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.
Despite the difficulties faced in a divorce, the children should not be placed in the center of the crossfire. During the divorce process, and sometimes following the divorce process, it is not uncommon for a parent to become so wrapped up in anger, vengeance or simply being “right” that they forget the effect the whole process is having on the children. Below are some behaviors to avoid and some suggestions to assist you with improving your communications during the divorce process:
- Do not use children as messengers between “mom” and “dad.”
- Do not criticize your former spouse in the presence of your children because children realize they are part “mom” and part “dad.”
- Resist any temptation to allow your children to act as your caretaker. Children need to be allowed the freedom to be “children.” Taking on such responsibility at an early age degrades their self-esteem, feeds anger and hinders a child’s ability to relate to their peers.
- Encourage your children to see your former spouse frequently. Promote a good relationship for the benefit of the child.
- Do not argue with your former spouse in the presence of the children. No matter what the situation, the child will feel torn between taking “mommy’s” side and “daddy’s” side.
- At every step during the divorce process, remind yourself that your children’s interests are paramount, even over your own.
- If you are the non-primary parent, pay your child support.
- If you are the primary parent and are not receiving child support, do not tell your children. This feeds a child’s sense of abandonment and erodes their stability.
- Remember that the Court’s view child support and child custody as two separate and distinct issues. Children do not understand whether “mommy” and/or “daddy” paid child support, but they do understand that “mommy” and/or “daddy” wants to see me.
- If at all possible, do not uproot your children. When a family is falling apart, a child needs a stable home and school life to buffer the trauma.
- If you have an addiction problem, whether it be drugs, alcohol or any other affliction, seek help immediately. Such impairments inhibit your ability to reassure your children and give them the attention they need.
- If you are having difficulty dealing with issues relating to your former spouse, discuss such issues with mental health professionals and counselors.
- Reassure your children that they are loved and that they have no fault in the divorce.
Though these steps are not all-inclusive, they will assist you in dealing with the complex issues of a divorce and hopefully minimize the impact of the divorce process on the children.
A regrettable truth in family law often finds one parent unilaterally removing a child from the other parent while dissolving a marriage without any grounds or evidence of wrongdoing. Not surprisingly, disturbing numbers of children are routinely separated from loving, responsible parents for reasons that have nothing to do with their wishes, safety, health, or welfare and many times have to do with a lack of proper legal counsel.
In 50% of the marriages that end in divorce, 80% of these are over the objection of one spouse (close to 100% when children are involved). I am sure you have heard about “custody battles,” but you probably do not know that many start out with one parent taking a child from the other and refusing visitation until a court orders possession sometimes months down the line. You have heard about the witch hunt for “deadbeat dads,” but did you know that many of these fathers are well educated men who have lost their jobs due to a downtrodden economy and still love their children and want to play a leading role in their lives and upbringing. You have heard the hysteria over “child abuse,” but did you know that many accusations against fathers are shown to be false and used by one parent as a weapon to alienate the children from the other parent.
David Popenoe in his book “Life Without Father” tells us that negative consequences of fatherlessness are all around us. Evidence indicating damage to children growing up in fatherless homes has accumulated in near tidal-wave proportions. Fatherless children experience significantly more physical, emotional, and behavioral problems than do children growing up in intact families.
Children from fatherless homes are:
- 5 times more likely to commit suicide
- 32 times more likely to run away
- 20 times more likely to have behavioral disorders
- 14 times more likely to commit rape
- 9 times more likely to drop out of high school
- 10 times more likely to abuse chemical substances
- 9 times more likely to end up in a state-operated institution
- 20 times more likely to end up in prison.
(Information from Mark Hall, Father’s Manifesto).
In “My Rewar, My Punishment…My Son, Sons of Divorce,” Steven Manchester describes the situation many dads are dealing with when exercising visitation:
“I’d take my son for our court-ordered visits, only to drop him off two hours later, so another man could bounce him off his lap. Ironically, each new boyfriend was given all the time he wanted with my son. At first, it killed me, but I decided, “Whatever’s best for my boy. His happiness must come first!” Though it stung terribly, that attitude sustained me all the way to Christmas.
