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Often times, the 401k or other similar retirement account is one of the most valuable assets in a marriage and must be carefully considered as to what is a proper division. The 401k which is subject to the just and right division of Texas Family Code should be considered along with the other assets in a community estate.
As with all other assets acquired during the marriage, the part of the retirement account earned during the marriage is generally community property. If part of the account was earned prior to the marriage, then that portion would be separate and not subject to division. Once the parties have agreed on a division of the account or the court has ordered specific portions to each party, the account must be actually divided. This is accomplished through a Qualified Domestic Relations Order (“QDRO”). The QDRO tells the retirement plan administrator to divide the account in accordance with the divorce decree. For example, a divorce decree might say each spouse is awarded 50% of the 401k value as of the date of the divorce. If the plan is worth $100,000 then the administrator would then divide the account into two $50,000 accounts. The spouse whose employment is related to the plan (owner) can continue to work and accumulate more value into the plan. The non-owner spouse would then have 3 options related to the account. The non-owner could cash out the account, rolling the account into an IRA or other similar account in his or her own name, or leave the money in the current plan and take distribution when the owner retires. Because the 401K or other retirement account is often such a large asset it is important to speak with an attorney to help decide what you are entitled to and what a proper division would be. The decision of what to do with the that account can also have tax consequences so you will want to speak with your accountant or financial planner to decide the best method for you and what the tax consequences would be. In Collin, Dallas, and Denton Counties, the district courts have what are called “Standing Orders” which take effect in all family law cases automatically. Neither side has to request the Standing Orders. You can view a copy of the Standing Orders for Collin, Dallas, and Denton Counties here.
The Standing Orders attempt to set forth ground rules between the parties the same during the pendency of the divorce or child custody case. For example, the Standing Orders prohibit both parties from taking any children out of state, from changing the children’s schools, or hiding the children. The Standing Orders also address the conduct of the parties. The orders prohibit harassing communication. They also prohibit threatening the other party, opening mail addressed to the other party, or accessing the other party’s emails, bank accounts, or social media accounts. Finally, in a divorce case, the Standing Orders also help to maintain the finances of the parties. The Orders prohibit the parties from selling or destroying property and withdrawing funds from bank accounts other than for certain circumstances such as reasonable living expenses and attorney fees. The Orders also prevent parties from withdrawing money from retirement accounts, canceling health insurance, or other necessary insurance. The Standing Orders will remain in place during the divorce or child custody case unless the court orders alternative orders or the parties reach an agreement. Otherwise, the orders will attempt to keep the status quo between the parties during the case. A copy of the Standing Orders for Collin, Dallas, and Denton can be accessed here: Collin County - Standing Order on Children, Property, and Conduct of Parties Dallas County - Dallas County Family District Courts General Orders Denton County - Denton County Standing Order Regarding Children, Property and Conduct of the Parties With the end of March upon us, I thought I'd write a reminder of the summer visitation schedule in the Texas Standard Possession Schedule.
For the non-custodial parent (the parent who doesn't designate the child's residence), April 1 is the deadline to designate your thirty days of extended summer possession. If you designate your possession by April 1, you can pick almost any time during the summer to exercise your extended summer visitation in a continuous 30 days or in two, two week possession periods. If you do not designate by April 1, then the non-custodial parent defaults to July 1 through July 31. The custodial parent has between April 2 and April 15 to designate one weekend within the non-custodial parent's 30 days of possession when the custodial parent can have possession of the child. If the parent does not give any notice, then the non-custodial parent will have 30 days of uninterrupted possession. By giving notice by April 15 (or with 14 days notice), the custodial parent can also exercise an additional weekend of possession that would normally belong to the non-custodial parent. This allows the non-custodial parent to exercise an extended period of possession by combining it with the custodial parent's other normal periods of possession. So parents thinking about summer vacation plans should keep in mind the April notice deadlines to avoid any issues. If you are going through a divorce it is important to start reevaluating any estate planning documents you have in place. If you've done a will during the marriage, chances are you will need to execute a new will.
Texas law automatically nullifies a will provision giving property to a former spouse if the will was done before the divorce. However, you still need to put in new provisions to state how you want your property divided now. If it's going to your young children you want it to be in a trust and you need to name a trustee. Your old will may have named your spouse as a trustee, but that may not be how you want it handled now. Additionally, the old will may have named your former spouse as the people entrusted to handle your estate- paying debts and distributing your assets. You probably don't want your former spouse to have that responsibility now. Finally, if you executed other estate planning documents during marriage such as a Durable Power of Attorney, Medical Directive, Medical Power of Attorney, those will need to be reconsidered too. A divorce involves many changes and one commonly overlooked part is estate planning. Make sure any estate planning documents are reviewed with an attorney and execute new documents if needed. This will make sure your preferences are carried out if you were to pass away. A divorce in Texas can be an expensive process, but there are ways to limit the costs involved. By following the tips below you can help keep costs down.
Under Texas Family Code Section 6.702, in most cases, a court can’t grant a divorce before 60 days have passed since the divorce petition was filed. So if you had an agreed divorce it is possible to divorced on the 61st day after filing the divorce petition.
