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Making and Breaking Premarital Agreements in Texas
New homeowners never think that their houses will burn down, and they certainly do not desire such an outcome. But responsible homeowners always obtain insurance policies, even though there is nothing "fun" about filling out insurance forms. In a similar vein, no soon-to-be-newlywed couple anticipates a high asset divorce, and they certainly do not desire this outcome. But a premarital agreement and a homeowner's insurance policy have much in common: they both help couples be prepared if the unthinkable should happen.
These contracts serve an additional purpose. Much evidence indicates that financial squabbles are among the leading causes of marital strife. When these disagreements inevitably appear, a premarital agreement helps bring order to the chaos, because some important financial decisions have already been made.
Making a Premarital Agreement
Economic Effects of Divorce
The poverty rate among unmarried women over 50 is nearly three times higher than the rate for divorced men over 50, according to a recent study.
To explain the discrepancy, researchers pointed to Social Security laws. When the Social Security Act was passed in the 1930s, most eligible persons were married, and so women who had been absent from the workforce for a number of years could rely on a spouse's Social Security benefit. But as the divorce rate in this age bracket has increased significantly in recent years, that reliance is no longer possible in many cases.
In 1980, one in five midlife adults were unmarried; today, that proportion is one in three.
Preserving Income Following a High-Asset Divorce
A later-in-life high net worth divorce is nearly always a shock, in more ways than one. Emotionally, many older children find it more difficult to adjust than minor children, because it can be very upsetting to end decades-old family traditions and replace what should be joyous occasions, like weddings and graduations, with a veritable hide-and-seek game of keeping Mom and Dad apart.
A Texas Two-Step: Family Business in a High Asset Divorce
In many situations, a closely-held business is the largest economic asset in a marriage. Moreover, it is often the couple's primary source of income; in fact, in many cases, spouses have put off development in their professional careers to pour their time into the businesses, and reintegrating into the labor force may not be easy. These economic factors sometimes make it difficult to divide these assets in a high asset divorce.
There is an emotional aspect as well, because it is often difficult to disconnect from a business after it has been such a large part of life.
Fortunately, in a number of cases, it is possible to keep a business intact after a high asset divorce. Truth be told, many spouses are better business partners than romantic partners. If they continue to work together, there will inevitably be tension and awkward moments, but these things exist in almost any partnership.
Retirement Accounts in Divorce
A prominent financial advisor suggests that spouses who receive the marital residence following a high-asset divorce sell it, downsize, and use the extra cash to make catch-up contributions to their retirement accounts.
Such action is particularly appropriate if the divorcee is over 50, because persons of this age have less time to make up lost wealth. If a person saves $500 per month in housing costs, invests it, and realizes a 5 percent return, that extra cash will be $77,000 in ten years. Professionals suggest that the funds go into a 401(k) or other employer-sponsored retirement account; in most cases, account holders can put up to $24,000 a year into their 401(k)s.
After divorce, household income drops by an average of 23 percent for men and over 40 percent for women.
Mistakes to Avoid during Co-Parenting
Emotions are very high during and after a divorce or complex child custody proceeding, and parents should take care that these feelings do not corrupt future co-parenting efforts.
Although it may be difficult to do so, do not make negative comments about your ex-partner in front of the children. This language makes the children feel guilty and lowers their self-esteem. Furthermore, it may be a bad idea to allow children to choose between parents, whether formally or informally. Rather predictably, children have a hard time relating with the rejected parent, and the feeling is often mutual. Keep angry outbursts to a minimum, as they disrupt the co-parenting dynamic. Try venting to a friend, co-worker, or family member while outside the presence of the children.
Finally, never use the children to convey messages back and forth. They often get the idea that there is unresolved conflict that may never be resolved, which gives the children a poor perspective about conflicts that arise in their future relationships.
Are Texas Child Support Calculation Methods Outdated?
Twenty years ago, the Dallas Cowboys won their most recent Super Bowl against their archrivals from Pittsburgh. Cornerback Larry Brown intercepted two second-half passes from Neil O'Donnell, which the Cowboys turned into two touchdowns, and Red "First Dahwwnn" Cashion was the referee. Now, the game and its participants are largely relegated to NFL Films retrospectives and documentaries.
Twenty years ago, or 1995 to be exact, also saw significant changes to the Texas Family Code. But instead of perusing through cable TV channels ad nauseam, one need only walk into a Texas family court to experience these changes firsthand. Because, at a time when some other states are updating their child support laws, lawmakers in the Lone Star State show no inkling to do so, recent technical changes notwithstanding.
Guideline Support
Constructive Fraud: Where Did the Money Go?
Constructive fraud is quite common in high net worth divorce cases. Many times, these matters involve long-term marriages which slowly deteriorated over a period of several years, giving the spouses ample opportunity to surreptitiously redirect community funds. There is also a compounding factor; for example, Wife may think little of giving children from a prior marriage a few hundred dollars a month without Husband's knowledge, but over the years, the community estate may lose tens of thousands of dollars.
In decades past, a separate tort lawsuit was about the only option for recovery of these funds. These cases are difficult to file, due to statute of limitations issues, and difficult to win, because of different evidentiary requirements. Moreover, even if they have substantial incomes, many Texans are essentially judgement proof. But the law recently changed, and fraud victims now have a remedy within the divorce procedure itself.
Property Division: When Is Fair, Fair?
Texas law requires that the property division in a high-asset divorce be a "just and right" division of the estate. Generally, such a division is made along an even or fairly even basis. But that is certainly not always the case, and both parties should be prepared to present a compelling case that protects their individual legal and financial interests, both in the short and long terms.
Property division is further complicated by Texas' rather narrow spousal maintenance law. In many other jurisdictions, long-term alimony that is designed to balance the standard of living between the two spouses is at least an option. But that is not the case in Texas, unless the payee spouse has a permanent disability or some other impairment, is the custodian of a minor disabled child, or has been the victim of family violence.
What to Divide
Mediation or Collaborative Law?
Many litigants and practitioners consider these forms of alternative dispute resolution to be similar. There are some commonalities, not the least of which is that they are both negotiation-based, as opposed to litigation-based, methods for dispute resolution. But comparing this alternative to complex property litigation with mediation is a little like comparing this article to William Shakespeare's literary epic Hamlet: while there are some similarities, the comparison is by no means apples to apples.
Functional Differences
Collaborative law is a comprehensive litigation alternative that includes a discovery component. During this process, the parties freely exchange relevant documents, and any disputes are worked out between the parties. In a similar vein, the spouses themselves are typically responsible for gathering financial and other documents, so they feel invested in the process. If there is need for an expert, such as an accountant, the parties divide the cost.
Child Custody Modification in Texas
Even though a considerable amount of time and effort are poured into complex custody orders, they are not meant to last forever. In fact, as a rule of thumb, most such orders should be modified at least one every three or four years, to keeps pace with a family's changing needs.
Frequent modification is important, because "side agreements" are always unenforceable in family court, even if they are in writing. Many parents come to rely on these understandings, such as a different visitation schedule or pickup time. Then, when the other parent suddenly decides to go back to the way it was, they are left without recourse.
Basis for Modification
The movant (party seeking change) has the burden of proof to show need for the change by a preponderance of the evidence, meaning more likely than not. There are three grounds in Section 156.101, and all three have gray areas.
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