No Mommy Presumption for Custody in Texas.

As a Dallas divorce lawyer, I am often asked whether court's still presume that custody of a child should go to the mother as opposed to the father.  The short answer is no.  Courts are not permitted to consider the gender of the parent (or the child) in making decisions regarding custody.  Generally the best interests of the child are the primary considerations the court assesses in determining custody issues.  The best interests of the child are frequently referred to as the Holley factors because of the case they were set forth in.  See Holley v. Adams, 544 S.W.2d 367, 371-71 (Tex. 1976).  Since 1976 the best interest factors have been divided up into three broad factors: (1) the ability of the either parent to care for the child; (2) the ability to maintain a family relationship; and (3) parental fitness.

Historically, gender played a role in assessing parental fitness.  This role led to the development of the "tender years doctrine" which in essence stated a child should not be separated from his or her mother.  Early records of the tender years doctrine date back to the mid 1800's and needless to say there have been dramatic shifts in socio-political viewpoints since that time.  The trend towards moving away from the mommy presumption and tender years doctrine gradually made its way in to Texas Case law and eventually was codified in the Texas Family Code.  According to Section 153.003 of the Texas Family Code, the court cannot consider the marital status or gender of either parent in making decisions regarding custody.

This shift away from the tender years doctrine coincides with the shift towards parents sharing their rights and duties equally.  In fact, there is a possession schedule set forth in the Texas Family Code that applies in most cases (in the absence of a showing why it should not) which effectively gives parents equal rights, duties and almost possession periods of their children. 

Despite the shift away from the mommy presumption, there are some judges who retain an "old school" mentality and still believe that the child should remain with his or her mother.  This is where hiring an experienced divorce attorney is critical, because if your case happens to land in a conservative judge's court, then your attorney will have to clear the mommy presumption hurdle. 

In short, the tender years doctrine has been, for the most part, put to bed in Texas courts.  However, it still pays to know the judge's preferences your case is assigned to. 

More Tips for Avoiding Financial Disaster in Divorce

1. Negotiate a reasonable settlement.

Get some professional advice from a CDFA or CFP to make sure you'll be able to live with the financial terms of the settlement -- now and into the future. 1.Don't live beyond your income. Reduce your expenses -- or increase your income -- so that you are always saving something for a rainy day. Ask your financial advisor for help creating a budget if necessary.


2. Think twice about keeping the family home.

Ask your financial advisor whether you can truly afford it, and ask them to show you what cash you'd have available for investment if you moved to a smaller home.

3. Realize that you won't get everything you want in the property division.

Don't spend months and thousands of dollars fighting over furniture, appliances, or other personal items. Make a short list of "Must-Haves" and be prepared to compromise on everything else. Look at the big picture; is this asset best for your situation?

4. Protect your Retirement Assets.

In the U.S., have the QDRO (Qualified Domestic Relations Order) filed as soon as possible. 

5. Use debt sparingly.

Get a copy of your credit report and close all joint accounts and all credit you do not use. Avoid maintaining balances on credit cards.

No Alienation of Affection Claims In Texas

Recently there has been quite a bit of media exposure over alienation of affection claims arising out of a North Carolina Court.  Under the case in North Carolina, the mistress who was allegedly responsible for breaking up a 30 year marriage was sued by her lover's ex-wife and awarded $9M in damages!  North Carolina is one of seven states to recognize alienation of affection claims, in which spouses can sue third parties that they allege interfered in their marriages.   Texas, however, does not recognize alienation of affection claims in divorce cases

Although Texas doesn't recognize alienation of affection claims, fault in the break up of the marriage can play a role in dividing the community estate.  For example, adultery is commonly a factor judges consider when making the just and right division of the community estate. 

For a more in depth look at the facts behind the $9M award, click here.

