Dallas Divorce Law Blog by Michelle O'Neil

Well, we survived another tax year.  Hopefully everyone got their returns in on time and the process was relatively painless.   For our readers who were recently divorced, its important to ensure the name on your tax return matches the name registered with the Social Security Administration (“SSA”).

After a divorce, it is important for the taxpayer to contact the SSA to change their last name.  Although standing in line at the SSA is never a pleasant experience, you can reduce your time in line by downloading and completing the appropriate form to change your last name here.  Once the taxpayer turns in the form, the SSA it takes about two weeks for the the change to be completed.  If a taxpayer submits a return with a name that does not match the SSA records, the return will be rejected.

For a good overview of divorce tax tips, check out Sharon Drew and Gregg Herman’s Ten Divorce Tax Tips.

Finally, check out Cary & Lipponcott’s blog post on tax issues presented on spousal maintenance ordered by a Texas court.

PROVING SEPARATE PROPERTY

If a spouse wants to keep certain property after the divorce, it must be proven in court that it should be considered separate property. That determination (also referred to as the “inception of title” rule) is usually made according to when the item was purchased. The simplest way to prove this is to produce a title or receipt that shows the purchase date was prior to the marriage.

Also, if clear and convincing evidence is presented, assets purchased during the marriage using separate property funds can also be considered as separate property. The courts refer to this as “tracing.”

Don’t just take for granted that your spouse “knows” that such-and-such was your’s before the marriage.  If you do not prove the separate property nature of the asset, it will be presumed to be community property and subject to division in the divorce.  This is where a document trail is very valuable.  Show, for example, where your house was purchased before the marriage using deed record.  Or, provide a will and transfer documents to prove that a bank account holds only money received as inheritance when your mother died.  If you got a piece of jewelry as a Christmas gift, show a picture of opening the gift Christmas morning.

More than likely, each spouse entered into the marriage with personal assets. Just as likely, once married, the spouses accumulated joint assets including money, real estate, personal property such as cars and investments, and even debt. How to properly and fairly divide this property can turn even the most amicable divorce into a bitter battle.

Texas, along with California, Louisiana and a handful of other states, use a “community property” system of property division, which was derived from Spanish law. Other states follow an English law tradition.

So what does it mean when we say Texas is a community property state? It means that a court can divide the community property between the spouses, but cannot divide separate property.

Separate property is something one person (1) owned before the marriage; (2) individually received during the marriage by gift or inheritance; or (3) in some circumstances, money received in a personal injuries lawsuit during the marriage (except for lost earning capacity.) Community property is everything other than separate property.

There is a presumption that all property owned at the time of divorce is community property. If either spouse insists that certain property is separate property, it is up to that person to prove their claim in court.

However, not every case has to go before a judge for asset division. After filing for divorce, the spouses are free to agree to divide their assets any way they see fit. They can even split their personal property or agree to pay alimony on their own.

After a decision is reached, whether by settlement or trial, a divorce decree is entered. This is the court order the judge signs finalizing the divorce.  It is usually a lengthy document that formalizes and finalizes all of the provisions of the divorce – including issues of property division and child custody. The decree must be drafted very carefully, because, once entered, this agreement will become the rules by which you must live.  It is hard to forsee in the future every issue that may arise based on wording in the decree.  But, careful consideration must be given to the specific wording of the provisions in the decree to avoid future problems.

The current economic crisis may be putting a strain on some couples.  According to the American Psychological Association, 83% of women and 78% of men are currently stressed out about money.  But what happens when one spouse lies to the other about money.  Take, for example, the Muniz couple interviewed on Good Morning America this morning.  When the wife was pregnant and due with their child, the husband changed insurance, resulting in no coverage for the wife and child at birth.  This caused the couple to incur significant medical bills for the hospital stay and some complications.

What is financial infidelity?  It is a subtle form of cheating — disloyalty to your spouse.  Many people think it is benign because you just leave out some information — like you bought a new dress and told your husband it was on sale when it really wasn’t.  Or, your spouse gets a credit card that you don’t know anything about and hides it, with the purchases, from you.  But, any lie can be damaging to the trust relationship in a marriage and can cause cracks in the foundation.

As a Dallas divorce lawyer, I see many couples who have issues of infidelity or lying about finances.  It is too common to see a wife who has zero information about the finances.  This causes such disparity in the divorce process.  The divorce lawyer for one spouse cannot get vital information from that spouse, so the information must come, unreliably, from the other spouse.  That can also raise the expense of the divorce because the other spouse may not be forthcoming in turning over the information.  This can leave the spouse without the information, usually the wife, in a vulnerable position, subject to the dictatorial demands in negotiations of the other spouse, usually the husband.

So, if you are married, encourage your spouse to be forthcoming about the finances.  If you find out that your spouse is withholding information or lying about the finances, carefully examine the relationship for other cracks in the foundation. 

If you are contemplating divorce in Dallas, Collin, Tarrant, or Denton Counties in Tx or anywhere else for that matter, gather information about your finances and educate yourself on your marital estate before you get taken advantage of!

According to an article on KSAT website out of San Antonio, divorce lawyers nationwide are seeing a trend away from divorce in light of the recent economic woes.  We are seeing the same trends in Dallas divorces.  Usually bad economic times increase the stress on marriages, causing a rise in divorce rates.  But this time, it seems that couples are not splitting up as a result of the poor economy.  It isn’t that couples are rekindline their marriages, but more that they cannot afford to get divorced.  Housing values have falled, 401K values have fallen, and there is just not as much to divide.  Debt values may outweigh assets values, leaving nothing positive to gain from the divorce.  Spouses may not be able to get credit cards or personal loans to finance attorneys fees to obtain a divorce.  In fact, most credit card companies have reduced the credit limits on credit cards, leaving less available credit to borrow from.  I’ve even seen some spouses who cannot obtain new housing post-divorce, leaving them few options but to stay in an unhappy marriage just for a place to live.

