Changes from 2018 and looking ahead to 2019 for Texas family law

2018-2019 change represents the new year 2019 three-dimensional rendering 3D illustration

The Texas Legislature convenes every two years, with 2019 being one of those. Each session, proposed new laws get introduced that will affect family law in Texas. It is expected that a bill will be introduced to remove no fault divorce and require proof of fault grounds for all Texas divorce and extend the waiting period to finalize a divorce (currently 60 days). Neither of these proposals are expected to gain much traction. Reform of the child protective services system will, however, be a hot topic for the legislative session given all of the litigation there has been criticizing how CPS handles matters ineffectively.

From 2018, most of the big changes in Texas family law came from the courts. The Texas Supreme Court clarified a conflict between the courts of appeals in various parts of the state on the right of a nonparent to intervene and ask for custody of a child. In re H.S. involved grandparents who sought standing to sue for custody due to the actual care, control and possession of the child for at least 6 months. The Texas Supreme Court gave a broader definition of “control” than some of the intermediate courts had been using, making it easier for a nonparent (like grandparent, step-parent, etc) to sue for custody.

Another significant change in 2018, also from the Texas Supreme Court, reinforced the binding nature of a premarital agreement. In re Marriage of I.C. determined that a clause allowing for forfeiture of all rights under a premarital agreement if a spouse challenged the agreement was a valid and enforceable provision.

The Texas Supreme Court has two justices with family law backgrounds, unusual in the history of the Court. The effect is that the justices are more comfortable hearing family law matters and are accepting discretionary review more often in family law cases. We expect this trend to continue for 2019.

 

New tax laws impact divorce

The Tax Cuts and Jobs Act passed Congress last December and there is a lot of talk about how it will impact the tax situation for individuals. Few have considered the impact that the new law will have on divorce and child custody. (See  How Will the New Tax Law Affect Your Divorce? )

Much of the commentary centers around the elimination of the tax deduction for alimony payments. The new law eliminated the deduction for alimony payments from taxable income. Likewise, the recipient of the alimony no longer must claim the payments as income. This new law only applies to divorce finalized after 2018. For alimony orders predating the law, any modification of the alimony order requires a statement as to whether the new law applies for deductibility/income inclusion. While this sounds like a win for alimony recipients,  it actually demotivates a higher-earning spouse from agreeing to make alimony payments as part of a divorce settlement. Alimony payments were a useful tool in resolving divorces where one spouse was high wage earner and the other spouse was a lower wage earner. The paying spouse was motivated to receive the tax deduction where the receiving spouse would not be as heavily tax impacted. Additionally, the new law will effect premarital and postmarital agreements that predate the law because there is no consideration under the new law for agreements reached before the effective date of the law. The law applies based on the date of the divorce judgment.

Another issue arising from the new tax laws in the effect on valuation of a business interest in divorce. In many divorces, the business interest may be the main asset in the property division. However, the new law increase the cash flow of certain kinds of businesses due to lower C Corp tax rates (reduced from adjustable rates up to 35% to a flat rate of 21%).  If all else is equal, the effect of this should raise net after tax income for the difference in the taxes. The exact effect of this on corporate valuation won’t be known until a new business tax return is filed under the new law.

Additionally, for pass through entities, owners of the business may now deduct up to 20% of income defined as “qualified business income” without limit for taxpayers whose taxable income does not exceed $315,000 for married joint filers and phased out up to $415,000. If income is above that level, the deduction is limited to the greater of 50% of W2 wages or the sum of 25% of W2 wages plus 2.5% of the unadjusted basis of all qualified property. For valuation purposes, the TCJA has widened the differences in the tax rates for corporate entities versus pass-through income, which may require adjustments to some of the assumptions applied for valuation purposes.

The new law allows 529 plans to be used to pay for elementary or secondary private school tuition, not just college. There is no change in the tax benefits of a 529 plan, but for 2018, up to $10,000 per beneficiary may be distributed to pay for schooling.  This would raise an issue that needs to be addressed in the divorce settlement.

Personal exemptions have been suspended for tax years 2018 through 2025. During this 8-year period, divorcing parents cannot use personal exemptions for dependent children and do not need to negotiate over which parent gets to use the exemption. If the children are young enough, the exemption may return after the suspension period.

The TCJA significantly changed the child tax credit. It doubled the tax credit to $2,000 for each qualifying dependent child and make $1400 of the credit refundable. But, the credit phases out for married taxpayers earning more than $400,000. and, it expires in 2026. The phase-out threshold under the old law made the child tax credit irrelevant in many divorces, so increasing the phase-out threshold will make this a more significant issue.