Toddler Tug of War Article Quotes Dallas Family Law Attorney O'Neil

Dallas Family Law Attorney Michelle May O'Neil was cited in an article published today in the Texas Lawyer news magazine.  The article entitled Toddler Tug of War:  Mother and Couple at Odds in Parental Rights Termination Case by John Council discusses a case pending in the Houston 1st Court of Appeals seeking to terminate a mother's parental rights when the baby was secreted from the mother by the father and unknowingly placed with a prospecitve adoptive family.  The case turns on the question of whether the prospective adoptive family's ability to provide a better environment for the child than the mother should play a role in determining whether the termination of mother's rights is in the child's best interest. 

From the article:

Michelle May O'Neil, a family lawyer and partner in Dallas' O'Neil Anderson, believes the 1st Court's decision may ultimately boil down to Jordan's "fundamental right to parent."

"The rights of a parent are constitutional. A parent has a liberty interest in establishing a home for their children and in raising their children. And the government can only interfere in that parent's rights when there are certain adequate reasons," O'Neil says. "For example, if CPS [Child Protective Services] has to take a child from a parent, they have to prove some sort of abuse."

Neither Jordan's mental health history nor her economic situation should figure into a court determination to end her parental rights, O'Neil says.

"Mentally ill people have a right to be parents. The government only has the right to interfere in parental relationships if there is abuse to the child," O'Neil says. "And you can be mentally ill and not abuse your child. One does not equate to the other."

"The question cannot be the quality of the family that the child is placed with," she adds. "The question in a termination proceeding is whether it's in the best interest of the child that the biological parent's right be terminated."

Ann Crawford McClure, a justice on El Paso's 8th Court of Appeals who is a past president of the State Bar of Texas Family Law Section, agrees with O'Neil. Texas courts require a higher burden of proof in parental rights termination cases than in normal family law cases, McClure says.

The Dosseys "have to prove by clear and convincing evidence that it's in the best interest of the child. The courts have been clear that you can't weigh lifestyle in that determination," McClure says. "You can't look at an adoptive family and say they are better off financially and can provide opportunities that the mother can't in determining the best interest of the child."

 

Credit Rating and Divorce

Divorce can be a trying time on your credit as well as your finances and emotions.  A vindictive or spendthrift ex-spouse can incur debt on your joint accounts and destroy your credit rating during hte divorce process.  I fyou are not able to pay a joint account in full, inquire as to whether you can maintain a balance on the account after it is closed to prevent the situation from gettng worse. 

Tips for dealing with your credit during a divorce:

  • Get a copy of your credit report and familiarize yourself with everything in it.
  • Close all accounts that you do not need or use.
  • If you don't already have one, apply for a credit card in your name while you can.
  • Close all joint accounts and credit cards as soon as possible.

Keep in mind that many of the courts in Texas have orders that prohibit accounts from being closed or limited while the divorce is pending.  So, either take these actions before the divorce is filed or you may need to seek court approval to do so. For example, see the Collin County Standing Order that applies to all pending divorces and my prior post on this topic: Collin County Texas Divorce Standing Order

Your credit report shoudl help you discover any outstanding debts that need to be addressed as part of the divorce process.  Consider using marital assets or funds to pay off joint debts so each spouse can start over with a clean slate.

Once the divorce is finalized, use credit cards sparingly.  To establish or maintain a good credit score, pay off balances on time every month. 

If you need to use credit for short-term liquidity, then you may be better off refinancing your home and avoiding balances on credit cards.  Benfits of home financing include deductibility of the mortgage interest and a lower interest rate.

 

Top Five Signs your Marriage is in Trouble

Frequently I encounter clients in my Dallas divorce law firm that share common signs that their marriage has come to an end.  Here are the top five signs that a marriage is coming to an end.

