Divorce

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 Court Addresses Validity of Post-Nuptial Agreement

Published on: February 18, 2023 | by Kelly McClure

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While it is not the most comfortable thing to consider before or during the marriage, premarital and postnuptial agreements are critical to establishing each partner’s property and financial rights. Texas law provides a mechanism for couples in a marriage to accomplish the same results that could have been created in a premarital agreement. These post-nuptial agreements are often referred to as “marital property agreements.”

There is a general understanding that there are many reasons why a couple might want to change the character of their marital assets during their marriage. Accordingly, the formalities and enforcement rules for post-nuptial agreements are, in effect, the same as for premarital agreements. However, Texas post-nuptial agreements are often prone to issues surrounding unconscionability and involuntariness.

TEXAS COURT FINDS POST-NUPTIAL PARTIAL AND EXCHANGE AGREEMENT INVALID AND UNENFORCEABLE

In one of the more recent published opinions regarding post-nuptial agreements, a Texas appeals court affirmed a trial court’s judgment finding that a post-nuptial Partition and Exchange Agreement (PEA) was not valid or enforceable.

How Do Texas Courts Value a Medical Practice During Divorce Proceedings?

Published on: February 17, 2023 | by Kelly McClure

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Valuing a closely-held medical practice during a divorce in Texas requires a complex understanding of the measures of value, methods of valuation, and Texas statutes. Although business valuations do not adhere to precise mathematical processes, general methods, procedures, and principles exist. In Texas, determining the value of medical practice is often a critical and hotly contested aspect of divorce proceedings. Understanding how a court will incorporate the value of medical practice to come to a “just and right” division of property is crucial to securing a favorable outcome in a divorce.

TEXAS ASSETS DURING A DIVORCE

Texas is a community property state, meaning only property created or accrued during the marriage is subject to division during a divorce. Community property may include real estate, businesses, medical practices, cars, money, and retirement accounts. Under the law, courts must make divisions that are “just and right.” It is important to note that “just and right” does not necessarily equate to a 50 percent division.

OWNERSHIP OF MEDICAL PRACTICE AFTER A DIVORCE

Medical practices fall under an important caveat of Texas’ property division laws. The Corporate Practice of Medicine (CPOM) doctrine prohibits non-physicians, entities, or corporations from practicing medicine. Thus, a court cannot divide the ownership of a medical practice to a non-physician spouse; instead, the court can only determine and divide the value of the practice.

Texas Court Rejects Mother’s Request to Modify Relocation Restrictions in Recent Divorce Appeal

Published on: February 14, 2023 | by Kelly McClure

iStock-902725964-300x200 When a judge finalizes a Texas divorce involving the custody of children, they will determine which parent has the right to determine where the child will live. However, courts will almost always place certain restrictions on that parent’s ability to relocate. While a relocation restriction may not immediately be an issue for a parent with primary custody, that may change if they obtain employment elsewhere in the state or decide to move for other reasons.

MOTHER UNSUCCESSFULLY SEEKS MODIFICATION ORDER TO PERMIT RELOCATION

In a recent opinion issued by the Fifth District Court of Appeals in Dallas, the court rejected a mother’s request to modify a divorce decree that placed restrictions on her ability to relocate as well as her rights to travel internationally with her son. According to the court’s opinion, Mother and Father divorced in November 2016. At that time, the court gave Mother the right to determine where the child would live, provided it was within Dallas County, Collin County, or Southlake Independent School District. The divorce decree also required either parent to provide written notice to the other if they intended to travel outside the United States with their son.

In July 2017, Mother married a man who lived in Oklahoma. Mother started to spend as much time as possible in Oklahoma, and she would often take her son. Subsequently, Mother sought modification of the initial divorce decree in hopes of being able to relocate. Father filed a counter-petition, hoping to be named as their son’s conservator so he could keep the child in Dallas County, Collin County, or Southlake Independent School District.

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.

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.

Attorney’s Fees in Texas Divorce Without Community Property

Published on: January 8, 2023 | by Kelly McClure

iStock-481542709-300x179 A couple may choose to enter into a Texas pre-marital agreement to protect their respective assets in the event of a divorce. A pre-martial agreement allows the parties to agree on use, control, and transfer of property, characterization of property or income, disposition of property in a divorce, and a number of other issues. In some cases, pre-marital agreements may lead to results that the parties did not consider.

Parties Signed Premarital Agreement

In a recent case, a husband challenged an award of attorney’s fees to the wife because their pre-marital agreement provided for property to remain separate. According to the appeals court’s opinion, the parties signed the pre-marital agreement which provided that their pre-marital separate property and property acquired during the marriage would stay separate. They married in 2016 and had a child the next year.

When the wife petitioned for divorce in 2018, she requested attorney’s fees. She indicated she sought fees “[t]o effect an equitable division of the estate” and for the services she provided related to support and conservatorship of the child. The trial court entered a final divorce decree in November 2019. The husband was ordered to pay $14,900 in attorney’s fees, with $10,000 of that being paid directly to the wife’s attorney.

Disability Can Be Established Through Lay Testimony in Texas Spousal Maintenance Case

Published on: December 27, 2022 | by Kelly McClure

iStock-545456068-300x184 A Texas court may award spousal maintenance in certain circumstances, including when a spouse lacks sufficient property to provide for their reasonable minimum needs and is unable to earn enough income to provide for those minimum reasonable needs due to an incapacitating disability. Tex. Fam. Code § 8.051. Spousal support is generally limited based on the length of the marriage, but may be indefinite while the spouse is unable to support himself or herself because of a disability. Tex. Fam. Code § 8.054(b).

A husband recently challenged a spousal maintenance award. According to the appeals court’s opinion, the parties had been married for about eight years and had a child together when the husband filed for divorce. The wife requested spousal maintenance.

Evidence Presented at Trial Regarding Spousal-Maintenance Request

The wife, the husband, and the husband’s mother all testified at trial. The wife testified about her work history, educational background, and health issues. She testified that she received daily dialysis, which required her to be connected to a machine for as much as 10 hours. She could, however, do the dialysis at home where she could move around the house and care for the child.

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.