Under the Texas Family Code, a spouses separate property consists of 1) the property owned or claimed by the spouse before marriage; 2) the property acquired by the spouse during marriage by gift, devise, or descent, and 3) the recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage.
The terms “owned and claimed” as used in the Texas Family Code mean that where the right to the property accrued before marriage, the property would be separate. Inception of title occurs when a party first has a right of claim to the property by virtue of which title is finally vested. The existence or nonexistence of the marriage at the time of incipiency of the right of which title finally vests determines whether property is community or separate. Inception of title occurs when a party first has a right of claim to the property.
Under Texas Constitution, Art. XVI, Section 15, separate property is defined as 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; provided that persons about to marry and spouses, without the intention to defraud pre-existing creditors, may by written instrument from time to time partition between themselves all or part of their property, then existing or to be acquired, or exchange between themselves the community interest of one spouse or future spouse in any property for the community interest of the other spouse or future spouse in other community property then existing or to be acquired, whereupon the portion or interest set aside to each spouse shall be and constitute a part of the separate property and estate of such spouse or future spouse; spouses may also from time to time, by written instrument, agree between themselves that the income or property from all or part of the separate property then owned or which thereafter might be acquired by only one of them, shall be the separate property of that spouse; if one spouse makes a gift of property to the other that gift is presumed to include all income or property which might arise from that gift of property; and spouses may agree in writing that all or part of the separate property owned by either or both of them shall be the spouses’ community property.
In 1917 the Legislature defined and income from separate property to be the separate property of the owner spouse. In Arnold v. Leonard, 114 Tex. 535,273 S.W. 799 (1925), the Supreme Court held that the Legislature did not have the constitutional authority to characterize the income from separate property as the owner’s separate property. The court explained that the Legislature’s authority was limited to enacting laws regulating the management and liability of marital property, not its separate or community character. This decision strengthened the constitutional principal that the Legislature may not define what is community and separate property in a manner inconsistent with Article 16, Section 15 of the Texas Constitution.
There are numerous means by which separate property may be acquired in defiance of Article 16, Section 15, a partial list includes mutations of separate property, increases in value of separate land and personality, recovery for personal injury not measured by loss of earning power, improvements of separate land with an unascertainable amount of community funds, and United States Securities purchased with community funds.
Although such property may undergo changes or mutations, as long as it is traced and properly identified it will remain separate property.
The Texas Family Code defines community property as follows: “community property consists of the property, other than separate property, acquired by either spouse during marriage.”
Texas Family Code, Section 3.003 states that all property possessed by either spouse during or at the dissolution of the marriage is presumed to be community property and that the degree of proof necessary to establish that property is separate property, rather than community property, is clear and convincing evidence. Clear and convincing evidence is defined as that 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. If property cannot be proved to be separate property, then it is deemed to be community property.
The Texas Family Code, Section 7.002, deals with quasi-community property and requires a court divide property wherever the property is situated, if 1) the property was acquired by either spouse while domiciled in another state and the property would have been community property if the spouse who acquired the property had been domiciled in Texas at the time of acquisition; or 2) property was acquired by either spouse in exchange for real or personal property and that property would have been community property if the spouse who acquired the property so exchanged had been domiciled in Texas at the time of the acquisition.
What is needed for visitation enforcement?
- A valid court order that has been signed by a judge or issued by the district clerk’s office, certified as having been signed by a judge.
- Be sure to read your order thoroughly. If you do not understand any of the provisions, take it to an attorney and have them explain it to you.
- The custodial parent must have been validly served with the court order or it must be shown that the they had prior knowledge of the court order and its content.
- The custodial parent must have full knowledge of the above two factors and must be intentionally and willfully violating the court order.
Despite the fact that you may have a valid court order, many police departments do not want to get involved in enforcing civil orders. If you call the police department and show them the order they may or may not assist you in gaining access to your children. Despite whether you get your children or not, you need to ask them to create a police report stating that you were there to pick up your children and noting the time and date you were present. If the police refuse to prepare a report, go to a local grocery store or fast food restaurant and purchase something so that you have a receipt stating that you were in the area and stating the date and time you were there.
How to prove a denial of visitation.
Take a witness along with you – preferably an off-duty constable or deputy or neutral party. Have your witness stay in the vehicle, but with the window down so that he/she can hear any conversations that take place. Have your vehicle parked in such a way that the witness can see you at all times.
Take a copy of your divorce decree along with you which shows you are suppose to have possession of your children on the date and time you arrive to pick them up.
Always be on time, and if possible a few minutes early.
If the custodial parent does not answer the door or have the child available to exercise visitation then call the police and request a Police Incident Report. If the police will not issue a police report then make sure you document the incident as best as possible. After two or three violations, take the reports, along with any witness statements, to an attorney to discuss how to bring an enforcement action against the custodial parent who is violating the order.
Take a tape recorder with you, have it running from the time you approach the residence, and do not stop it until you leave. Keep the tape recorder running as you leave the area.