1.  You dream about a life without your spouse.  It is not uncommon for us all to wonder “what if” during our day-to-day lives, but when you start thinking about how your life would be better without your spouse, you’ve definitely got a sign that your marriage is in trouble

2.  You keep things to yourself.  I’m surprised at how often clients come in and tell me that they simply quit communicating their needs and concerns to their spouse.  When your marriage has reached a point to where its not worth it to “bother” your spouse with your concerns and needs, this is another sign the marriage is in trouble.  Open communication is a key to any successful relationship, and holding things back from your spouse is quite unhealthy to the marriage. 

3.  You feel like you are the only person trying to make the marriage work.  If you feel that your spouse is not putting the same amount of effort into the marriage, then feelings of resentment and anger can really kick in.  Anger sometimes fuels people to make rash decisions, however the feeling of a lack of reciprocal effort is a definite sign the marriage is on rocky grounds. 

4.  You lack intimacy.  Sex is part of any healthy marriage.  If one spouse seems uninterested in sexual intimacy with the other, this is a sign the marriage is in trouble.  Even more so, if one spouse is withholding sex as a form of “revenge” then this too indicates a storm is brewing. 

5.  You feel like the bad in the marriage outweighs the good.  This one ties in closely with all the other signs.  If you feel there is more trouble in paradise, then there are some issues that need to be confronted. 

Avoiding Financial Disaster in Divorce

Many people face financial uncertainty when they divorce in Texas.  Often, this stems from taking the same amount of income that was previously being used to fund one household and splitting it up to cover two househoulds, including two house payments, two utility payments, two sets of furniture, and maybe even two attorneys.  This problem is especially exacerbated when only one spouse works, leaving the other spouse somewhat dependent on the working spouse for money.

The time while a divorce is pending is when you should really tighten the belt and spend only within your means.  Now is not the time to go to Neiman's or have fresh flowers weekly.  Prepare youreself now for the eventuality that your standard of living may change dramatically after the divorce is final. 

One common mistake people make is considering the divorce settlement to be income used to pay monthly expenses, instead of reserving the assets, retirement and other items received in the settlement for self-improvement, reserves, or rainy days.  Doing this will only make it worse when the assets or other funds run out. 

When you are deciding on what assets you and your spouse will take, you should be aware that not all assets are equal. One of you may end up with a huge tax bill when you access the assets: for instance, you could end up paying capital-gain taxes upon the sale of your home or your investment assets. In addition, if you dip into your retirement assets, you may end up paying income tax and a penalty. Consider the present cash value of each asset in dividing things up -- if it isn't cash then how hard would it be to convert it to cash.

Other assets may end up being a money pit. Your primary residence, vacation home, or rental properties could cost you a significant amount of money to maintain. Frequently, the primary benefit of a rental property is not necessarily cash flow, but the tax losses that are generated. If you are in a low tax bracket, then these losses may not benefit you to the extent that another investment would. Your expenses may actually increase. For example, if your spouse used to make all repairs, mow the lawn, etc., but now you have to hire someone to do those things, then your expenses will increase. Would you be better off liquidating these properties and investing the proceeds in something that would increase your cash flow instead of creating a financial drain?

For more info on this topic, see Divorce Magazine's article.

Here's more info on Property and Debt Division in Divorce.

Questions to ask yourself before filing for divorce.

As a Dallas divorce lawyer, I am often asked what can one do to prepare themselves for the filing of a divorce.  A divorce can be one of the most stressful and emotionally involved experiences of your life.  So before filing for divorce it is important to ask yourself some key questions to make sure you understand the legal process and are prepared for the emotional involvement a divorce requires.  First, ask yourself whether it would be beneficial to speak with a marriage counselor, either individually or as a couple.  Even if you think there is no hope for saving the marriage, talking to a professional might help you recognize where things went wrong, and how you can avoid similar behavior in the future. 