I waited in my old driveway for 4 excruciating hours, while three inches of snow muffled the screams from the cab of my truck. When they finally pulled in, my ex-wife snickered, “I must have lost track of time?” and handed over my son. I was livid! My boy was dead tired and half-asleep. And the EX…well…she just grinned, confident that there was nothing I could do about it. It took everything I had left to conceal my tears. I didn’t plan to give her anything for Christmas and was doing my best to stick to the plan.”
It is a sad scenario.
In divorce court, many fathers are left feeling that everything they have done, years of hard work, years of tender love, years of unstinting devotion to their family and children count as nothing.
In the 1960’s women fought hard to get laws passed to protect them against family violence, stalking and sexual harassment. The shame is that women of the 1990’s now use these same needed and appropriate laws wrongfully to their advantage and feel justified in punishing their spouse for wrongs they feel have been done to them by misusing the legal system; and in the process erase fathers from the lives of their children!
The facts are that many times the courtroom becomes a legal battleground. Inadequate counsel or absence of counsel can result in decisions that negatively affect children and the family for years to come.
In Texas, Prenuptial Agreements are becoming a very important tool for prospective spouses in the event of future marital problems. With the rise in divorce rates and more boomer/senior remarriages, many people with assets are turning to a marital contract to sidestep a potentially difficult and very expense divorce.
A prenuptial agreement allows prospective spouses to, legally in advance, specifically define rights and obligations to each other and further allows spouses to decide their future marital property rights with relativity minimal judicial actions. A prenuptial agreement, in Texas, can cover any matter except:
Violate public policy or a statute imposing criminal penalties
Adversely affect a child’s right to support
Defraud a creditor
Texas Family Code 4.003(a)(8), (b),4.106(a).
Among the permissible provisions that parties can list in a prenuptial agreement are the following:
Rights and obligations of any interest, present or future, legal or equitable, vested or contingent, in real or personal property.
Right to manage, control and dispose, by agreement, property upon separation of the married parties, dissolution of the marriage, death of either party, or other agreed event.
Modify or eliminate spousal support.
Specific matters related to prospective spouses, including personal rights and obligations that are not in violation of state laws.
Choice of a state or country law that will govern the prenuptial agreement.
Creation of a Will or Trust.
Disposing of the Estate upon the death of one of the spouses. Also ownership rights and disposition of benefits from a life insurance policy upon the death.
Waive one party’s right to occupy the family homestead after the other party dies.
To file for a divorce in Texas, you must be a Texas Resident for 6 months, and you must have lived within the county you plan to file in for at least 90 days immediately prior to filing of your divorce petition. Time spent by a Texas resident outside of Texas, while in the military, satisfies the residency requirement in Texas for a divorce.
Texas does not recognize legal separations.
It is possible to get a divorce even though the other party does not want the divorce to take place. Texas is a “no fault divorce state.” “No fault” means that one spouse does not have to prove the other spouse has done anything wrong in order to obtain a divorce. You cannot be held to a marriage because your spouse does not want to sign or refuses to participate in the divorce process. The court will enter divorce orders even if the other party refuses to sign them.
Texas requires a minimum 60 day waiting period before any divorce can be finalized. The 60 day period begins to run from the time the Original Petition for Divorce is actually filed with the court. In other words, the shortest time it will take to finalize a divorced in Texas is 61 days. On occasion, in domestic violence cases, there is an exception to the 60 day rule. If the parties are in agreement, a divorce proceeding can be finalized immediately following the sixty-day waiting period. On average, however, the time period is more likely to run 90 to 120 days in an uncontested divorce due to the crowding of court dockets and the time necessary for counsel to draft necessary legal documents and obtain the agreement of both parties regarding the wording of the final documents. If the parties are not in agreement, the time necessary to finalize the divorce will depend on the conduct of both parties and their attorneys, the court’s schedule, the matters in controversy and the complexity of the contested issues. From start to finish, the divorce process may go through a number of phases which might include temporary orders, exchange of financial information, psychological evaluations (in child custody cases), alternative dispute resolution, trial, and appeal. A divorce in which the parties are deeply in opposition to an agreement on some or all of the core issues may take anywhere from several months to several years to complete.
As to the division of marital assets, Texas is a community property state. For more information on community and separate property, see our blog, Divorce: What is separate property and what is community property.
It is important to remember that, although the statutory waiting period to finalize a divorced is 60 days, it is more likely than not that your divorce will “not” be finalized on the 61st day following the filing of your petition for divorce.