Lewisville Family Law Blog

Front Loading of Alimony - Beware of the Recapture Rule

  • 20
  • April
    2015

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by Damon J. Wykrent, CFP®, CDFATM, CFE 

If you are the Payee (the spouse receiving the payments) congratulations you must have great negotiation skills; however, this article is not for you. As the payor of alimony (the spouse paying), how would you feel if after a few years the IRS told you that you could not deduct the alimony payments that you paid to your ex spouse? You must be thinking that this could not happen to me...my agreement stated that I could deduct the payments and my ex spouse would have to include them as income. Well, if your alimony payments decrease or end during the first three calendar years, you may be subject to the recapture rule.alimony 2.jpg

The rule comes into effect to the extent that alimony payments decrease annually in excess of $15,000 during the first three calendar years. To the extent that the payor spouse has paid excess alimony, the excess alimony is to be recaptured in the payor spouse's taxable income beginning in the third year after divorce. The payee spouse is entitled to deduct the recaptured amount from gross income in the third year after divorce.

An example: Both spouses decide that it would be in the best interest of their family if one spouse were able to go back to school for two years after the divorce. After two years they plan on both spouses being able to work and support would no longer be needed. They decided that one spouse would pay $24,000 each year (or $2,000 per month) in alimony for two years.

A friend tells them about the IRS rule that says if you want to deduct everything over $15,000, alimony must go on for at least three years, but the rule doesn't stipulate as to the amount that must be paid. So for year three they decide that there will be a $1,000 payment to satisfy the IRS rule. This is what the figures look like.

1st Year $24,000

2nd Year $24,000

3rd Year $1,000

The couple in the above example would still fall into the recapture rule because of the second part of the rule. If payments drop by more than $15,000 from one year to the next, there is tax recapture on the amount over $15,000.

There are ways to plan around the recapture rule as well as the three year requirement. The first step is to get a financial expert that specializes in the field of divorce involved with your case.

Damon Wykrent, CFP®, CDFATM, CFE has over a decade of extensive experience which includes work in the financial services industry and being a financial expert in a full service law firm. On a daily basis, Damon provides expert financial support to attorneys and individuals going through the divorce process. Some of these areas include explaining business valuations, present value calculations for pensions and other assets, asset tracing, measuring economic damages, uncontested and contested property division, mediation and settlement support, QDRO support, expert witness testimony, and work as a neutral financial expert as part of a collaborative team. For more information about Damon go to: www.DivorceFinancialExpert.com.alimony4.jpg

Our Family Wizard - Communication Tool for Parents

  • 15
  • April
    2015

johndenke_SMALL1.jpgOften times when parents either divorce or separate, there can be problems with the communication between them regarding the children. Whether this is because of animosity or differences in opinion, the court has come up with a way to address these communication issues. A service known as Our Family Wizard is one of these tools used to facilitate communication between parents of children.

When orders are put in place between parents as to custody, visitation, childwizard.jpgsupport, and health insurance, each parent can use the wizard to inform the other parent of their intentions on these matters. So, for example, a parent could inform the other parent of their intended pick up time or return of the children, participation of the children in extracurricular activities, and health information affecting the children. The wizard can also be used to exchange financial information such as child support payment and unreimbursed medical information.

By using the wizard to exchange this information, there is a record of the communications going between parents which helps to eliminate the disparity and confusion that can result from exchanging this information through talk, text, or e-mail. In addition, the communications on the wizard can later be used in a court proceeding between the parties to show evidence of a discussion on a particular matter, notice of a party's intent, or as a tally of expenses or amounts owed under the prior orders of the court.

Our Family Wizard can be a particularly useful tool for parents who tend to disagree on the matters affecting their children, which can be enhanced by past litigation between the parties. If the court or attorneys can recognize this difficulty in communication between the parents early on, they can impose this required communication tool on the parents such that it aids in exchanging pertinent information concerning the children in a clear and unambiguous manner.download (3).jpg

HOW WILL YOU HANDLE MEDICAL CHILD SUPPORT?

