Divorce And Your Business: Who Gets What
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.
Unique Possession Orders that Work with a Fathers Profession
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.
For Richer or Poorer, Hire Expert Help to Protect Your Interests in Your Texas Divorce
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 $9,200.00 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.
What Happens in a Texas Divorce ?
Divorce can be frustrating, confusing, and resentful. Divorce is never a pleasant experience even in the most amicable terms. It is important to know what you are in for when a divorce is filed. An original petition will be filed, and your spouse must be served with a process server.
After service of the original petition, the Petitioner may file for a Temporary Restraining Order (“TRO”) to protect the child and marital estate. Once a TRO is granted by the District Judge, a temporary order hearing will be set within 14 days. This temporary order hearing is extremely important and will determine the direction of the case.
Temporary Order hearings are usually condensed to 20 minutes a side depending on the complexities of the case. Within this 20 minutes, you will have to put on evidence for your entire case regarding custody of the children, management of the marital estate, and any other considerations such as receivership of a business.
After the temporary orders hearing, the case will dive into full throttle litigation. Discovery on both sides is usually conducted including interrogatories, admissions, and production of documentations. The documents that are usually requested consists of bank statements, retirement pensions, social media pages, text messages, and emails. Each case requires specific Discovery requests that are narrowly tailored to the facts presented. Discovery can last months and usually follow with motions to compel and sanctions. In highly contested cases the rigors of discovery and compiling documentation can be brutal.
During the Discovery phase, Depositions may be warranted. Depositions consists of your attorney questioning your spouse and any other witnesses that are relevant to the case for impeachment purposes. Depositions are necessary if the case will go to a jury, because impeachment of your spouse is a necessity to prove your truthfulness.
Mediation is, more often than not, mandatory in Courts, but this is the general rule. Certain Courts in the Dallas, Fort Worth, and Collin county do not require mandatory mediation. Each Court has its own rules of procedure and requirements. If the Mediation fails to produce a settlement between you and your spouse, then the only thing left is trial.
Depending on the complexities of the case and assets, a trial can last half a day or be a three-day trial. Most trials are before the District Judge. Certain facts may give rise to a jury trial but a jury trial is more costly and can take up more time. After the trial is complete the parties will have to wait for a ruling. This can take days to months depending on the case and jurisdiction.
When the final ruling is given to all parties, the Judge will charge one party to create a final order that will be submitted to the Court. This can give rise to more litigation depending on the interpretation of the Judge’s rulings by both parties. Finally, when both parties agree to a final order or the Judge determines which version of the final order is proper, then the case will be over.
Divorce can be a painful process that lasts 6 months to three years depending on the circumstances and the nature of the parties involved. If you are about to file for a Divorce in the DFW metroplex call Nacol Law Firm so that you have an experienced family law attorney to represent your interests throughout the process.
Julian Nacol
Dallas Fathers Rights Divorce Attorney
Nacol Law Firm PC
Texas Family Court Actions and Parental Alienation
Most children of divorce want to be loved and maintain strong and healthy relationships with both of their parents. These children also want to be kept out of the conflict between their parents. But there are some parents who through their feelings of hatred, rejection or want of control over the rejected parent, brainwash the alienated child to have very adverse feelings for the rejected parent and choose sides to bolster their parental identity. This is called Parental Alienation.
Parental Alienation usually happens equally between children of both sex and many times occur in highly conflicted and long lasting divorces and custody battles. A Study by Fidler and Bala (2010) states that about 11-15% of all divorces involving children involve parental alienation issues.
Parental Alienation involves destructive actions by an aligned parent to discredit and sabotage the rejected parent in the eyes of the alienated child. This is usually a sign of a parent’s inability to separate the couple’s conflict with the needs of the alienated child’s well-being. This adverse action will eventually cause increased hostility and decreased contact with the alienated child and the rejected parent. The aligned parent programs the child to believe that the rejected parent is mean, unloving, worthless and selfish, and makes the alienated child believe that he/she will be happier if the rejected parent is erased from his/her life. In very extreme cases, through manipulation by the aligned parent, the alienated child will start to hate the rejected parent which can lead to many behavioral, emotional and mental problems of separation.
What are some symptoms of Parental Alienation by the Aligned Parent?
- Interference with the target parent visits. Giving children unhealthy choices when there is no choice about the visit. Not allowing any target parent visits.
- Depriving the target parent from information regarding educational, medical and social activities of the child and excluding or not informing the target parent of all of the school, medical, social activities of the child.
- Sharing with the child “everything” about the marital relationship with false information to be “honest” with the child. Blaming the target parent of breaking up the family, financial problems, or not loving the child enough to stay, the alienating parent tries to turn the child and his/her anger against the target parent.
- Interference with or not supporting contact between the child and the target parent. Listening into telephone conversation or reading all emails, texting, or correspondence between the child and target parent.
- Making major unilateral decisions regarding the child without consulting the target parent.
- Refusing to let the child take his/her possessions to the target parent’s residence.
- Telling the child, in a time of juvenile crisis, that the target parent has been abusive and the target parent may hurt the child.
- By defying the target parent’s authority and supervision, the alienating parent is asking the child to impossibly choose one parent over the other. This causes considerable stress and potential long term emotion scarring for the child and much unnecessary pain, difficulty, and anxiety when trying to love both parents.
The alienating parent will try to program the child to dislike, hate, or fear the rejected parent. By causing the child to disown or distance themselves away from the rejected parent, the aligned parent may, in the end, cause a very distrustful and emotionally scarred child. The goal may be achieved, but not with the desired results of the alienating parent. Many times, the child, without hope, will turn on both parents and never be able to have trusting, loving relationships in his/her life.
Since the American Psychiatric Association does not formally recognize Parental Alienation Syndrome/Disorder, The State of Texas does not provide legal standards to evaluate a parental alienation presence in a child. Texas courts have started to act when there is suspected parental alienation. Some of the aids are courts appointing guardians ad litem, parenting facilitators and forensic psychologists used to study the child’s living situations and mental health of both parents and the child. Reports from these specialists have been used in making some very important rulings for the benefit of the child and the families in suspected Parental Alienation cases.
If you and your child are victims of Parental Alienation Syndrome, please contact a Dallas family law attorney who is experienced in these types of cases in Texas family courts.
