Four Women Who Need a Pre-Nup in Texas

By | Community Property, Divorce, Just and Right, Marital Property Division, Pre-Marital Agreements, Separate Property

1. The Business Owner. A properly created business has exhaustive company agreements, succession planning and creditor protection. Unless you have every confidence in your documents, you may want to consider a pre-nup to set up agreements between you and your spouse. I see many family-owned businesses severely disrupted by divorce, especially by the temporary orders phase. Image a couple in crises and both spouses are signatories on the company checking account. Perhaps each believes he/she runs the business and should be able to continue to run it exclusive to the other spouse. Where does a court begin to do what’s in the marital estate’s best interest? It is much easier on the Court if there is an agreement in place.

2. The Second Wife and Step-Mother. The reason wife No. 2 needs a pre-nup has everything to do with the probate code. When a spouse dies without a will and has children from a different marriage, Texas law requires that the majority of the estate goes to the deceased’s children. This is a huge problem for second wives.

Imagine a second wife who has young children being left with almost nothing. She will have her community interest in property earned or acquired during the marriage except for property her husband inherited, but that’s it.

A pre-nup can avoid this problem in two ways. One, a pre-nup can provide for trusts, bequests and contingent awards in a highly tailored manner. Typically, these provisions satisfy the needs of children from prior marriages as well as the spouse and children from the second marriage. Because a pre-nup is created before marriage, it provides answers to these issues before the challenges of marriage influence decisions. Secondly, a carefully drafted pre-nup can trump a will that leaves out a spouse. Yes, that’s right. Spouses do not have to leave their estate to their surviving spouse unless they have a pre-nup.

3. The Stay-At-Home Mom. As you may have read in previous articles, a stay-at-home mom is the most common penniless woman in the family courthouse. If the plan is for you to stay at home — the flexible one, the one who doesn’t climb the corporate ladder and so on — you won’t have much of a launching pad for a career should you divorce or your spouse pass away.

There isn’t a way to provide for a launching pad in divorce, but you could at least ask for yearly retirement savings in the likely amount you would have earned had your career not been the priority. For example, if you leave your advertising job of $80,000 per year to raise children by your never-home regional manager husband, consider asking for him to agree that the family will deposit 10 percent of your forgone salary into a retirement vehicle that would be considered your separate property upon divorce or death. Your resume may not be prepared, but at least you wouldn’t have to start all over on retirement planning.

4. The young (and dumb). Please do not take offense. I say young and dumb because undisclosed credit card debt is a very big and growing problem. Refinancing, consolidating, co-signing … can be very confusing and often misleading to the young and in love. A key element to pre-nups is that they require full disclosure of assets and liabilities. Younger people simply do not have the skills to confirm the credit worthiness of their fiancé. I suppose a good liar would also lie about their liabilities before marriage, but at least with the majority of people, a meaningful conversation can be started about debt, who is paying for it and how to get out of it.

The Subpoena Power

By | Child Support, Community Property, Custody and Conservatorship, Divorce, Just and Right, Marital Property Division, Separate Property, Trial Issues

There are two types of subpoenas that can command two types of actions. Trial subpoenas command appearance at a trial or hearing and discovery subpoenas command appearance to give testimony for the purpose of discovery of evidence. Either way, the subpoena can also ask for production of documents or tangible items for trial, a hearing or discovery.

The subpoena power can reach beyond the parties in a lawsuit. It can also compel non-parties or entities to comply. Although there are some limits, generally speaking, someone can be compelled to testify or produce documents in a case that they are not directly involved in. For example, Denise Richards could have been subpoenaed in Charlie Sheen’s criminal assault case for his alleged attack on Brooke Mueller. In his suit against Kim Kardashian, Chris Humphries (her 72 day husband) subpoenaed Kanye West (her boyfriend) to appear and give testimony at a deposition, purportedly to show she didn’t intend to marry Chris for legitimate reasons.

Oftentimes, the only way to obtain admissible evidence in a case and prepare for trial is to seek information from third parties using a subpoena. Bank records, computer files, corporate books and records, report cards, medical records, phone records and so forth are good examples. Note: Facebook and other social media sites are protected by federal law from the subpoena power.

Failing to comply with a subpoena could result in contempt charges. The statute allows for a court to assess fines or require the non-appearing party to be confined. Texas Rule of Civil Procedure 176.8.

Pre-Nup Agreement Invalidated in Dallas as Involuntary

By | Community Property, Divorce, Just and Right, Marital Property Division, Pre-Marital Agreements, Separate Property

The 5th District Court of Appeals in Dallas upheld a trial court’s finding that a pre-marital agreement was invalid and awarded the wife $1.39 million on July 3, 2012. Moore v. Moore, 2012 Tex. App. LEXIS 5290 (Tex. App. Dallas July 3, 2012).

There are many lessons to be learned from the Moore case. For example, don’t say you need a pre-nup because you have a lot of “loans, liens and lawsuits” as Mr. Moore did in this case when in reality he was a millionaire. Also, make sure both parties are represented by good counsel.