The standard deduction has been doubled under the TCJA to $24,000 for married joint filers. The objective for this increase is to reduce taxes and simplify the filing process.Effectively this eliminated itemized deduction for most taxpayers. The limits on itemized deductions have been eliminated, which probably benefits higher wage earners. But the new law reduces the availability of the deduction for state and local taxes for individuals (but not businesses). So, for example, property taxes on a marital residence are deductible up to the cap of $10,000 for married joint filers, making much of property taxes on a high value home not deductible. The new law limits the deductibility of mortgage interest for loans originated after 12/15/17. It also eliminates the deduction for interest on home equity loans. This provision is set to expire after 2025. This increases the cost of financing a home by limiting the tax benefits.

 

 

Fault or no fault — that is the question

A client recently asked about divorcing her husband who was pending felony criminal charges. Texas is generally a no-fault divorce state. This means that one spouse may seek and be granted a divorce based solely on the irreparable breakdown in the marriage relationship without showing anything else. However, Texas allows for a fault-based divorce decreed in favor of one spouse, which generally only matters when immigration is an issue or when the property available to divide in the marriage is significant. One of the grounds for such a fault-based divorce is the conviction of a felony that results in imprisonment for at least one year.  Other fault grounds include cruel treatment, adultery, or confinement in a mental hospital for at least 3 years. It is important to note that fault grounds require proof of the ground and also proof that the grounds actually cause the divorce. In other words, it is insufficient to prove that a spouse was unfaithful during the marriage to get a fault finding. There must be additional proof that the unfaithfulness actually cause the marriage to end. The same would be said for cruel treatment or felony conviction. If the actions were tolerated for many years or ignored and the marriage continued, then fault grounds likely do not exist.

Overwhelmingly, most divorces are granted on no-fault grounds in Texas. The cost incurred of litigating over the fault grounds usually cannot be justified in the overall outcome. There has been movement among very conservative Texas legislators to negate the law allowing no-fault divorce and only permit divorces based on fault grounds. Although the simple concept of making divorce harder to get may sound like a good idea, no-fault divorce actually benefits everyone. No-fault divorce decreases the cost of divorce dramatically by providing one less issue to fight over. Think about it, to prove that a spouse is having sexual intercourse (the standard to show adultery), private investigators would have to be employed in every case. Further, for victims of domestic violence, having to provide proof and testify about the episodes of cruel treatment increases the emotional toil of the divorce.

House Bill 93 was filed in the 2017 legislative session to repeal no-fault divorce and require fault-based divorces in Texas. It was defeated, but many expect a similar bill to be introduced in the 2019 session. A survey by the Texas Bar association shows that 93% of attorneys are opposed to repeal of the no-fault divorce laws. 94% of attorneys believe that the repeal of the no-fault divorce laws would increase the attorneys fees and prolong the time it takes to get divorced. 64% of the Texas attorneys surveyed said that repeal of the no-fault divorce laws would give an advantage to a spouse opposing the divorce in the litigation.

 

Domestic Violence Awareness Month – What is Dallas doing about it?

Interesting article in the Dallas Morning News today about efforts to prevent folks convicted of domestic violence or abuse from gun ownership. Under federal law, anyone found to have committed family violence (aka domestic abuse), whether in a criminal proceeding or by way of a civil protective order, is prohibited from purchasing a gun. The identity of the person should be reported to the National Crime Information Center, which is the registry used for gun sales. Unfortunately, the lower level courts in Dallas County have not been reporting convictions. By the end of October, even municipal courts will begin reporting the identities and fingerprints of all people who are found guilty or plead no contest to Class C misdemeanor family violence charges. Class C cases involve verbal threats or physical contact that did not result in visible injury. No one walks away with more than $500 ticket. About 2,200 such cases came through the Dallas courts in the last three to four years.

The new action was inspired by the shooting at Sutherland Springs last year. The gunman had been convicted in military court of domestic assault, but it was not sent to the database. If it had been the gunman would not have been permitted to buy the gun that he used in the shooting.

Dallas council members previously approved $45,000 to buy three Live Scan Fingerprinting systems needed to secure info for the database. While this may seem small in the grand scheme of the City of Dallas budget, smaller cities will have a harder time bearing such costs.

Read the news story here: https://www.dallasnews.com/opinion/commentary/2018/10/15/dallas-keep-guns-domestic-abusers-hands

October is Domestic Violence Awareness Month. The statistics about the common occurrence of domestic violence are astounding.

  • THREE women in the US are murdered every day by their current or former boyfriends.
  • 38 MILLION + people in the US have experienced physical violence by a partner at some point during their lifetime.
  • 4.7 MILLION women experience physcial violence by a partner every YEAR.
  • 20 people every MINUTE are victims of domestic violence.
  • 1 in 4 women will be a victim of severe domestic violence in their lifetime. 1 in 7 men will fall victim to severe domestic violence. 2 in 5 gay men will experience domestic violence.
  • 45% of women in violent relationships are also raped in those relationships.
  • Every 9 seconds a woman is beaten in the US.
  • 70% of women worldwide will experience physical and/or sexual abuse by an intimate partner during their lifetimes.
  • 98% of people who experience domestic violence also experience financial abuse.
  • Black women experience domestic violence at rates more than 35% higher than white women.
  • Only 25% of physical assaults are reported to the police.

