the other state.
What about Temporary Emergency Jurisdiction?
Temporary emergency jurisdiction is reserved for very extraordinary circumstances. The court has and may assert jurisdiction only when a child is present in the state and has been abandoned or is in need of protection because of a threat or subjected the child to mistreatment or abuse.
When involved in an international child custody case where the child has been abducted or is wrongfully retained, the issue may be determined if the International Child Abduction Remedies Act, 12 USC Section 11.601-11610, of the Hague Convention, is applicable. If so, The US State Department Office of Citizen & Counselor Services should be contacted or any attorney may file suit for return of the child.
These interstate jurisdiction cases are very intensive. Get to a knowledgeable attorney and assert your rights quickly. Protect you and your child’s rights to have a normal child/parent relationship without the fear of abduction!
Preparing for a Texas Divorce: Assets
Preparing for a divorce is painful no matter the circumstance. Before you get into the tangle of the Texas divorce process, you can reduce the expense, stress and conflict many people face by making sure you are prepared. Planning ahead allows you to make sound decisions and start preparing for your life post-divorce, and may also help you avoid post-divorce pitfalls. Below is a list of items you need to gather before counseling with an attorney.
1. A Listing of all Real Property, address and location, including (include time-shares and vacation properties):
1. Deeds of Trust
3. Legal Description
4. Mortgage Companies (Name, Address, Telephone Number, Account Number, Balance of Note, Monthly Payments)
5. Current fair market value
2. Cash and accounts with financial institutions (checking, savings, commercial bank accounts, credit union funds, IRA’s, CD’s, 401K’s, pension plans and any other form of retirement accounts):
1. Name of institution, address and telephone number
2. Amount in institution on date of marriage
3. Amount in institution currently
4. Account Number
5. Names on Account
3. Retirement Benefits
1. Exact name of plan
2. Address of plan administrator
5. Starting date of contributions
6. Amount in account on date of marriage
7. Amount currently in account
8. Balance of any loan against plan
4. Publicly traded stock, bonds and other securities (include securities not in a brokerage, mutual fund, or retirement account):
1. Number of shares
2. Type of securities
3. Certificate numbers
4. In possession of
5. Name of exchange which listed
6. Pledged as collateral?
7. Date acquired
8. Tax basis
9. Current market value
10. If stock (date option granted, number of shares and value per share)
5. Insurance and Annuities
1. Name of insurance company
2. Policy Number
4. Type of insurance (whole/term/universal)
5. Amount of monthly premiums
6. Date of Issue
7. Face amount
8. Cash surrender value
9. Current surrender value
10. Designated beneficiary
6. Closely held business interests:
1. Name of business
3. Type of business
4. % of ownership
5. Number of shares owned if applicable
6. Value of shares
7. Balance of accounts receivables
8. Cash flow reports
9. Balance of liabilities
10. List of company assets
7. Mineral Interests (include any property in which you own the mineral estate, separate and apart from the surface estate, such as oil and gas leases; also include royalty interests, work interests, and producing and non-producing oil and gas wells.
1. Name of mineral interest
2. Type of interest
3. County of location
4. Legal description
5. Name of producer/operator
6. Current market value
8. Motor Vehicles (including mobile homes, boats, trailers, motorcycles, recreational vehicles; exclude company owned)
5. Name on title
6. VIN Number
7. Fair Market Value
8. Name of creditor (if any), address and telephone
9. Persons listed on debt
10. Account number
11. Balance of any loan and monthly payment
12. Net Equity in vehicle
9. Money owed by spouse (including any expected federal or state income tax refund but not including receivables connected with any business)
10. Household furniture, furnishings and Fixtures
11. Electronics and computers
12. Antiques, artwork and collectibles (including works of art, paintings, tapestry, rugs, crystal, coin or stamp collections)
13. Miscellaneous sporting goods and firearms
15. Animals and livestock
16. Farming equipment
17. Club Memberships
18. Travel Award Benefits (including frequent flyer miles)
19. Safe deposit box items
20. Burial plots
21. Items in any storage facility
22. A listing of separate property (property prior to marriage, family heir looms, property gifted)
23. Listing of all liabilities (including mortgages, credit card debt, personal loans, automobile loans, etc.):
a. Name of entity, address and telephone number
b. Account number
c. Amount owed
d. Monthly payment
e. Property securing payment (if any)
f. Persons listed as liable for debt
The Holiday season is now upon us and hopefully all parents have worked out the upcoming visitation schedules for the 2012 Holiday Season. But if not you need to be working on it now! Here is a reminder of the current Texas Family Law
Code’s Standard Possession Order for Holidays.
§ 153.314. Holiday Possession Unaffected by Distance Parents Reside Apart.
The following provisions govern possession of the child for certain specific holidays and supersede conflicting weekend or Thursday periods of possession without regard to the distance the parents reside apart. The possessory conservator and the managing conservator shall have rights of possession of the child as follows:
Texas Family Law Code’s Standard Visitation Guidelines for Christmas Break:
(1) the possessory conservator shall have possession of the child in even-numbered years beginning at 6 p.m. on the day the child is dismissed from school for the Christmas school vacation and ending at noon on December 28, and the managing conservator shall have possession for the same period in odd-numbered years;
(2) the possessory conservator shall have possession of the child in odd-numbered years beginning at noon on December 28 and ending at 6 p.m. on the day before school resumes after that vacation, and the managing conservator shall have possession for the same period in even-numbered years;
Texas Family Law Code’s Standard Visitation Guidelines for Thanksgiving:
(3) the possessory conservator shall have possession of the child in odd-numbered years, beginning at 6 p.m. on the day the child is dismissed from school before Thanksgiving and ending at 6 p.m. on the following Sunday, and the managing conservator shall have possession for the same period in even-numbered years;
Texas Family Law Code’s Standard Visitation Guidelines for Child’s Birthday:
(4) the parent not otherwise entitled under this standard order to present possession of a child on the child’s birthday shall have possession of the child beginning at 6 p.m. and ending at 8 p.m. on that day, provided that the parent picks up the child from the residence of the conservator entitled to possession and returns the child to that same place;
Texas Family Law Code’s Standard Visitation Guidelines for Father’s Day:
(5) if a conservator, the father shall have possession of the child beginning at 6 p.m. on the Friday preceding Father’s Day and ending on Father’s Day at 6 p.m., provided that, if he is not otherwise entitled under this standard order to present possession of the child, he picks up the child from the residence of the conservator entitled to possession and returns the child to that same place;
Texas Family Law Code’s Standard Visitation Guidelines for Mother’s Day:
(6) if a conservator, the mother shall have possession of the child beginning at 6 p.m. on the Friday preceding Mother’s Day and ending on Mother’s Day at 6 p.m., provided that, if she is not otherwise entitled under this standard order to present possession of the child, she picks up the child from the residence of the conservator entitled to possession and returns the child to that same place.
Texas child visitation orders may differ from the norm to accommodate family situations so you should always check your decree first! If in doubt about your holiday visitation time, contact an attorney who can help you to make sure nothing happens to affect this special season with your children. ‘Tis the Season To Be Jolly’!