In Texas, a pre-nup is not enforceable if the party against whom enforcement is requested proves that he or she did not sign the agreement voluntarily. Tex. Fam. Code § 4.006(a)(1).

The following 4 factors are considered when determining voluntariness in entering a pre-nup: 1. whether a party has had the advice of counsel; 2. misrepresentations made in procuring the agreement; 3. the amount of information provided; and, 4. whether information has been withheld. The court may also hear evidence as to fraud.

That being said, claiming you didn’t know what you were signing when you signed it isn’t enough to invalidate a contract in Texas. In fact, Texas law presumes that a party to a contract knows what he signed, the meaning of what he signed and can comprehend its legal effect. There are a number of exceptions to this principle as demonstrated in the Moore case. Each case is different and there are no bright line rules.

The evidence uncovered at the trial court level in Moore showed the wife signed the pre-nup a few hours before the wedding, that she had been incorrectly informed that it was reviewed and approved by her attorney, that it did not disclose husband’s assets and that it had generally been withheld from her until the morning of her walk down the isle. All of these facts influenced the court in finding that the wife did not sign the pre-nup voluntarily.

According to the Dallas Court, “voluntary” means “an action that is taken intentionally or by the free exercise of one’s will.” While the wife freely signed her name to the pre-nup, it wasn’t enough to make the agreement enforceable in this case with these specific facts. Therefore, the pre-nup was invalidated and the Moore assets were divided up according to “just and right” principles. For more information on “Just and Right“, please follow the link.

Using Social Media as Evidence in a Divorce – What you can and can’t do.

By | Custody and Conservatorship, Divorce, Just and Right, Marital Property Division, Trial Issues

Spouse is cheating, doing drugs, being a bad parent and Facebook can prove it right? All you need is for your lawyer to show the judge. Right?

There are 845 million monthly active users of Facebook and each profile has 40 potential entries of personal information. It goes without saying that a party’s activity on social media sites could be a lightning rod in a family law matter. Case in point: Anthony Weiner’s pictures on Twitter could have affected a would-be divorce brought by his pregnant wife.

Unlike financial records, where information reflecting detailed transaction activity over decades can be discovered via a subpoena, social media and networking sites are protected by federal law from forced disclosure.

Federal law prohibits electronic communication services from disclosing “contents of a communication while in electronic storage by that service” and prohibits remote computing services from disclosing “the contents of any communication which is carried or maintained on that service.” 18 USC § 2702.

Courts have interpreted the meaning of “electronic communication services” and “remote computing services” to include Facebook, Myspace, Twitter and Linkedln as well as email providers such as Gmail, Yahoo and Hotmail. Therefore, you can subpoena the records until you are blue in the face, but they are not required to produce anything more than basic information. Even if it were possible, it would be the most expensive route because many of these companies are out of state and a subpoena wouldn’t be considered until the lawsuit is domesticated.

Fear not, there may be another way.

A court in Connecticut recently and quite boldly ordered divorcing parties to exchange Facebook and dating site login and passwords. Although Texas doesn’t have any reported cases involving this kind of exchange, it is within the realm of possibility considering applicable discovery rules.

A party in a Texas lawsuit is entitled to discovery of non-privileged information that is relevant to the subject matter of the case. Even if the information would not be admissible at trial, it may be discovered if it appears reasonably calculated to lead to the discovery of admissible evidence. Tex. R. Civ. P. § 192.3(a). For more information on discovery, refer to my blog: Finding Hidden Assets in a Divorce.

In the divorce or custody context, this means information relating to fault in the marriage, parenting, child support and everything in between could lead to the discovery of admissible evidence. Content on Myspace or Facebook depicting you behaving like a single person is likely to lead to admissible evidence that you committed adultery. Match.com or eHarmony is a little more obvious. A statement regarding drug use is likely to lead to admissible evidence that you do not have a stable home environment for your children. Therefore, a strong argument can be made that content on social media sites are relevant and in fact valuable in proving your case.

“If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.” Eric Schmidt, CEO of Google 2001-2011.

The best way to discover social media activity is to request it through discovery from the party who controls the account. As you can imagine, your spouse may object and do whatever is necessary to prevent the disclosure of the so-called “private” posts and communications. The privacy argument has been heavily debated but ultimately, the argument is weak in light of how slight the expectation of privacy is on these sites.

There are no bright line rules or tests in Texas that will guarantee you can force disclosure or prevent it. The argument to force disclosure is strengthened by the connection it has to subject matter in the case. It is weakened if there are other means to get the information or if it is out of scope, unduly burdensome or not likely to lead to the discovery of admissible evidence.

Facebook has made it somewhat easier to discover this information by allowing users to download a copy of all their facebook data online. Myspace will allow the production of data with the consent of the account holder. As it gets easier to produce the information, courts may be more inclined to order its production.

Unfortunately, it doesn’t appear that there is a solution to discovering deleted posts so it’s worth hitting the print button on posts you foresee being useful down the road. In situations where crucial information may have been deleted by the user, it may be possible to have a forensic exam of the party’s hard drive.

As always, the analysis will turn on the specific facts of each case and court. Check back for more information as case law in Texas develops.