Read more here: https://www.huffingtonpost.com/2014/10/23/domestic-violence-statistics_n_5959776.html

Download a domestic violence fact sheet here: https://www.speakcdn.com/assets/2497/domestic_violence2.pdf

Download the fact sheet about Domestic Violence in TExas here: https://www.speakcdn.com/assets/2497/texas.pdf

How much parenting time do Dad’s get in Texas versus other states?

https://www.custodyxchange.com/maps/dads-custody-time-2018.png

Dads custody time 2018

I read an interesting study performed by Custody Xchange about parenting time state-by-state. (See How much custody time does dad get in your state?) Bottom line, their study showed that nationally a father is likely to receive on average 35% of time with a child by court order. Interestingly, 40% of states – 20 out of 50 – start with a 50/50 model for parenting time. For example, Florida has a 48 hours on and 48 hours off plan. Contrast this with Tennessee, who scored last of the 50 states, where a father is likely to receive about 21.8% of time with a child. In Tennessee, a father will likely receive a Friday to Sunday period twice a month.

This translates to about 183 days for dad in an equal state like Florida compared to Tennessee which gives an average of 80 days a year. That is a 100 day per year difference depending on the state lived in!

Texas scored close to the average, with fathers receiving about 33% of the child’s time. It was interesting to note in the study that when the 20 states that provide a start of 50/50 are eliminated from the study, Texas scored close to the top providing time for fathers compared with other states that do not provide equal time.

Last year, 20 states considered laws to make equal or shared co-parenting the presumed standard even over objection of one or both parents. (See More than 20 states in 2017 considered laws to promote shared custody of children after divorce from Washington Post.) Shared parenting, advocates say, replaces the “winner take all” attitude of custody cases. In one model, two parents enter a courtroom and at the end, one leaves a “parent” and the other leaves a “visitor”. In the other model, both remain parents even after the breakup of the relationship.

The visiting parent model came from old notions that mothers were better primary caretakers of children, diminishing the father’s role. The tide began to change in the late 1960’s and 70’s as women joined the workforce and roles at home began to change. The “tender years doctrine” favoring mothers has been replaced with a gender-neutral “best interest of the child” standard. Even so, judges still trended toward awarding mothers custody most of the time, making it unusual for fathers to be awarded custody of children in a contested case. Fathers rights advocates feel that more stringent laws imposing equal footing are necessary.

 

Here is the summary of Texas parenting time schedule from the Custody Xchange study:

Texas

Biggest county: Harris County

Source type: RL- Standard Possession Order

Year: 2018

Regular schedule: Weekends— On weekends that occur during the regular school term, beginning at [6:00 P.M./the time the child’s school is regularly dismissed] on the first, third, and fifth Friday of each month and ending at [6:00 P.M. on the following Sunday/the time the child’s school resumes after the weekend]. On weekends that do not occur during the regular school term, beginning at 6:00 P.M. on the first, third, and fifth Friday of each month and ending at 6:00 P.M. on the following Sunday.

Weekend Possession Extended by a Holiday— Except as otherwise expressly provided in this Standard Possession Order, if a weekend period of possession by Possessory Conservator begins on a student holiday or a teacher in-service day that falls on a Friday during the regular school term, as determined by the school in which the child is enrolled, or a federal, state, or local holiday that falls on a Friday during the summer months when school is not in session, that weekend period of possession shall begin at [6:00 P.M. on the immediately preceding Thursday/the time the child’s school is regularly dismissed on the Thursday immediately preceding the student holiday or teacher in-service day and 6:00 P.M. on the Thursday immediately preceding the federal, state, or local holiday during the summer months]. Except as otherwise expressly provided in this Standard Possession Order, if a weekend period of possession by Possessory Conservator ends on or is immediately followed by a student holiday or a teacher inservice day that falls on a Monday during the regular school term, as determined by the school in which the child is enrolled, or a federal, state, or local holiday that falls on a Monday during the summer months when school is not in session, that weekend period of possession shall end at 6:00 P.M. on that Monday.

Thursdays—On Thursday of each week during the regular school term, beginning at [6:00 P.M./the time the child’s school is regularly dismissed] and ending at [8:00 P.M./the time the child’s school resumes on Friday].