  • 02
  • April
    2015

Thumbnail image for Thumbnail image for ted ogilvie_SMALL.jpgMake no mistake; the Court will assign as medical child support who pays for and who obtains health insurance for the children included in a custody lawsuit. The Judge will consider what health insurance plans are available, which parent or conservator should enroll the children and on what plan, and who is to pay how much.Unknmedic20.jpg

In any suit affecting the parent-child relationship in Texas, whether it is part of a divorce with children or simply a stand-alone cause of action, the Court must specify the manner in which healthcare coverage is to be provided. First, the Court will consider what options are available. Could this be through a parent or conservator's work? Could it be through the "Obamacare Marketplace" now available online? Could it be through services for indigent care through the State of Texas? The Court will elicit responses to these questions and require the parties obtain information to allow a reasonable determination as to what is available.

Second, the Court will determine what money is available to pay for the costs of obtaining the selected coverage. As you can see right away, if the parties have no funds to pay for healthcare insurance, the Court will likely order a party to seek enrollment in a State-funded program, such as Medicaid, that will cover the children adequately. Likewise, if sufficient funds are available, then the Court will direct funds to go for the "reasonable cost" of covering the children on the selected private plan.

So what is a "reasonable cost" under the Texas Family Code? Anything at or under 9% of a party's annual resources is the answer found in Section 154.181(e) of the Code. As an example, that means a party making $100,000 per year could be held accountable for up to $9,000 of health insurance coverage. In other words, so long as premiums to include children on the coverage would be $750 or less per month, then the Judge would order that party to either pay the premiums directly or reimburse the other party if the other party paid the premiums directly.

Third, the Court will likely order this obligation to continue so long as the children are considered under the continuing exclusive jurisdiction of the Court (i.e., under 18 and not yet graduated high school, not otherwise emancipated, not under special needs or a continuing disability, etc.).

Finally, that leaves the Court to its discretion to allocate between the parties the percentage each will be responsible to pay for those expenses that the insurance plan fails to cover, such as deductibles, co-pays, and services/products not covered under the plan. The Court will usually take a 50/50 approach, but it can assign the costs as it sees fit after considering the available resources of each party.Thumbnail image for medicalsup.jpg

What is Your Stuff Worth in Divorce Court?

  • 27
  • March
    2015

jakebig-1.jpgIt depends on who is evaluating it and why.

Money has different values. $10,000.00 in cash is better than a $10,000.00 CD that is locked in for 5 years at 3% interest or $10,000.00 in a 401(k) because you have to pay tax on 401(k). A 3% CD is very low interest normally and has no flexibility.

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Stock value seems simple. But $10,000.00 of stock you purchased for $10,000.00 is worth more to you than that $10,000.00 of stock for which you paid $1,000.00 because you have taxes to pay on the latter.

Real Estate. Your homestead which you sell for $100,000.00 more than you paid for it is worth more than the weekend lake house which you sell for $100,000.00 more than you paid for it because then you will be taxed when you sell the lake house but not when you sell the homestead.

Personal property such as furniture may have several different values. However, unless it is an antique or collectible it's garage sale value. But to replace it will cost more than that, so it's worth more to the owner. Example: A Washer-Dryer in good condition that originally cost $1,500 is only worth about $150 used but unless you are willing to go to garage sales to replace it that used item is worth more than $150 to you.

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Lawyers aren't CPA's and generally do not have expertise in tax matters, but their experience and training can recognize and point out the many ways of valuing your stuff.

Here at Neal Ashmore, we are fortunate to have Damon Wykrent  available to help. Damon is one of the preeminent certified divorce planners, financial planners, and certified fraud examiners in the area. He is able to give you the correct evaluation methods to help you make financial decisions in dividing your property in a divorce. In my 46 years as both a lawyer and District Judge, I have seen more mistakes by litigants in getting the right valuations and then making the right choices based on those evaluations than almost anything else. Do your homework carefully then choose wisely.

Termination of Rights - When Is It Appropriate?

  • 20
  • March
    2015

Thumbnail image for johndenke_SMALL1.jpgIn certain cases, a parent may have committed actions that warrant a court to consider terminating that parent's rights to their child.  The actions will need to be serious, but if they are, either a judge or jury can possibly terminate that parent's rights after presentation of the evidence on the matter.

A suit for termination of rights can be filed by the other parent of the child, a person who has custody of the child, or by someone such as the Department of Family and Protective Services when they discover that the conduct calling for termination has been committed.  The party requesting termination must plead specific grounds for termination of the other parent's rights to be entitled to this form of relief.

