Francesca Blackard, Author at Texas Divorce Attorney Blog

Considerations in Texas Divorces Involving Complex Business Assets

Published on: April 20, 2023 | by Francesca Blackard

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For many business owners and entrepreneurs, their business is not only imperative to their financial well-being but is also a large part of their identity. This can raise obvious concerns when divorce is on the horizon. And when a couple owns a large business or corporation, or the business assets are complex in nature, the thought of dividing business assets can be overwhelming. Nonetheless, dividing complex business assets is often required, and, therefore, it is imperative that spouses understand how Texas law handles these situations.

WHAT ARE COMPLEX BUSINESS ASSETS?

Complex business assets are assets that belong to or are associated with a business that do not necessarily lend themselves to simple valuation or division. For example, the monetary value of a business’s goodwill or intellectual property rights are two common examples of complex business assets.

ARE BUSINESS ASSETS DIVIDED BETWEEN SPOUSES IN A TEXAS DIVORCE?

The short answer is it depends. Texas is a community property state. So, any assets that are acquired by either spouse during the marriage are presumed to be community property, which is subject to division upon divorce. However, determining whether complex business assets are community property is not always a straightforward endeavor. And even then, this is only the first question courts must answer when hearing a divorce involving complex business assets.

Texas Divorce Decree Must Comply with Material Terms of Parties’ Rule 11 Agreement

Published on: February 21, 2023 | by Francesca Blackard

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Parties to a Texas divorce may enter into a Rule 11 agreement to resolve issues in their case. The agreement must be made in open court and entered into the record, or be in writing, signed, and filed with the court. A Rule 11 agreement must be complete in material details and contain all of the essential elements of the agreement. It is an abuse of discretion for a court to enter a judgment that is not in compliance with material terms of the agreement. A mother recently appealed a final divorce decree that she claimed did not comply with the terms of the Rule 11 agreement.

Parties Enter into Rule 11 Agreement

According to the appeals court’s opinion, the parties’ Rule 11 agreement provided they would be joint managing conservators of the two minor children, with the mother being primary for determining their residence with a geographic restriction. The father would continue picking up the daughter from school. The father would have a standard possession order for the son. The son had the option to have dinner at the father’s on Thursday. No alcohol was to be consumed during or for four hours prior to the father’s possession. Child support would be calculated according to the guidelines based on the father’s 2019 Schedule C “unless Schedule C gross receipts are higher for 2020 as filed.”

The parties both moved to enter the final decree, with the mother indicating they had not agreed regarding child support. At the hearing, she argued the parties intended child support to be calculated without subtracting expenses from the gross receipts if the 2020 gross receipts were higher. The father argued different language would have been used if that was the intent. He argued the language required the child support to be calculated according to the guidelines, which require calculation of net income before determining child support.

The Potential Property Division Issues That Can Come Up in a Texas High-Net-Worth Divorce

Published on: February 13, 2023 | by Francesca Blackard

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Texas is one of just a handful of states that follows that “community property” doctrine. Under Texas Family Code § 3.003, all property obtained by either spouse during the marriage is presumed to be community property, meaning both spouses have an equal ownership interest. And while disagreements related to how a couple’s assets are divided are common in all Texas divorces, this is especially the case in high-net-worth divorces.

WHAT IS A HIGH-NET-WORTH DIVORCE?

While there is no official definition of what constitutes a high-net-worth divorce in Texas, the consensus among Texas divorce attorneys is that any divorce involving liquid assets of $1 million or more is considered a high-net-worth divorce.

WHAT ISSUES COMMONLY ARISE IN HIGH-NET-WORTH DIVORCES?

High-net-worth divorces can involve all the typical aspects of a divorce, including child custody, child support, division of assets, and spousal support. However, due to the value and complexity of the assets, high-net-worth divorces tend to raise other issues, especially as they relate to property division. For example, a high-net-worth divorce may require the court to determine how the following classes of assets should be distributed:

401(k)s, IRAs and other retirement accounts;
Stocks, bonds, cryptocurrency and other investment holdings;
Real estate and property holdings;
Shared ownership in a business;
Pensions and benefits; and
Artwork and other collections.

Showing a Material and Substantial Change of Circumstances for Texas Custody Modification

Published on: February 9, 2023 | by Francesca Blackard

iStock-902725964-300x200 A court may modify a Texas custody order if doing so is in the child’s best interest and there has been a material and substantial change in circumstances. The party seeking modification must show the conditions at the time of the prior order and the subsequent changes. To determine if there has been a substantial and material change, the factfinder must be able to compare historical and current evidence. A mother recently challenged a custody modification, arguing the father had not presented evidence of the circumstances at the time of the divorce.

According to the appeals court’s opinion, the 2018 agreed divorce decree appointed the parents joint managing conservators and gave the mother the exclusive right to designate the children’s primary residence.

The father petitioned for modification and the exclusive right to designate the children’s primary residence after the mother’s nanny told him the stepfather was abusing them.

Texas Appeals Court Reverses Separate Property Characterization in Divorce Case

Published on: February 7, 2023 | by Francesca Blackard

In a Texas divorce, the trial court must divide the estate in a just and right manner, but the division does not have to be equal. Property possessed by either party during or on dissolution of the marriage is presumed to be community property. To rebut the presumption, a party must generally trace the property back to separate property. Without tracing, a party’s testimony they purchased the property with separate funds will generally not be sufficient to rebut the presumption. However, a presumption of separate property arises if a deed includes a separate property recital stating the property is transferred as separate property. If a spouse is party to a transaction, they may not contradict the deed’s express recitals with parol or extrinsic evidence without evidence of fraud, accident or mistake. If a spouse is not party to the transaction, however, they may use parol evidence to contradict the recitals.