Holiday schedule: Spring Vacation in Even-Numbered Years—In even-numbered years, beginning at [6:00 P.M. on the day the child is dismissed from school/the time the child’s school is dismissed] for the school’s spring vacation and ending at 6:00 P.M. on the day before school resumes after that vacation. Extended Summer Possession by Possessory Conservator— With Written Notice by April 1—If Possessory Conservator gives Sole Managing Conservator written notice by April 1 of a year specifying an extended period or periods of summer possession for that year, Possessory Conservator shall have possession of the child for thirty days beginning no earlier than the day after the child’s school is dismissed for the summer vacation and ending no later than seven days before school resumes at the end of the summer vacation in that year, to be exercised in no more than two separate periods of at least seven consecutive days each, as specified in the written notice [include if applicable: , provided that the period or periods of extended summer possession do not interfere with Father’s Day possession]. These periods of possession shall begin and end at 6:00 P.M. on each applicable day. Without Written Notice by April 1—If Possessory Conservator does not give Sole Managing Conservator written notice by April 1 of a year specifying an extended period or periods of summer possession for that year, Possessory Conservator shall have possession of the child for thirty consecutive days in that year beginning at 6:00 P.M. on July 1 and ending at 6:00 P.M. on July 31.

Notwithstanding the Thursday periods of possession during the regular school term and the weekend periods of possession ORDERED for Possessory Conservator, it is expressly ORDERED that Sole Managing Conservator shall have a superior right of possession of the child as follows: Spring Vacation in Odd-Numbered Years—In odd-numbered years, beginning at [6:00 P.M. on the day the child is dismissed from school/the time the child’s school is dismissed] for the school’s spring vacation and ending at 6:00 P.M. on the day before school resumes after that vacation. Summer Weekend Possession by Sole Managing Conservator—If Sole Managing Conservator gives Possessory Conservator written notice by April 15 of a year, Sole Managing Conservator shall have possession of the child on any one weekend beginning at 6:00 P.M. on Friday and ending at 6:00 P.M. on the following Sunday during any one period of the extended summer possession by Possessory Conservator in that year, provided that Sole Managing Conservator picks up the child from Possessory Conservator and returns the child to that same place [include if applicable: and that the weekend so designated does not interfere with Father’s Day possession]. Extended Summer Possession by Sole Managing Conservator—If Sole Managing Conservator gives Possessory Conservator written notice by April 15 of a year or gives Possessory Conservator fourteen days’ written notice on or after April 16 of a year, Sole Managing Conservator may designate one weekend beginning no earlier than the day after the child’s school is dismissed for the summer vacation and ending no later than seven days before school resumes at the end of the summer vacation, during which an otherwise scheduled weekend period of possession by Possessory Conservator shall not take place in that year, provided that the weekend so designated does not interfere with Possessory Conservator’s period or periods of extended summer possession [include if applicable: or with Father’s Day possession].

Other holidays: Notwithstanding the weekend and Thursday periods of possession of Possessory Conservator, Sole Managing Conservator and Possessory Conservator shall have the right to possession of the child as follows: Christmas Holidays in Even-Numbered Years—In even-numbered years, Possessory Conservator shall have the right to possession of the child beginning at [6:00 P.M. on the day the child is dismissed from school/the time the child’s school is dismissed] for the Christmas school vacation and ending at noon on December 28, and Sole Managing Conservator shall have the right to possession of the child beginning at noon on December 28 and ending at 6:00 P.M. on the day before school resumes after that Christmas school vacation. Christmas Holidays in Odd-Numbered Years—In odd-numbered years, Sole Managing Conservator shall have the right to possession of the child beginning at [6:00 P.M. on the day the child is dismissed from school/the time the child’s school is dismissed] for the Christmas school vacation and ending at noon on December 28, and Possessory Conservator shall have the right to possession of the child beginning at noon on December 28 and ending at 6:00 P.M. on the day before school resumes after that Christmas school vacation.

Thanksgiving in Odd-Numbered Years—In odd-numbered years, Possessory Conservator shall have the right to possession of the child beginning at [6:00 P.M. on the day the child is dismissed from school/the time the child’s school is dismissed] for the Thanksgiving holiday and ending at 6:00 P.M. on the Sunday following Thanksgiving. Thanksgiving in Even-Numbered Years—In even-numbered years, Sole Managing Conservator shall have the right to possession of the child beginning at [6:00 P.M. on the day the child is dismissed from school/the time the child’s school is dismissed] for the Thanksgiving holiday and ending at 6:00 P.M. on the Sunday following Thanksgiving.