Some of the grounds for termination include the following:  1) abandonment and lack of support, 2) child endangerment including abuse or neglect, 3) engaging in criminal conduct such as pregnancy caused by a criminal act or committing of a serious crime, or 4) a parent is otherwise unfit including not complying with a CPS service plan or the parent cannot care for the child because of being incapacitated.  The grounds for termination must be established by clear and convincing evidence, which is a slightly higher burden than the usual preponderance of evidence required in civil cases.tpr1.jpg

Another way a termination may occur is if the parent whose rights are to be terminated consents to the termination.  This does happen often in termination cases, and the parent terminating their rights can sign an affidavit of voluntary relinquishment that essentially forgoes any rights they may have to the child.  The affidavit is usually revocable for a small period of time, and then becomes irrevocable after the expiration of this time period.  Just because a parent voluntarily agrees to give up rights to their child does not mean a court will grant the relief.  The court still has to make a determination that the termination is in the best interests of the child.

Often times in a termination suit, a petition for adoption is included in the termination suit for the child.  The reasoning behind this is so that the child is not essentially "orphaned" by the termination of one of their parent's rights.  The adoption can be by a variety of different parties, including the spouse of the other parent, a relative of the child, or a party who the child has been living with for an extended period of time.  The adoption will also help with the court's likelihood of granting the termination as they will know that another person is stepping into the role of either mother or father to the child.

Whether a case is appropriate for termination will need to be evaluated by an attorney familiar with such suits.  While it may ultimately be appropriate to terminate a parent's rights, a party will not want to waste time and money on seeking this form of relief if it will not be granted by a court.  This same approach should be used when a parent is seeking to terminate their own rights, as they must keep in mind that the ultimate decision to do so lies with the court.   handing_over_baby_small.jpg       

My Ex Won't Follow the Possession Order! What Can I Do?

  • 17
  • March
    2015

Thumbnail image for jimsmall.jpgIn Texas, all divorce decrees, modification orders, or orders in suits affecting the parent-child relationship contain what is called a "Possession Order", setting forth when the parties are to have possession of the child. Most Texas orders also include a provision which usually reads as follows:

"IT IS ORDERED that the conservators shall have possession of the child at times mutually agreed to in advance by the parties, and, in the absence of mutual agreement, it is ORDERED that the parties shall have possession of the child under the specific terms set out in this Possession Order."

In cases where parties cooperate with each other, their failure to follow the Possession Order (by agreement) is not a violation at all and many times is in the best interest of the child. However, in cases where one of the parties violates the Possession Order without the agreement of the other party, and these violations are frequent, the party may need to ask the Court to enforce the Possession Order. Here are five options for dealing with the other party's failure to follow the Possession Order:dropoffk.jpg

1. Try talking to the offending party and see if you can work out the problem without resorting to initiating litigation or getting attorneys or the Courts involved. Of course, this approach probably will not work because sometimes a party feels like they can do whatever they want, order or not.

2. Don't do anything. This is not a good option. If the failure to follow the Possession Order by the other party goes on for an extended period of time, and you do nothing, the Court may interpret this as you are ok with the other party violating the possession order which may result in the other party filing a Motion to Modify the Possession Order to reflect what the parties are actually doing in regard to possession of the child.

3. Seek the assistance of an attorney to draft a demand letter setting forth what the offending party is doing to violate the Possession Order and the legal action you are going to take if they continue to violate the Possession Order. In some cases, this is enough to correct the problem.

4. Have your attorney file a Motion for Enforcement. If the Court grants the Motion, the Court will have the ability to redress the violation. There are many options that are available to the Court to "correct" the bad behavior. The Court may also order the violating party to pay the other party's attorneys fees.

5. File your own Motion to Modify. If you believe that the other party's continual violation of the Possession Order creates grounds for modification (you should discuss this with your attorney), then you may file a Motion to Modify the Possession Order. The requested modification should seek to end the violations of the possession order.

It is critically important for parents to cooperate in raising their children, thus avoiding legal fees and Court intervention. Sadly, in some cases, there is no other option.dropoffkids1.jpg

Snow Days and Sick Days - Who gets the Kids?

