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.
Rights and Duties of a Parent – Joint Managing Conservator in Texas
Rights and Duties of a Parent – Joint Managing Conservator in Texas.
Waiver To the Guidelines is a Matter of Court Discretion
As a joint managing conservator of a child in a divorce proceeding in Texas, unless special circumstances arise justifying a variance from the Guidelines, the Court will normally order guideline code rights and duties and a parent will be awarded the following:
1.the right to receive information from any other conservator of the child concerning the health, education, and welfare of the child.
2.the right to confer with the other parent to the extent possible before making a decision concerning the health, education, and welfare of the child.
3.the right of access to medical, dental, psychological, and educational records of the child.
4.the right to consult with a physician, dentist, or psychologist of the child.
5.the right to consult with school officials concerning the child’s welfare and educational status, including school activities.
6.the right to attend school activities.
7.the right to be designated on the child’s records as a person to be notified in case of an emergency.
8.the right to consent to medical, dental, and surgical treatment during an emergency involving an immediate danger to the health and safety of the child.
9.the right to manage the estate of the child to the extent the estate has been created by the parent/conservator or the parent/conservator’s family.
10.the duty to inform the other conservator of the child in a timely manner of significant information concerning the health, education, and welfare of the child; and
11.the duty to inform the other conservator of the child if the conservator resides with for at least thirty days, marries, or intends to marry a person who the conservator knows is registered as a sex offender under chapter 62 of the Code of Criminal Procedure or is currently charged with an offense for which on conviction the person would be required to register under that chapter. IT IS ORDERED that this information shall be tendered in the form of a notice made as soon as practicable, but not later than the fortieth day after the date the conservator of the child begins to reside with the person or on the tenth day after the date the marriage occurs, as appropriate. IT IS ORDERED that the notice must include a description of the offense that is the basis of the person’s requirement to register as a sex offender or of the offense with which the person is charged. WARNING: A CONSERVATOR COMMITS AN OFFENSE PUNISHABLE AS A CLASS C MISDEMEANOR IF THE CONSERVATOR FAILS TO PROVIDE THIS NOTICE.
12.the duty of care, control, protection, and reasonable discipline of the child.
13.the duty to support the child, including providing the child with clothing, food, shelter, and medical and dental care not involving an invasive procedure.
14.the right to consent for the child to medical and dental care not involving an invasive procedure.
15.the right to direct the moral and religious training of the child.
16.Only one parent shall have the exclusive right to designate the primary residence of child in a specific geographical area, which is commonly the county in which the child currently resides and the contiguous counties thereto.
17.the right to consent to medical, dental, and surgical treatment involving invasive procedures may be subject to agreement, an independent right or an exclusive right;
18.the right to consent to psychiatric and psychological treatment of the child may be subject to agreement, an independent right or an exclusive right;
19.Only one parent shall have the exclusive right to receive and give receipt for periodic payments for the support of the child and to hold or disburse these funds for the benefit of the child;
20.the right to represent the child in legal action and to make other decisions of substantial legal significance concerning the child may be subject to agreement, an independent right or an exclusive right;
21.the right to consent to marriage and to enlistment in the armed forces of the United States may be subject to agreement, an independent right or an exclusive right;
22.the right to make decisions concerning the child’s education may be subject to agreement, an independent right a joint right or an exclusive right;
23.except as provided by section 264.0111 of the Texas Family Code, the right to the services and earnings of the child may be subject to agreement, an independent right or an exclusive right;
24.except when a guardian of the child’s estate or a guardian or attorney ad litem has been appointed for the child, the right to act as an agent of the child in relation to the child’s estate if the child’s action is required by a state, the United States, or a foreign government may be subject to agreement, an independent right or an exclusive right; and
25.the right to manage the estate of the child to the extent the estate has been created by community property or the joint property of the parent/conservator may be subject to agreement, an independent right or an exclusive right.
In accordance with section 153.001 of the Texas Family Code, it is the public policy of Texas to assure that children will have frequent and continuing contact with parents who have shown the ability to act in the best interest of the child, to provide a safe, stable, and nonviolent environment for the child, and to encourage parents to share in the rights and duties of raising their child after the parents have separated or dissolved their marriage. The Court will therefore normally establish the primary residence of the child in the county where the child currently resides and/or a contiguous county thereto, and the parties shall not remove the child from such county for the purpose of changing the primary residence of child until there is a modification to the existing order of the court of continuing jurisdiction or a written agreement signed by the parties and filed with the court.
The geographical restriction on the residence of the child may be lifted or modified if, at the time the primary parent with the right to establish residence wishes to remove the child from the county for the purpose of changing the primary residence of the child, the other parent does not reside in that county or a contiguous county thereto.
Time constraints, employment issues of the primary Joint Managing Conservator, and other material factors may come into play when a Joint Managing Conservator requests waiver of the geographical restrictions. It customarily is a very difficult, but not always insurmountable, burden to achieve a geographical restriction waiver. The success, consistency and regularity of the non-primary conservator’s possession and access to the child is a factor the court will view in making a ruling. Frequently, an agreement to adjust the amount of support and/or transportation costs comes into play in resolving such disputes.
A Father’s Uphill Battle – I Love My 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.
Torn Apart – Children and Divorce
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.
Texas Prenuptial Agreements
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:
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Violate public policy or a statute imposing criminal penalties
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Adversely affect a child’s right to support
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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:
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Rights and obligations of any interest, present or future, legal or equitable, vested or contingent, in real or personal property.
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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.
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Modify or eliminate spousal support.
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Specific matters related to prospective spouses, including personal rights and obligations that are not in violation of state laws.
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Choice of a state or country law that will govern the prenuptial agreement.
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Creation of a Will or Trust.
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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.
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Waive one party’s right to occupy the family homestead after the other party dies.