Child’s Birthday—If a conservator is not otherwise entitled under this Standard Possession Order to present possession of [the/a] child on the child’s birthday, that conservator shall have possession of the child [include if desired: and the child’s minor siblings] [possession of siblings on a child’s birthday is not part of the standard possession order] beginning at 6:00 P.M. and ending at 8:00 P.M. on that day, provided that that conservator picks up the child[ren] from the other conservator’s residence and returns the child[ren] to that same place. Father’s Day—Father shall have the right to possession of the child each year, beginning at 6:00 P.M. on the Friday preceding Father’s Day and ending at [6:00 P.M. on/8:00 A.M. on the Monday after] Father’s Day, provided that if Father is not otherwise entitled under this Standard Possession Order to present possession of the child, he shall pick up the child from the other conservator’s residence and return the child to that same place. Mother’s Day—Mother shall have the right to possession of the child each year, beginning at [6:00 P.M./the time the child’s school is regularly dismissed] on the Friday preceding Mother’s Day and ending at [6:00 P.M. on/the time the child’s school resumes after] Mother’s Day, provided that if Mother is not otherwise entitled under this Standard Possession Order to present possession of the child, she shall pick up the child from the other conservator’s residence and return the child to that same place.

Percentage custody for non-custodial parent: 33%

 

 

Cryptocurrency and Family Law: Tracing Remainder Addresses on Exchanges (Part 2)

This article is limited to transactions on exchanges only.  The next entry will address remainder addresses in non-exchange scenarios.

For a better understanding what cryptocurrencies are, please read the first article in this series, available here: https://www.dallastxdivorce.com/2018/08/articles/articles/cryptocurrency-and-family-law-the-basics-part-1/

Everyone in the world can see when cryptocurrencies are transferred.  Public addresses are wallets, and generally remain the same, and private addresses are similar to coins, and change upon transfer. When a private address (coin) moves from one public address (wallet) to another (from seller to buyer), one could simply follow the coin’s movement from public address to public address, by following the amount of cryptocurrency transferred between public addresses, similar to tracing cash amounts from bank account to bank account.

However, tracing assets is not as simple as following a trail, as the trail is in a constant state of transition, and it is difficult to determine who the buyer/recipient is. As discussed in the previous article, private addresses always change when transferred.  Public addresses generally stay the same.  However, while sales/transfers from a seller’s transmitting public addresses don’t change the transmitting public address, when only a portion of the cryptocurrency held in a transmitting public address is transferred to a single recipient, a third public address is created where the seller holds their remaining funds.  A seller would then have the old public address where the seller could still receive funds, and a new one where the seller could keep the funds or enact a secondary transfer.  Below is an example of how public addresses can be traced, and demonstrates how a remainder address is created.

Subdivisions would appear as follows:

             1uS

         (1.0 BTC)

      ↓                  ↓

   3Uk               1Ru

(0.75 BTC)   (0.25 BTC)

Buyer           Unknown

Seller (1uS) transfers a portion of her Bitcoin holdings (0.75 BTC) to Buyer (3Uk).  Remember, the sale is a transmission of a private address, however, for purposes of this demonstration that private address (coin) is not shown, only the amount transferred is shown, as we are demonstrating how public addresses change in this example.  That private address is transmitted and converted in secret. 3Uk receives 0.75 Bitcoin from Seller’s 1uS wallet, and it appears that Seller keeps the remaining 0.25 Bitcoin. However, that remaining 0.25 Bitcoin does not stay in Seller’s original, transmitting 1uS public address. Instead, it generates a new public address for Seller, called a remainder address, designated as 1Ru.  Seller’s old public address (1uS) remains but has a zero balance. Seller can still receive funds and replenish the 1uS public address (wallet). Without access to exchange records, the remainder address, 1Ru, creates tracing issues, as a tracer would not know whether the remainder address (1Ru) is a second buyer (for example, if Seller put all 1.0 BTC up for sale, and the exchange sent 0.75 BTC to 3Uk and 0.25 BTC to a second buyer at 1Ru), or Seller’s remainder address (Seller only sold 0.75 BTC and kept 0.25 BTC in the newly created 1Ru remainder). It only appears as a new address in the blockchain, without clarification. A tracing party would know a transmission occurred, but they would not know to who, and unless it was a complete transfer, they would not know how much was retained.  

Tracers need to pay attention when exchanges are used to sell cryptocurrency.  In some cases the value of 1Ru could be a combination of multiple remainders and could appear to be a transfer larger than the original account balance, for example, 10 BTC.  This could lead the tracer to believe that an error occurred, or the Seller had hidden funds.  This 10 BTC scenario would occur when a second buyer puts in a buy order for 10 BTC, but no seller has 10 BTC to sell.  The exchange then combines multiple remainder addresses to fill the order.  Seller, unknowingly becomes part of this, and while Seller put 1.0 BTC up for sale, 0.25 BTC of that was combined with numerous other sell orders into one large 10 BTC sale order to the second buyer. Luckily for a tracer, if this were to occur, it would be clear that Seller sold both the entire share of 0.75 BTC from the 1uS public address, and the remaining 0.25 BTC (part of the large combination 1Ru public address).  When no combination (i.e. combining multiple remainders to 10 BTC) occurs, the owner of the 0.25 Bitcoin in 1Ru is unknown. It could have been a second buyer who only wanted to purchase 0.25 BTC, or it could be Seller’s remainder address. To discover the holder of the 1Ru public address, Seller would need to subpoena the exchange.  If no exchange was used, or the exchange is outside the reach of a subpoena (many are), the owner of 1Ru is truly anonymous.  The best hope a tracer would have would be access exchange balance and transaction statements, but these may be impossible to obtain.