As you approach the residence state the following facts in the recorder: your complete name, the address you are approaching, the reason you are there “I am going to pick up my children as stated in the final decree,” state who is with you and why, state the time of day, state when you are leaving and a brief description of what occurred. Keep a written record of each recording and label them according to date.
Keep a calendar of each denied visitation.
Make sure you have a credible witness each time you try to exercise your possession with your children.
Do not argue with your exhibit-spouse regardless of how angry you are or whether you get your children or not. Staying calm will work in your favor in the long run.
If you file an enforcement action, if the custodial parent continues to deny you visitation after the suit is brought, continue to go and knock on the door to exercise your visitation, as each separate violation of the court order can be used in the enforcement action.
“Mommy and Daddy can’t get along anymore, so we’re going to get a divorce, but we still love you.” Anonymous
Famous last words! Now the Divorce is over and the divorced parents have to deal with each other on working out who may use the tax deductions on the child’s expenses. This is a very serious tax matter for both parents since if done incorrectly; both parties could be audited, with fines, penalties and much ill feeling. Working together on applying for deductions correctly is a good start on joint parenting of your child. You may have both made the decision not to be together, but you should continue after a divorce to make decisions on your child and his/her well-being.
Dependent Exception for Children
A qualifying child for purposes of the child tax credit:
1. Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them
2. Under age of 17 at the end of 2011,
3. Did you provide over half of his or her own support for 2011,
4. Did they live with you for more than half of 2011 and are you “the custodial parent”.
5. Did you claim them as dependent on your return?
6. Did you not file a joint return for the year and
7. Are you a U.S. citizen, a U.S. national, or a U.S. resident alien?
The custodial parent is entitled to take this exemption for their child since the child has lived over 50% of the time with this parent and also provides over 50% of the child’s support.
Then noncustodial parent may be able to take the deduction in specific cases (Non-Custodial Parent Rule):
1. A Custodial parent signs a written IRS declaration giving the noncustodial parent the right to claim the designated child as a dependent for the year.
2. If combined, both parents provide more than half of the child’s support
3. The parents are divorced or separated under a written agreement at the end of the year or have lived apart during the last six months of the year.
4. The child lives with the noncustodial parent more than half the year.
When a parent has equal joint physical custody of the child, it is problematic as to which parent is entitled to the exemption. To avoid the unnecessary expense of confronting this issue both parents should try to come to an agreement as to who will use the child exemption for the year and have the other parent sign an IRS declaration as to the exemption. Always keep a date and time log of when the child is in residence with you during the year and the expenses incurred on their behalf. This log may be very important in resolving many problems by establishing possession times of your child and can be strong evidence in a court of law.
When these requirements are met, the noncustodial parent is eligible for tax breaks with the designated child.
Dependency Exemption Deduction: $3,700 for 2011 and $3,800 for 2012.
Child Tax Credit: This credit is worth up to $1,000 for each eligible child.
Higher Education Tax Credits: American Opportunity can be worth up to $2,5000 during first four years of child’s college education. The Lifetime Learning credit can be worth up to $2,000 and covers usually any higher education tuition costs.
Student Loan Interest Deduction: A deduction up to $2,500 on qualified student loan interest paid by the parent.
Tuition Deduction: The deduction is up to $4,000 for higher education tuition and mandatory enrollment fees.
The noncustodial parent can usually claim the tax breaks below as long as the support and the custody requirements of the noncustodial parent rule are met. The custodial parent can also usually claim these breaks.
1. Itemized deductions for the child’s medical expenses paid by parent.
2. Tax free employer provided healthcare benefits for the child
3. Tax free heath savings account (HAS) distributions to cover the child’s medical expenses
Only A Custodial Parent Is Allowed Tax Breaks:
Head of Household (HOH) Filing: This filing is better than filing as a single taxpayer since the standard deduction is larger and tax brackets are looser.
Tax Free Childcare Assistance: Under an employer plan up to $5,000 in federal income tax free reimbursement for child care expenses.
Earned Income Tax Credit: In 2012, this credit is worth up to $3,169 for one child and up to $5,891 FOR THREE OR MORE CHILDREN. As a parent’s income goes up, the credit is phased out.
Child Care Tax Credit: This credit of between $600 to $1500 for one child, and $1,200 to $2,100 for two or more children, based on a parent’s income.
Under Texas legislation the courts have a right to temporarily amend certain existing orders concerning a parent who is ordered to military deployment, military mobilization or temporary military duty. This legislation was set into Texas law, beginning September 1, 2009.
If a conservator is ordered to military deployment, military mobilization, or temporary military duty that involves moving a substantial distance from the conservator’s residence so as to materially affect the conservator’s ability to exercise the conservator’s rights and duties in relation to his or her child, either conservator may file for an order under subchapter (a) of Section 153.702 of the Texas Family Code.
The Court may then render a temporary order in a proceeding under this subchapter regarding:
1. possession of or access to the child; or
2. child support.
A temporary order of the court under this subchapter may grant rights to and impose duties on a designated person (with certain limitations) regarding the child, except the court may not require the designated person to pay child support.