Ask yourself if whether it is a financially good idea or bad idea to get a divorce in this economy.  Although there are signs that the economy is strengthening, a lot of individuals still have not fully recovered from the effects of the economic downturn.  Property values are still down somewhat and the stock market hasn’t fully recovered.  As a result, getting a divorce now may cost you more than it would if you “stick it out” and wait until the economy is moving in strong positive direction.  Obviously, the emotional aspects of considering a divorce sometimes outweigh the financial aspects.  However, it is still important to ask yourself how getting a divorce in this economy would effect your overall net worth.

Ask yourself, and others, for a reference to a qualified divorce attorney.  A divorce is a complicated procedure and you will need someone to not only advise you but listen to your needs and concerns as well.  You’ll be spending a good amount of time, and money, with your divorce attorney, so it is critical that you shop around until you find an attorney that fits your personality and needs.  A great resource for finding divorce attorneys are websites such as AVVO.com or your state’s bar association webpage.  Referrals from friends and family that have gone through a divorce are also a great resource to consider.

Ask yourself if you have all of your financial documents in order.  Again, emotions during a divorce can be overwhelming but it is absolutely critical to have all your financial documents gathered and in a safe place before filing for divorce.  During a divorce, your bank account statements, credit card statements, retirement and brokerage account statements will be looked at with great scrutiny.  Doing the legwork before filing for divorce and gathering all these documents will help not only keep costs down (from having your attorney search for these records), but also help keep the emotional toil down as well.

Ask yourself what steps you can take to safeguard your assets during separation.  One of these steps is for you to take possession or certain assets, especially those you wish to continue using such as your car or other personal belongings.  Another step involves protecting your credit score by closing out joint credit cards and bank accounts.  By taking these proactive steps, you can help keep things as normal as possible during such an emotional time.

Finally, ask yourself what your goals of the divorce are.  For some, the goal is short-sighted: they just want to end their marriage.  For others, the goal is to be put in a situation to where they can move on to greener pastures and continue to grow in their personal lives.  Whatever the reason, it is important to ask yourself what your goal is and communicate this with your divorce attorney. 

Divorce Business Valuation Approach

Calculating the value of a business can be one of the most important parts of a divorce because a closely-held business may be one of the most significant assets of the marital estate.  The best approach to such valuation is to hire an independent business appraiser—a CPA with an Accredited in Business Valuation (ABV) credential or a certified professional, like a Certified Business Appraiser (CBA) or someone recognized by the American Society of Appraisers (ASA).  Such expert will begin by obtaining all business books and records, tax returns, and financial statements and reports for at least the last five years.

Using this data, the appraiser will determine the company’s intangible and tangible net assets, an appropriate rate of return for them, and will calculate excess earnings in accordance with various accepted methods.

After finding a proper capitalization rate for the excess earnings (that which remains after taking into account normal costs, return on assets and salaries), the appraiser can place a value on the most contentious aspect of business valuation, the intangible asset known as “goodwill.”

"Commercial goodwill” is the capacity of a business to attract new customers, or keep old ones due to great locations, a reputation for superior service or skill, or anything else that influences a person, supplier or other business to continue a commercial or professional relationship. “Personal goodwill” describes the nontransferable ability of an individual to attract and maintain customers or clients due to his or her skill or reputation for honesty, intelligence, craftsmanship.

 

 

Play by the Rules or Pay by the Rules - Death Penalty Sanctions Affirmed on Appeal

Dallas divorce attorney, Michelle May O’Neil, prevailed in the El Paso Court of Appeals opinion issued on February 24, 2010, in Cause No. 08-07-00228-CV, In the Interest of P.L.H., S.L.H., and C.H.H., Minor Children The Court overruled all seven of Appellee’s issues on appeal, upholding the judgment of the trial court, including the entry of death penalty sanctions against Mother, denial of Mother’s request for a continuance,  judgment against Mother for $60,000 in attorney’s fees incurred by Father, and a credit in Father’s favor for over $32,000 for prior overpayments of child support.