Exchanges are not the only time remainder addresses pose problems, and are not the only mechanism to sell cryptocurrency.  Part three of this series will address cash-escrow services and privates sales, both of which compound the problems created for tracers by remainder addresses.

*Remainder addresses are also referred to as “change” addresses.

Cryptocurrency and Family Law: The Basics (Part 1)

Cryptocurrency and Family Law: The Basics (Part 1)

Cryptocurrencies like Bitcoin and Ethereum are not going away any time soon.  Both have been sanctioned by the United States government, and millions of people within our country utilize these electronic currencies every day in a variety of ways.  Some use them as vehicles for investment, some use them to trade goods and services, and others use them as sources of income. This article is the first of an in depth series, which will explain: (1) what cryptocurrencies are, (2) how they can be traced or discovered, and (3) how they can be used to hide assets in a divorce or child support case.

What is a Cryptocurrency?

In the most basic terms, a cryptocurrency unit consists of two-character lines of code (“addresses”) (usually 26-35 characters long for Bitcoin). One address to send and one address to receive. The public address is the receiving code, and acts like a wallet. The private address is the sending code, and acts like a coin. The coin is moved from one wallet to another, and when it is received in the new wallet, it transforms, gaining a new private address, similar to providing it with a password so the sender can’t reverse the charge. An example of this transmission is as follows:

The seller starts with 0.5 Bitcoin, with the private address (coin) of 1xIXXX, held within his public address (wallet) 3FKXXX.  Everyone in the world can see that seller has 0.5 Bitcoin in his public address, but nobody besides seller knows the private address.  Buyer, whose public address (wallet) is 1ThXXX, seeks to purchase 0.5 Bitcoin.  Buyer puts fiat currency (such as the United States Dollar) into an exchange that holds his fiat in escrow.  Buyer then submits a purchase request on the exchange (or privately).  Seller, seeing the purchase order, places his private address (coin) into that same escrow account on the exchange, and the exchange transfers the private address from seller to buyer, and the fiat from buyer to seller.  However, now that the seller and buyer both know the private address, the cryptocurrency system (blockchain) converts the old private address to a new private address.  If the address stayed the same, the seller could technically rescind the sale, and take the 0.5 bitcoin back, and keep the fiat.  For this reason, private addresses are strictly confidential. Once a person has it, they can take it from you and you cannot get it back because when it lands in the thief’s public address, it has a brand new private address. A party should not disclose the private address under any circumstances.  An example of a theft would be when a thief visually see’s a victim’s private address, writes it down, enters it into a transfer program manually, and sends the code to the thief’s public address (wallet).  The private address is then converted into a new code, unknown to victim, and victim has no idea who the owner of the public address the coin was transferred to (the anonymous thief).  How the thief cashes out is a topic for another article.

As demonstrated above, a public address is used to receive funds from anyone. It stays the same after funds are transferred. You can always send funds to any public addresses, they are not deleted, and can always receive funds.  Sometimes they transform, which will be discussed in part two of this series, which addresses the complexities inherit to tracing cryptocurrencies.

Blake Griffin’s child support and reason #1,522 not to live in California

Reports surfaced today that pro-NBA player Blake Griffin has reached a settlement deal with his ex-girlfriend Brynn Cameron to pay child support of $258,000 PER MONTH for their two children. (See reports here from TotalProSports and here from TMZ.) The lawsuit, pending in California, alleges that Griffin ousted Cameron and the kids from his mansion in the California hills and made them homeless and penniless so he could carry on with reality star Kendall Jenner. Cameron, however, is savvy — she has another child with a pro-football player. She sued under California law for breach of an oral relationship contract, palimony and child support based upon her “station in life”. You see, California considers the “station in life” as a factor in setting the amount of money to be paid in a cohabitating break up. So, wealthy men should beware if you live in California.

Now, Griffin agreed to this order, so we can’t feel super sorry for him. But, I’m confident that he wouldn’t agree to something that was so far outside the realm of possibilities in court. If his lawyers thought a settlement like that would never happen in a million years in court, they wouldn’t let him agree to it. On the other hand, if there was a risk of a worse deal, then they would tell him to take it.