  • 16
  • March
    2015

Thumbnail image for wfneal_SMALL.jpgGood question! In our great state of Texas, it seems this question comes up about once a year and then is forgotten until the next ice storm or snow day. The possession schedule for the kids between separated, divorced, or non married parents gets thrown into chaos. Oddly enough, the Texas Family Code has no rules for this predicament and most orders and decrees don't cover it either. It's left for interpretation and that is normally a recipe for disaster and calls to the lawyer's office. The solution is hopefully two parents that can use common sense and logic to get through the 2 or 3 days a year when it comes up - but the majority of times it is a tug of war for possession and the mythical tenet of law everyone embraces of "possession is 9/10's of the law" prevails.icytruck1.jpg

1. What the law says. The "law' is going to be what is written in your Decree of Divorce or Order governing possession. The return or surrender time for parent's to exchange the children is either going to be 6:00 p.m. on a Sunday or when the kids resume school on a Monday. Most decrees and orders of possession cover the traditional holiday or teacher training day and will spell out who keeps the children on that Monday or Friday off day for the kids from school. But when the inability to return the children at the designated hour is caused by weather, other natural disaster, or sickness of the child, then a close reading of those court ordered possession schedules will yield no definitive answers. School never resumes on the Monday snow day so the parent in possession will argue they don't have to return the kiddos until it does resume. The out of possession parent will argue that the other's possession time ends at the time school resumes and therefore that parent should return the kids back to the parent entitled to possession. Who is legally entitled to "possession" of a child during school? Totally gray area. Most judges and lawyers, I believe, will concede that the intent of any possession order is to have set times for the start and ending of possession for parents who live apart from one another. The "intent" of a possession order done under the Family Code is for the parent in possession of the children on a weekend or week night and who is to return the children at the time school "resumes" should turn over possession to the parent not in possession at that designated time - whether school is closed due to weather or child sickness. However, most decrees and orders don't say that specifically.

2. How the problems should be handled. First, common sense and safety for you and your children should rule the thinking process - not how do I one-up my ex by holding onto the kids for another day. Children thrive on routine and most judges and mental health experts will advise that you should stick to that plan as much as you can. So, if the roads are really icy and unsafe, keep the kids. Wait till it gets better and there aren't cars and semi trucks spinning out on every major road and overpass. When it clears, get the kids back to the parent who is supposed to have possession as soon as possible and get them back into their routine. Second, get your order fixed right. We are now putting into orders we prepare provisions for "snow days" to govern these circumstances. We are legally defining who has the right of possession when schools are closed for reasons other than prescheduled holidays and in teacher service days. We are also drafting provisions that give the out of possession parent the right to go to the parent who is claiming the roads are too hazardous and get the kids and bring them back to their house. We are putting into legally enforceable orders what the "intent" has always been. When finishing your divorce, modification, or other parenting plan order, make sure your lawyer addresses this issue. It can save a lot of angst and anger when that "northern" blows in more than just cold air.

Making a snowman with your kid is a great experience and a memory every parent would love to make, but don't use it as an excuse to ignore your larger obligation of teaching your children responsibility, cooperation with their other parent, and how adults handle adversity and emergencies.Mariemont-Family-Photographer-6-1024x683(pp_w736_h490).jpg

How Young is "Too Young" to Leave Your Child Home Alone?

  • 13
  • March
    2015

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Over the years, I have been asked this question a number of times, and it has been part of litigation in many courtrooms throughout the country and even overseas. The simple answer is (like most legal questions)-it depends!

Most states do not have a minimum age requirement to leave a child home alone. Only a few states have laws that specify the age when a parent may leave their child home alone, including Oregon (age 10), Illinois (age 14), and Maryland (age 8).

Texas law does not state what age is old enough for a child to stay at home alone. However, you (as a parent) are accountable for the safety of your child, and failure to properly supervise your child could be considered as a type of neglect ("neglectful supervision").

The Texas Department of Family and Protective Services sets forth some things for parents to consider when deciding how closely to supervise a child:

-How old, emotionally mature, and capable is your child?

-What is the layout and safety of the home, play area, or other setting?

-What are the hazards and risks in the neighborhood?

-What is your child's ability to respond to illness, fire, weather, or other types of emergencies?

-Does your child have a mental, physical, or medical disability?

-How many children are being left supervised?

-Do they know where you are?

-Can they contact you or other responsible adults?

-How long and how often is the child (or children) left alone?

In other words, use common sense. The bottom line is that it is a huge responsibility for a parent to make the decision to leave a child home alone. Please consider these guidelines when making that decision.homealone.jpg

3 Ways To Disinherit Your Offspring In Texas and Not Leave Them a Dime

  • 09
  • March
    2015

Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for ted ogilvie_SMALL.jpgSo are you disappointed with the way your kids turned out? Are they rotten, spoiled brats? Are they criminals in and out of prison (mostly in)? Did they marry the wrong, gender, religion, age, or political affiliation? Did they go to law school instead of medical school? Did they let you down to the point where you now disown them?