However, in actuality, a divorce typically takes anywhere between 6 months and 1 year. Since all assets and liabilities have to be divided, it takes time to inventory the community estate. You want to make sure you have a complete listing and accurate valuation of the estate. This is typically done through what’s called discovery which can involve gathering financial documents and taking depositions. Once a complete inventory is done, the estate then has to be divided between the parties. The parties can informally negotiate a division, go to a mediator to facilitate an agreed division, or, if no agreement can be reached, have the court decide how the estate will be divided. Going to trial will result in the longest divorce cases. Trials require more preparation and you will have to rely on when the court will have time to hear your case. In some courts, if you request a court date the first available date can be 4-6 months in the future. So in most cases, the length of the divorce will depend on the parties. Are the parties able to reach agreements between themselves or will the case have to be tried? Will multiple court hearings be needed or will the parties be able to reach a complete inventory of property relatively easily? Most people want their divorce completed as soon as possible, but the parties have to keep in mind how important the divorce and property division will be and plan accordingly. I spoke last about community property in Texas. I wanted to follow that up with a more detailed discussion of what is considered separate property in Texas and what separate property means for a Texas divorce.
Separate property is property that does not owe its existence to the marriage and is owned individually by a respective spouse. It generally consists of property owned or acquired by a spouse before the date of marriage. or property that is given to an individual spouse as a gift or property that a spouse inherits. It can also include property recovered for personal injury whether recovered before or during the marriage. During a divorce, if property is determined to be the separate property of a spouse the court must confirm that property to the spouse. The court is prohibited from taking the separate property of a spouse and awarding it to the other spouse. However, the court may order the property be sold to pay or settle support for minor children. Any property that is found not to be separate property will be classified as community property. If you own property that's separate property then you don't have to worry about losing title to that property. Therefore, it is important to have an attorney who can accurately advise you on what property may be subject to court division and what isn't subject to division. The Texas Family Code § 3.002 defines community property as that “property, other than separate property, acquired by either spouse during the marriage.” This leads to the obvious questions- what is separate property?
Separate property is generally one of three things: 1. Property owned prior to marriage; 2. Property acquired by a spouse by gift or inheritance; or 3. Any recovery for personal injuries sustained during the marriage, except for loss of earnings. So, generally, property that doesn’t fall within one of those three categories is considered community property. Texas law also presumes that property possessed by either spouse during the marriage is community property. The spouse claiming that a piece of property is separate has the burden of proving that the property is, in fact, separate and not community property. How a property is titled does not determine if it is separate or community property. For instance, if a married couple purchased a house but only put one name on the mortgage and title to the property, then the house would still be community property despite having only one name on the title. The house was purchased during the marriage and, absent other facts, it would be community property. If you were married later in life you may have already acquired substantial separate property before the marriage. On the other hand, all property owned by you and your spouse may be community property that needs to be divided in the divorce. An attorney can sit down with you and review all property that might be involved in the divorce and whether Texas divorce law would consider it community or separate property. if you have questions and would like to schedule a consultation, you can contact our office at at michael@michaeldiazlaw.com or 972-542-6820. The Supreme Court of Texas has issued a new order on court re-openings. The Order restates that whenever possible court participants should be allowed to participate via video or telephone conference. The Order also states that justice or municipal courts (i.e. small claims or traffic tickets) should not hold in-person jury trials until at least December 1.
The order does allow district court (family and felony cases) along with county courts (misdemeanor cases) to hold jury trials if they meet certain conditions such as (1) submitting a plan to the the Office of Court Administration, (2) gained approval from the local administrative district judge and Regional Presiding Judge, (3) consulted with the local public health authority regarding appropriate precautions, (4) has established protocols to prevent anyone with COVID or who's been exposed to COVID from participating and (5) the court have considered any appropriate objections or motions from the parties participating. Social distancing requirements will prevent the courts from conducting normal docket schedules but this at least allows for the possibility of holding in person proceedings. It also allows defendants in jail waiting for jury trial to finally have their cases resolved. A full copy of the order can be found here. Court proceedings are intended to be open to the public as a way of ensuring accountability. In most cases, any one can walk into any court room and observe proceedings. The constitution guarantees the right to a "public trial" in the Sixth Amendment partly as a way ensuring that all proper laws and rules are followed during trial.
Courts in Collin County and throughout north Texas have continued to hold hearings through the use Zoom and other video conferencing and have worked to ensure the public nature of court proceedings through the use of YouTube. Collin County courts each have their own YouTube channels where any one from the public can go on and watch court proceedings. Courts throughout Texas are taking part in this practice and although it does present some challenges it does help to meet the goal of having public access to court proceedings. Slate.com has an interesting article regarding the various concerns and how those concerns are being addressed https://slate.com/technology/2020/08/zoom-courts-livestream-youtube.html. So anyone wanting to watch real court proceedings can now just tune into YouTube. |
AuthorMichael Diaz Archives
February 2023
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