Move to Texas — we don’t have those kind of laws here. The lawsuit between Griffin and Cameron would never have happened in Texas. First of all, she sued him for breach of some oral contract between them for their relationship. That kind of suit is not allowed in Texas. Plus, we don’t have palimony in Texas. Palimony is where two unmarried people break up and one spouse has to pay the other monthly support post-break up, in the nature of alimony. (See Texas Family Code 8.061.) In Texas, either you’re married or you’re not. That’s it. (We also have very weak alimony laws even for married folks, contrasted to California, so consider that too in where you want to take up residence.) Texas child support laws are also more restrictive. Our standard child support guidelines are fixed to cap the amount of income that is relevant to setting child support (merely $8,550 per month in income is considered). The needs of the child (NOT luxuries, wants, or “station in life”) can be considered for extraordinary child support amounts above the guideline. Usually these types of needs include special disabilities that cause extra expenses. But, this is a rare circumstance. Private school education is the most commonly debated issued for over-guideline child support. But in Texas that is not a need, only a want or a luxury. Public school is just fine, says Texas, and private school is discretionary. If a wealthy parent wants to pay for private school, that is optional and not the business of the courts or the child support amounts. (Here’s an article from Forbes showing that California on average orders double the amount of child support over Texas’ awards.)

So Mr. Griffin, and others like you, I’d suggest looking at Texas for your main residence. We may not have the sun, sand, and beautiful weather like California does (yes, it is very hot here), but your bank account will thank you.

Significant Impairment Standard Applies When the Primary Conservator Seeks to Vacate a Geographic Restriction Within One Year

Subsection (a) of Texas Family Code section 156.102, entitled “Modification of Exclusive Right to Determine Primary Residence of Child Within One Year of Order,” provides:

“If a suit seeking to modify the designation of the person having the exclusive right to designate the primary residence of a child is filed not later than one year after the earlier of the date of the rendition of the order or the date of the signing of a mediated or collaborative law settlement agreement on which the order is based, the person filing the suit shall execute and attach an affidavit as provided by Subsection (b).

Tex. Fam. Code Ann. §156.102(a). Subsection (b) requires that the affidavit contain, along with supporting allegations, at least one of the following allegations:

(1) that the child’s present environment may endanger the child’s physical health or significantly impair the child’s emotional development;

(2) that the person who has the exclusive right to designate the primary residence of the child is the person seeking or consenting to the modification and the modification is in the best interest of the child; or

(3) that the person who has the exclusive right to designate the primary residence of the child has voluntarily relinquished the primary care and possession of the child for at least six months and the modification is in the best interest of the child.

Tex. Fam. Code §156.102(b).

What if a primary conservator files suit within one year to vacate a geographic restriction? Must she file allege a significant impairment by affidavit per (b)(1) above? Or can she consent to the suit without meeting the elevated standard per (b)(2)?

The Fort Worth Court of Appeals conclusively addressed this argument and held that where a parent who has the exclusive right to designate the primary residence of the child within a defined geographic area seeks to vacate that geographic restriction within one year of the prior order, that parent must allege significant impairment under §156.102(b)(1). In re A.S.M., 172 S.W.3d 710, 713–14 (Tex. App. – 2005, no pet.).

In A.S.M., the Mother was appointed as the parent with the exclusive right to establish the child’s primary residence within Tarrant and continuous counties. Id. at 712. One month following the entry of the divorce decree, Mother sought to modify the order by vacating the geographic restriction. Id. She argued that she was excused from complying with 156.102(b)(1)’s significant impairment standard because she was the primary conservator filing suit under 156.102(b)(2). Id. Father sought dismissal of her cause of action and sanctions for frivolous filing. Id. The trial court agreed with Father, dismissed Mother’s suit for modification filed within one year of the prior order, and awarded sanctions against Mother. Id. at 713. Mother appealed.

The Fort Worth Court of appeals affirmed the trial court’s decision. The court looked to the public policy underlying Title V of the Texas Family Code in general and specifically the specific public policy underlying 156.102:

“The purpose of section 156.102 in particular is to “promote stability in the conservatorship of children by preventing the re-litigation of custodial issues within a short period of time after the custody order is entered.”

Id. at 715, citing In re R.C.S., 167 S.W.3d 145 (Tex. App. — Dallas 2005, pet. denied), cert. denied, 547 U.S. 1055 (2006). The court examined other cases interpreting §156.102 related to imposing a geographic restriction where none existed before, finding similarity between a case seeking to impose a geographic restriction and the case at bar seeking to vacate a geographic restriction:

“…[T]he Waco court has interpreted the provision broadly, to include not only a suit seeking to change the person with the exclusive right to determine a child’s primary residence, but also a suit seeking to change the scope, or terms, of the then-existing designation without changing the identity of the person. We believe that this interpretation of section 156.102(a) is consistent with the underlying purposes of the statute and the public policy applicable to suits affecting the parent-child relationship in general.”