A husband recently challenged the characterization of property in his divorce.

Both parties requested a disproportionate share of the community estate. The husband also requested reimbursement based on alleged waste and actual fraud by the wife.

Texas Court Denies Wife’s Request for Name Change in Divorce

Published on: January 20, 2023 | by Francesca Blackard

How-to-Improve-Your-Mental-Health-300x200 In some Texas divorce cases, how a party requests something can determine if they are successful. A wife recently challenged part of the property division and the court’s denial of her name change after a second trial.

The appeals court’s opinion states the wife informed the court the parties had agreed two pensions would be divided with “a 50 percent shared interest per each party as of the date of divorce.” The husband’s attorney agreed that was their understanding of the agreement.

In a memorandum ruling, the trial court granted the divorce and accepted the parties’ agreement as to the fifty-fifty division of pensions.

Texas Appeals Court Upholds Child-Custody Modification

Published on: January 12, 2023 | by Francesca Blackard

judge-and-gavel-in-courtroom-171096040-583b48533df78c6f6af9f0e3-300x225 A Texas conservatorship order may be modified if doing so is in the child’s best interest and there’s been a material and substantial change in circumstances. When a parent seeks modification, the other parent may file a counter-petition seeking their own modification. In a recent case, a mother appealed a modification order in favor of the father after she had petitioned for modification.

According to the appeals court’s opinion, when the parties divorced, the trial court approved their agreement to be joint managing conservators with 50/50 custody. The mother petitioned for modification, seeking primary custody and educational decision-making. The father also sought appointment as primary conservator. He asked for modification allowing him to impose reasonable discipline and to limit the mother’s phone contact during his possession.

The mother pointed to the father’s allowing the son to stay alone, behavior at sporting events, storage of a gun, and a text message asking her to pick up the children because “he was done” with them.

Documentary Evidence in Texas Divorce

Published on: December 31, 2022 | by Francesca Blackard

iStock-1214358087-300x169 Although testimony can be important evidence in a Texas divorce, documentary evidence is needed for some claims. A wife recently challenged a number of issues in her divorce based on insufficiency of evidence.

According to the appeals court’s opinion, the parties acquired several rental properties during their marriage. The husband petitioned for divorce in July 2020. The trial was originally scheduled for October 7, 2020, but the wife moved for a continuance and asked for mediation.

The trial date was reset for April 28, 2021, but the wife moved for another continuance the day before. The trial was rescheduled for May 6, 2021, and she again requested a continuance. The trial court denied the motion.

Dormancy of Texas Divorce Judgment Calculated From Date Payment Obligation Is Triggered

Published on: December 23, 2022 | by Francesca Blackard

iStock-1187184203-300x200 TEX. CIV. PRAC. & REM. CODE § 34.001(a) provides that a judgment becomes dormant if a writ of execution is not issued within 10 years of its rendition. A judgment is dormant, execution may not be issued unless it is revived. A dormant judgment may be revived within two years of becoming dormant. TEX. CIV. PRAC. & REM. CODE § 31.006. A former wife recently argued that her ex-husband could not enforce a payment obligation contained in their divorce decree because the judgment had become dormant.

2008 Divorce – $30,000 Judgment Awarded to Husband

According to the appeals court’s opinion, the parties divorced in 2008. The decree awarded the husband $30,000, with interest beginning 12 months after the judgment, secured by a lien on the home where the wife lived. The unpaid principle and accrued interest were to be paid upon the earliest of: the sale of the home, the youngest child’s emancipation, the wife’s remarriage or cohabitation with a romantic partner, the wife’s death, or the home ceasing to be the primary residence of the children.

The husband filed an application for turnover and appointment of a receiver in 2021. His counsel stated that the earliest of the listed events happened in May 2014, when the youngest child turned 18 and graduated high school. The wife argued that the judgment had become dormant. The trial court signed a turnover order and appointed a receiver to possess and liquidate the wife’s non-exempt property to satisfy the judgment. She appealed.

Texas Division of Real Estate in Divorce

Published on: December 15, 2022 | by Francesca Blackard

property-division-300x110 Property in a Texas divorce does not have to be divided equally, but instead must be divided in a just and right manner. There can be a number of ways to achieve a just and right division, especially when the property is a large piece of real estate. In a recent case, a husband asked the court to award the wife a smaller portion of the parties’ ranch, which he claimed was more valuable than the rest of the ranch.

Wife Precluded from Presenting Testimony about Value of Ranch

The parties married in 1995. When the wife petitioned for divorce, the parties owned a ranch together. Before the trial, the husband moved to compel discovery and subsequently for discovery sanctions. The trial court granted the motions and ordered that the wife would not be allowed to testify about the community property’s value.

According to the appeals court’s opinion, he husband testified that the tax appraisal for the ranch was $529,280, but that the ranch was only worth $400,000. He asked the trial court to award him the entire ranch, or alternatively to award the wife the “richest 10 acres” and give him the other 40. He testified the westernmost ten acres were the most beautiful and had the richest soil. The remaining 40 acres included several improvements, including a mobile home, a barn, and a pond.