The parties were originally divorced in Oklahoma in 2000, via a Final Decree of Divorce that improperly omitted the requisite finding for child support under Oklahoma law. Unaware of this deficiency, Father paid child support from 1999 through 2004 in the amount of $981.46 per month. In 2004, the error was corrected by the Oklahoma Court’s entry of a nunc pro tunc Final Decree of Divorce, ordering Father to pay $481.20 per month, instead of $981.46. In 2005, Father filed a Petition to Modify in Dallas, which by that time had become the county of the children’s residence. Mother filed her own counter petition in the Dallas court as well, seeking to drastically reduce Father’s possession time and to increase child support. Mother then requested the Oklahoma Court to decline jurisdiction in favor of the Dallas court as to all issues regarding child support and custody.

A year after the Oklahoma court declined jurisdiction over all child support and custody issues, Mother went back to Oklahoma and obtained entry of another nunc pro tunc order, this time the changes had the effect of increasing Father’s child support obligation.  At trial, Mother attempted to argue the validity of this second nunc pro tunc order in the Dallas court. But the trial judge found that, since the correction involved a “judicial” rather than “clerical”, and since the Dallas court had already assumed jurisdiction of all issues involving child support and custody at the time the second nunc pro tunc was entered, the Oklahoma court lacked jurisdiction to make such substantive changes. The second nunc pro tunc was, therefore, void. The Court of Appeals affirmed this ruling on appeal.

The jurisdictional issue regarding the second nunc pro tunc was the most complex of the seven issues presented. The other six issues on appeal concerned mainly Mother’s repeated failure to follow the orders of the trial court and the Rules of Civil Procedure.

Here, the appellate court upheld the trial court’s imposition of death penalty sanctions against Mother as the result of her failure to comply with the pretrial scheduling order were proper. Based on Mother’s history of discovery abuse throughout the course of the litigation, and her failure to comply with the trial court’s orders, the El Paso Court of Appeals found the trial court’s decision to exclude Mother’s trial exhibits was not excessive. The Court’s opinion further states, “[t]he record demonstrates that the trial court considered, and imposed, lesser sanctions when earlier discovery abuses arose, without success. Accordingly, the court’s decision to impose a Rule 215.2(b) sanction was not an abuse of discretion.”

The appellate court also upheld the trial court’s denial of Mother’s requested continuance of trial. Mother’s Motion for Continuance was not verified or supported by an affidavit, as required by the Texas Rules of Civil Procedure. Mother acknowledge that although her Motion for Continuance was procedurally defective, the circumstances of her case, specifically that she was representing herself pro se, made a continuance appropriate regardless of procedure. The appellate court disagreed.

Mother also attempted to argue on appeal that the child support credit Father received was a debt previously discharged by Mother in bankruptcy. Not withstanding the substantive argument against this issue, the appellate court found that Mother failed to properly plead, and, therefore, waived, the affirmative defense of discharge in bankruptcy per Texas Rule of Civil Procedure 94. Therefore, the appellate court did not even reach the merits of Mother’s argument on this issue, overruling the issue on Mother’s pure procedural deficiencies.  

Although the facts of this case are somewhat complex, the principles attorneys, as well as their clients, can take away from it are simple. Review orders carefully either before or as soon as you possibly can after entry, especially divorce decrees and child support orders, because you might not have jurisdiction to correct substantive mistakes later on. Be careful what you ask for, like Mother’s request here that the Oklahoma court decline jurisdiction, because you just might get it. Also, play by the rules, the rules of civil procedure and the orders of the court, failing to do so could result in stiff penalties, like the death penalty sanctions entered here. Along those same lines, while legal representation may seem expensive to pro se litigants, the price you pay in the long run if you choose to represent yourself without knowing the rules could be much greater.

Congratulations to Michelle May O'Neil on another successful appeal for her client!

Question to Dallas Divorce Lawyer: My spouse got in a car wreck, can they take my separate property?