If so, then here are three ways you can fix their wagons by not leaving them your hard-earned fortune:

1. Use it all up yourself. Just let loose and spend every last cent just before you die. To drive the point home to your off-putting offspring, you could even leave them a little debt to deal with should they want to pursue your estate.

2. Leave your estate to a worthy charity. Find the cause that excites you the most, seek out the person responsible for capturing gifts and pledges for your philanthropic choice, and pledge away. You might even want to see if the charity will name a building, scholarship or playground in your honor. (Wouldn't that be a great reminder the little undeserving twits will have to remember you by?)demrep.jpg

3. Of course, the method I would recommend is including an affirmative acknowledgement and minimal provision to the specific child(ren) in a will. In Texas, parents can choose whether or not to leave property to their children. In order to disinherit heirs, though, the only truly successful way is through a will. Under the Texas Estates Code, intestate distribution statutes may have property being passed to undesired heirs instead of those the parent would have chosen . . . or not chosen.

A will provides the testator the opportunity to affirmatively address and state to whom the testator wants to leave anything and everything. It also provides the testator the opportunity to affirmatively state what he does not want to give certain people. Hence, the testator has the sole power before he dies or loses capacity to direct who gets what.

Carrying this a little further to those parents who have children that are born out-of-wedlock, the will is definitely the most secure place to identify such children and own them or disown them. Should the decedent fail to ever let surviving friends know about such out-of-wedlock children, then the door may be open for the illegitimate children to charge in and take control of the decedent's estate. Now that could really be disastrous!

To be sure, I would suggest naming the illegitimate child, along with any other offspring needed to be recognized, and state specifically what that child gets from the estate. I believe naming the child and the minimal amount of what it is the child receives upon your death may defeat any further control that child could have over your estate. But I would strongly recommend having an attorney prepare any will, particularly a will that disinherits legitimate or illegitimate kids. You don't want your kids getting the last laugh after you're gone, do you?!smileyprison.jpg

Appealing Your Case - The Process

  • 02
  • March
    2015

Thumbnail image for johndenke_SMALL1.jpgAt the conclusion of a family law proceeding, a party can feel that the decision of either the judge or jury was incorrect. In such a scenario, it may be proper to appeal the judgment or verdict to a higher court. The process of appealing a trial court judgment to an appeals court can be a lengthy process, but can also ultimately result in the overturning of an unjust decision.

The timetables for filing an appeal begin to run when a final order is signed by the judge in a particular court handling the case. Generally, a party has thirty days from the date the order is signed to file their notice of appeal with the trial court. This will let the trial court know that a party is appealing the judgment to a higher court and put the appeals process into action.

Once notice of appeal is filed, the appeals court will be notified of the intention of a party to appeal a case. At this point, it will be the duty of the appealing party, or appellant, to obtain the records of the proceedings in the lower court. This will be both the record of pleadings, or clerk's record, along with the transcript of the trial, or reporter's record. These must be obtained with some urgency as the appeals court will want them turned over on a timely basis.

Once the clerk's record and reporter's record are obtained, the appellant will have to submit a brief in support of their position why the lower court's judgment should be overturned. The brief must lay out the issues challenged in the trial court's judgment and argue why those issues should be found in the appellant's favor, with citations to supporting case law and statutes. The other party seeking to uphold the lower court's judgment will need to file a response brief to the appellant's brief. The briefs are very important as the appeals court will review both of them before making a final decision on an appeal.

Sometimes, the parties will request oral argument before the appeals court before they make their decision. This will let both parties present their position to a panel of judges from the appeals court as to why their position on the appeal should be followed. The time is limited in oral argument for the parties, and the court will not always allow it to be presented.

Once the appeals court has reviewed the briefs and heard oral argument, if allowed, they will render a written opinion on the appeal. The opinion will state whether the lower court's judgment is upheld or reversed and give the basis for the decision by citing to pertinent law. The entire process from filing the notice of appeal to the receiving of the written opinion can take a year or longer. If you are considering filing an appeal on your case, an attorney familiar with the process can help you follow the pertinent deadlines and craft a brief and argument that will hopefully persuade the appeals court to see the case in your favor.appealatejudges.jpg