After a conservator’s military deployment, military mobilization, or temporary military duty is concluded, and the conservator returns to the conservator’s usual residence, the temporary orders under this section terminate and the rights of all affected parties are governed by the terms of any court order that was applicable before the conservator was not ordered to military deployment, military mobilization, or temporary military duty.
Further, if the conservator with the exclusive right to designate the primary residence of the child is ordered to military deployment, military mobilization, or temporary military duty, the court may order appointment of a designated person to exercise the exclusive right to designate the primary residence of the child during the military deployment, military mobilization, or temporary military duty in the following order of preference:
1. the conservator who does not have the exclusive right to designate the primary residence of the child;
2. if appointing the conservator described by Subdivision (1) is not in the child’s best interest, a designated person chosen by the conservator with the exclusive right to designate the primary residence of the child; or
3. if appointing the conservator described by Subdivision (1) or the person chosen under Subdivision (2) is not in the child’s best interest, another person chosen by the court.
A designated person named in a temporary order rendered under this section has the rights and duties of a nonparent appointed as sole managing conservator under Section 153.371 of the Texas Family Code.
The court may limit or expand the rights of a nonparent named as a designated person in a temporary order rendered under this section as appropriate for the best interest of the child.
If the court appoints the conservator without the exclusive right to designate the primary residence of the child, the court may award visitation with the child to a designated person chosen by the conservator with the exclusive right to designate the primary residence of the child.
1. The periods of visitation shall be the same as the visitation to which the conservator without the exclusive right to designate the primary residence of the child was entitled under the court order in effect immediately before the date the temporary order.
2. The temporary order for visitation must provide that
a. the designated person under this section has the right to possession of the child for the periods and in the manner in which the conservator without the exclusive right to designate the primary residence of the child is entitled under the court order in effect immediately before the date of temporary order.
b. The child’s other conservator and the designated person under this section are subject to the requirements of Section 153.316(a) with the designated person considered for purposes of that section to be the possessory conservator;
c. The designated person under this section has the rights and duties of a nonparent possessory conservator under Section 153.376(a) during the period that the person has possession of the child; and
d. The designated person under this section is subject to any provision in a court order restricting or prohibiting access to the child by any specified individual.
3. The court may limit or expand the rights of a nonparent designated person named in a temporary order under this section as appropriate for the best interest of the child.
If the parent without exclusive right to designate the primary residence of the child is ordered to military deployment, military mobilization, or temporary military duty, the court may award visitation with the child to a designated person chosen by such conservator if the visitation is in the best interest of the child. The temporary order for visitation must provide that:
1. the designated person under this section has the right to possession of the child for the periods and in the manner in which the conservator described by Subsection (a) would be entitled if not ordered to military deployment, military mobilization, or temporary military duty;
2. the child’s other conservator and the designated person under this section are subject to the requirements of Section 153.316, with the designated person considered for purposes of that section to be the possessory conservator;
3. the designated person under this section has the rights and duties of a nonparent possessory conservator under Section 153.376(a) during the period that the designated person has possession of the child; and
4. the designated person under this section is subject to any provision in a court order restricting or prohibiting access to the child by any specified individual. The court may limit or expand the rights of a nonparent designated person named in a temporary order under this section as appropriate and as is in the best interest of the child.
In today’s unpredictable economy there has been a continuing growth of small businesses and a substantial decrease of existing established businesses in Texas. In the regrettable instance of “Divorce” how may the “Family Business” be divided between a dissolving couple to reach a fair and reasonable result for both parties?
In such a situation, an experienced Family Law Attorney with the aid of economic experts becomes critical in establishing a fair and equitable price on the business, consulting the client on their rights relative to the business, helping with negotiations for a business entity to be sold, transferred, or appraised, and making sure the client’s rights are protected in the transaction.
The most important fact to establish is a credible determination of the true fair market value of a business and how the business or the business assets are to be divided between the spouses in the divorce.
The dividable interest is determined by the fair market value of the business. This value is the price a willing buyer would pay and a willing seller would give in a purchase with both buyer and seller having reasonable knowledge of the relevant facts of the business and neither being under pressure to buy or sell the business.
During a Divorce, the concept of a credible hypothetical buyer and seller may be determative and very complicated. Going through a divorce is difficult enough, but fairly determining the true value of the business in the process can be complicated and sometimes expensive. There are always two different ideas in every divorce and the family business will bring out the some very serious opinions of just what is the “fair market value”! Ideas may range from too high in today’s economy to too low base on emotional attachments, complicated further by feelings as to possible other family members who own or claim parts of the business. The value placed on proposed purchases that are not part of an arm’s length transaction may not be relevant to the correct fair market value.
To help determine the fair market value and complete the transaction fairly for both parties the family law attorney must be able to obtain and review all business and financial records, financial statements and tax returns, and any other pertinent information for the preceding 5-7 years. Often an independent business appraiser or CPA will be retained to help in determining a credible and correct valuation of the business that a Judge or Jury will respect.