A recent article in the American Bar Journal confirms what Dallas divorce lawyers are seeing — the downturn in the economy is making divorces more difficult.  For many couples, their primary assets are the house and the 401K.  House values are declining and so the asset is not worth as much to the divorcing couple.  Also, the physical division of a house as an asset is more difficult because home sales have slowed and mortgage refinances are more difficult to get.  This makes it more difficult for a spouse to receive the division of the equity from that asset.  Some couples are already so heavily mortgaged that there is no equity in the house, so when the value falls, they may have negative equity.

With the sharp declines in the stock market, 401K values are also tumbling.  This leaves less to divide of a normally fairly liquid and divisible asset.

In many cases, a divorce that would have once been a split of an estate with a positive net worth is now an argument over division of debts.  Some couples are even staying together because of the bad economy.  Or… worse… getting a divorce, but continuing to live together.

Parade Magazine ran an interesting story on marriages and divorces in America.  Their survey confirmed that money and sex are the main sources of stress in a marriage.  Of their respondents, 43% reported that they squabble over money.  Household chores ranked second, although men consider chores less of an issue than women – telling since men still do considerably less housework than women.  As for sex, three-quarters of the respondents in the survey reported their sex lives were fulfilling, while 25% put their sex lives on the tolerable or terrible end of the spectrum.  Even so, 60% of the men reported that they don’t have sex enough, while 51% of the women shared that feeling. Despite those complaints, most of the respondents reported being faithful to their spouses, although 25% of men said they’d strayed outside their marriage or refused to answer the question.  Only 15% of women reported cheating or refused to answer the question.

Of the women, 44% have thought about leaving their husbands, where 31% of men have had the same thought.

Question… with a national divorce rate holding around 50% (and a slightly higher rate of divorce in Dallas Texas area) the respondents of the Parade survey must not be typical of the whole of society. 

Apparently Alec Baldwin has a book coming out this week that talks about his experience with the divorce process.  I read an excerpt of the book online — the introduction and part of the first chapter.  What I read seemed to be his “rant” on perceived corruption in the judicial system in California.  He calls the judges inept and the lawyers lazy.  I plan to get the book and read the rest of it just to see what he has to say.  I don’t know the lawyers or the judge involved with his case. No doubt he had a bad experience with his divorce — we all remember the ultra-inappropriate voice mail left for his daughter. No doubt the judge in his case disapproved.  I am curious to see how much of the book shows a viewpoint skewed by his bitterness and anger as opposed to a bias in the system that is more far-reaching.  I was struck immediately by a story he tells in chapter 1 about controversies with movie producers where he concludes that the producers are more corrupt than the illegal drug business.  I question his credibility in criticizing the legal system when he also calls the movie producers corrput.  Sounds like he’s saying, anything I disagree with is therefore corrupt.  Overall, his book seems like an honest, maybe even raw,  account of an embittered divorce — not so dissimilar to the experiences of many people.  He also disucsses his opinions on “parental alienation”, which he calls a syndrome, although I’ve never known of it to be a diagnosable condition. He does seem to shed light on the inequities and prejudices that continue to persevere in our country over women versus men in raising children.  Starting a discussion of those inequities in a valuable result of his book, I just hope that the good that can come from a celebrity bringing a private situation in the public eye isn’t overshadowed by his bitterness and anger. 

To consult with a dallas divorce attorney regarding your situation, click here.

Continuing with the discussion last week about helping children cope with the reality of divorce, here are ten tips for divorcing parents, from the American Academy of Matrimonial Lawyers:

Ten Tips for Divorcing Parents

Divorce is never easy on kids, but there are many ways parents can help lessen the impact of their break-up on their children:

1. Never disparage your former spouse in front of your children. Because children know they are “part mom” and “part dad”, the criticism can batter the child’s self-esteem.
2. Do not use your children as messengers between you and your former spouse. The less the children feel a part of the battle between their parents, the better.
3. Reassure your children that they are loved and that the divorce is not their fault. Many children assume that they are to blame for their parent’s hostility.
4. Encourage your children to see your former spouse frequently. Do everything within your power to accommodate the visitation.
5. At every step during your divorce, remind yourself that your children’s interests – not yours – are paramount, and act accordingly. Lavish them with love at each opportunity.
6. Your children may be tempted to act as your caretaker. Resist the temptation to let them. Let your peers, adult family members, and mental health professionals be your counselors and sounding board. Let your children be children.
7. If you have a drinking or drug problem, get counseling right away. An impairment inhibits your ability to reassure your children and give them the attention they need at this difficult time.
8. If you are the non-custodial parent, pay your child support. The loss of income facing many children after divorce puts them at a financial disadvantage that has a pervasive effect on the rest of their lives.
9. If you are the custodial parent and you are not receiving child support, do not tell your children. It feeds into the child’s sense of abandonment and further erodes his or her stability.
10. If at all possible, do not uproot your children. Stability in their residence and school life helps buffer children from the trauma of their parent’s divorce.

If you need the advice of a Texas Board Certified Family Law Specialist, please contact us for an appointment.