Recently I had a potential Dallas divorce client present the following scenario to me.  Wife was involved in an at-fault car accident.  Wife is sued by the other driver.  Husband is concerned that the person his wife was in an accident with will go after "all" the property they own, even husband's prized baseball card collection he had before marriage.  The question then became, can they take my separate property for my wife's negligence?

There are two steps for determining what marital property can be seized and sold to satisfy a liability created during marriage.  First, determine whether the property in question (to be seized) falls within an overall class of marital property that would be liable for or exempt from seizure under the Texas Family Code

For a debt arising out of a tort (in this case negligence in a car wreck) the at-fault spouse's separate property can be seized to satisfy the debt.  In contrast, the separate property of the not-at-fault spouse (in this case, Husband's beloved baseball card collection he owned prior to marriage) is not subject to seizure to satisfy the debt arising out of the tort.

So, bottom line, the answer is NO.  The separate property of a not-at-fault spouse is not subject to seizure for a liability arising out of a tort committed by the other spouse. 

Business Valuation in Divorce -- List of Documents Needed

In any divorce where one of the spouses owns a business interest, that interest must be valued.  Usually in Dallas County Texas divorces, the attorneys will hire a forensic business valuation expert with ABV accreditation to perform such valuation services.  That expert will need certain documents in order to perform his valuation, including:

Financial Statements for Typical Corporation

  • Balance sheets, income statements of changes in financial position, and statements of stockholders’ equity for the last five fiscal years.
  • Income tax returns for the same years
  • Latest interim statements and interim statements for comparable period(s) of previous year

Other Financial Data

  • Summary property, plant, and equipment list and depreciation schedule
  • Aged accounts receivable summary
  • Aged accounts payable summary
  • List of marketable securities and prepaid expenses
  • Inventory summary, with any necessary information on inventory accounting policies
  • Synopsis of leases for facilities or equipment
  • Any other existing contracts (employment agreements, covenants not to compete, supplier agreements, customer agreements, royalty agreements, equipment lease or rental contracts, loan agreements, labor contracts, employee benefit plans, and so on)
  • List of stockholders, with number of shares owned by each
  • Schedule of insurance in force (key person life, property and casualty, liability)
  • Budgets or projections, for a minimum of five years (if management prepares)
  • List of subsidiaries and/or financial interests in other companies
  • Key personnel compensation schedule, including benefits and personal expenses

Company Documents

  • Articles of incorporation, bylaws, and any amendments to either
  • Any existing buy-sell agreements, options to purchase stock, shareholder agreements, restrictions on transfer, or rights of first refusal
  • Franchise or operating agreements, if any

Other Information

  • Brief history, including how long in business and details of any changes in ownership and/or any bona fide offers recently received
  • Brief description of the business, including position relative to competition and any factors that make the business unique
  • Marketing literature (catalogs, brochures, advertisements, and so on)
  • List of locations where company operates, with size and recent appraisals
  • List of competitors, with location, relative size, and any relevant factors
  • Organization chart
  • Résumés of key personnel, with age, position, compensation, length of service, education, and prior experience
  • Personnel profile: number of employees by functional groupings, such as production, sales, engineering/R&D, personnel and accounting, customer service/field support, and so forth
  • Trade associations to which the company belongs or would be eligible for membership
  • Relevant trade or government publication (specially market forecasts)
  • Any existing indicators of asset values, including latest property tax assessments and any appraisals that have been performed
  • List of customer relationships, supplier relationships, contracts, patents, copyrights, trademarks, and other intangible assets
  • Any contingent or off-balance sheet liabilities (pending lawsuits, compliance requirements, warranty or other product liabilities, estimate of medical benefits for retirees, and so on)
  • Any filings or correspondence with regulatory agencies

Download pdf here: Preliminary Documents and Information Checklist for Business Valuation of Typical Corporation or Business Entity

View online here:  Preliminary Documents and Information Checklist for Business Valuation of Typical Corporation or Business Entity