Id., citing In re A.C.S., 157 S.W.3d 9, 17–19 (Tex. App.-Waco 2004, no pet.). The court rejected Mother’s contention that there is a difference between imposing a new geographic restriction and vacating an existing one:

“Appellant attempts to draw a distinction between a suit seeking to eliminate a restriction and a suit seeking to impose a restriction, but we do not believe there to be any meaningful distinction between the two. Granting relief in either situation has the potential to disrupt the status quo of the child’s living arrangements, a result that Texas public policy attempts to avoid except in cases in which the child’s physical or emotional health is in danger.”

Id. at 716, hn 6, citing Tex. Fam. Code. §153.001; R.C.S., 167 S.W.3d at 148; Burkhart v. Burkhart, 960 S.W.2d 321, 323 (Tex.App.-Houston [1st Dist.] 1997, pet. denied); Mobley v. Mobley, 684 S.W.2d 226, 229 (Tex.App.—Fort Worth 1985, writ dism’d).

The Fort Worth Court of Appeals conclusively held that a suit to modify and vacate a geographic restriction brought by the person having the right to determine the child’s primary residence falls within §156.102(a), requiring an affidavit and initial showing of significant impairment to proceed and subject to dismissal without such.

“Thus, we hold that a suit seeking to eliminate or modify the terms of a geographical restriction on a person having the exclusive right to determine a child’s primary residence is a “suit seeking to modify the designation of the person having the exclusive right to designate the primary residence of a child” for purposes of section 156.102(a).”

Id. at 716. Therefore, the Mother was required to file an affidavit alleging significant impairment with her petition/amended petition. Id. The trial court acted properly in dismissing Mother’s suit where no significant impairment was alleged to support vacating a geographic restriction.

Plus, attorney’s fees are mandatory where the modification is dismissed. Where a suit for modification is brought for the sole purpose of harassment, the trial court has authority to award attorney’s fees to the responding party. Tex. Fam. Code §156.005. Specifically, where a party fails to meet the initial pleading requirements of §156.102 showing a significant impairment which results in dismissal of the suit for modification, attorney’s fees are warranted. The Houston 14th Court of Appeals applied §156.005’s mandate to award of attorney’s fees to a dismissal for failure to file a §156.102 affidavit in a modification suit. Stashak v. Stashak, 2003 WL 21230406, at *3 (Tex. App. – Houston [14th Dist.] 2003, no pet.). Further, such attorney fee award must be taxed as court costs and subject to collection as such. Tex. Fam. Code §156.005.

Distinction between Military Deployment and Military Station

The Texas Family code provides special provisions regarding parenting time and access to children when the military parent is deployed.

Military deployment is not the same as a change of duty station (“PCS”). Deployment begins with the physical movement of individuals and units from their home installation to the designated theater of operations. One of the greatest distinctions between a duty station and a deployment, relevant to the questions pertaining to conservatorship, possession and access of a child the subject of a suit affecting the parent-child relationship, is the inability of friends and family to accompany the military member on a deployment. On the other hand, family members accompany the military member to a duty station, and the military member can maintain a relationship with his or her child. A deployment is a temporary location of service, where a duty station is intended to be a more permanent assignment.

This distinction was outlined by the Amarillo Court of Appeals. In re Marriage of Hess, 2009 WL 4824693 (Tex. App. – Amarillo 2009, no pet). There the military member father was stationed in North Carolina where he could have possession of and access to the child the subject of the suit. However, father claimed that it was a deployment under the Texas Family Code and the terms of the parties’ final divorce decree. The trial court rejected this argument, which was affirmed by the Amarillo Court, finding that father’s location in North Carolina was a duty station and not a deployment under the considerations of the Texas Family Code. Id.

Likewise, the Fort Worth Court of Appeals distinguished between a deployment and a duty station. In re Russell, 321 S.W.3d 846 (Tex. App. – Fort Worth, 2010, pet. denied). There, step-father was granted right of access to the child the subject of the suit following divorce from the child’ mother. After divorce, step-father relocated in the military to a duty station in California. He filed for modification of the order, seeking to substitute his parents for himself according to the Texas Family Code provisions regarding deployment of a military member. Following temporary orders hearing, the trial court granted step-father’s parents right to periods of possession of the child finding that father was “deployed” outside the state of Texas. Further dispute arose between mother and step-father’s parents over enforcement of the step-father’s parents’ right of possession, at which point the trial court removed mother as primary conservator of the child, awarded primary conservatorship to step-father’s parents and restricted mother’s access to the child. The trial court denied mother’s challenge to the step-father’s parents’ standing to intervene in the suit. Mother sough mandamus of the standing ruling. The Fort Worth Court of Appeals distinguished between a deployment and a duty station, holding that step-father was “stationed” in California but not “deployed”. Thus, his parents had no standing to intervene as if it were a deployment. Id.

A change of duty station (“PCS”) is different than a deployment such that special parenting provisions do not apply to a change of duty station.

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