What Changes and What Stays the Same with Regard to Child Support Orders

Child support in Texas has always been a court ordered obligation in Texas divorce and paternity actions.  Before implementation of the child support guidelines in the Texas Family Code in the 1980s, child support orders varied from court to court and county to county.  However, the enactment of Chapter 154 of the Texas Family Code was the Texas legislature’s attempt to bring uniformity and predictability to child support orders.  In doing so, the legislature established “guidelines” which established a method of computing child support which, when net resources are applied to the guidelines, would create an amount which would be “rebuttably presumed” to be in the best interests of the child. 

 

In Texas, the guidelines dictate that child support is a percentage of net resources which includes a laundry list of income and benefits received by a person ordered to pay child support.  That person is called an “obligor.”  What is and is not classified as net resources can be found in Texas Family Code § 154.062. 

Net Resources

 

(a) The court shall calculate net resources for the purpose of determining child support liability as    

provided by this section.

 

(b) Resources include:

(1) 100 percent of all wage and salary income and other compensation for personal services (including commissions, overtime pay, tips, and bonuses);

(2) interest, dividends, and royalty income;

(3) self-employment income;

(4) net rental income (defined as rent after deducting operating expenses and mortgage payments, but not including noncash items such as depreciation); and

(5) all other income actually being received, including severance pay, retirement benefits, pensions, trust income, annuities, capital gains, social security benefits other than supplemental security income, unemployment benefits, disability and workers' compensation benefits, interest income from notes regardless of the source, gifts and prizes, spousal maintenance, and alimony.

 

(c) Resources do not include:

(1) return of principal or capital;

(2) accounts receivable;

(3) benefits paid in accordance with the Temporary Assistance for Needy Families program or another federal public assistance program; or

(4) payments for foster care of a child.

 

(d) The court shall deduct the following items from resources to determine the net resources available for child support:

(1) social security taxes;

(2) federal income tax based on the tax rate for a single person claiming one personal exemption and the standard deduction;

(3) state income tax;

(4) union dues;

(5) expenses for the cost of health insurance or cash medical support for the obligors child ordered by the court under Section 154.182; and

(6) if the obligor does not pay social security taxes, nondiscretionary retirement plan contributions.

 

(e) In calculating the amount of the deduction for health care coverage for a child under Subsection (d)(5), if the obligor has other minor dependents covered under the same health insurance plan, the court shall divide the total cost to the obligor for the insurance by the total number of minor dependents, including the child, covered under the plan.

 

(f) For purposes of Subsection (d) (6), a nondiscretionary retirement plan is a plan to which an employee is required to contribute as a condition of employment.

There are additional factors for the court to consider but these factors are determined by the Court on a case by case basis.  However, income of a spouse cannot be added to an obligor spouse’s net resources. 

 

To aid in the computation, the Attorney General’s Office is charges with annually promulgating tax charts to compute net monthly income, subtracting from gross income social security taxes and federal income tax withholding for a single person claiming one personal exemption and the standard deduction.

 

The presumption is that net resources shall be multiplied by percentages based upon the number of children that the obligor and obligee have together. These percentages have not changed:  

1 child        20% of Obligors Net Resources

2 children   25% of Obligors Net Resources

3 children   30% of Obligors Net Resources

4 children   35% of Obligors Net Resources

5 children   40% of Obligors Net Resources

6+ children  Not less than the amount for 5 children

In the 1980s a cap of $6,000 was established which would be applied to the foregoing percentages.  In 1995, the cap was raised to $7,500 and beginning September 1, 2013, the cap was raised to $8,550.  The legislature imposed the duty of recomputing net resources according to the Consumer Price Index. The 2013 legislature at the Attorney General’s request, based upon research since 1995, made the leap to $8,550 as a cap.

The cap is a guideline and is not a ceiling. The legislature allowed courts to set child support above the guidelines should the court deem such to be in the best interest of the child.  Purely as a measuring stick, an obligor would reach the cap for the presumed child support order at an income level of approximately $12,500 per month. So for one child, the presumed child support for an obligor with $8,550 in net resources would be $1,710 per month. Amounts of net resources less than $12,500 per month would also be applied to the applicable percentage.

Two Recent Changes to the Child Support Statute

Effective September 1, 2013, two changes to the child support statute came into effect.

The first change is a housekeeping amendment. Texas Family Code section 154.062(b)(5) includes both a catch–all provision to determine the amount of net resources an obligor receives and a list of income that is excluded from the definition of net resources. The Texas legislature amended section 154.062(b)(5) to add an exclusion for non–service–connected disability pension benefits. Section 154.062(b)(5) now reads:

(5) all other income actually being received, including severance pay, retirement benefits, pensions, trust income, annuities, capital gains, social security benefits other than supplemental security income, United States Department of Veterans Affairs disability benefits other than non-service-connected disability pension benefits, as defined by 38 U.S.C. Section 101(17), unemployment benefits, disability and workers' compensation benefits, interest income from notes regardless of the source, gifts and prizes, spousal maintenance, and alimony.

The Texas Attorney General, not the Texas legislature, made the second change to the child support statute. Under Texas Family Code section 154.125, the Attorney General periodically recalculates the net resources cap to take inflation into account. The cap rose from $7,500 to $8,550.

The maximum amount of guideline child support a court may order an obligor to pay is 40% of net resources. Under the old cap, the maximum dollar amount of guideline child support equalled $3,000. Under the new cap, guideline child support maxes out at $3,420. Put another way, an obligor maxes out for guideline child support purposes at a monthly gross income of $11,828.81 for the employed and $12,580.47 for the self-employed.

You Can't Have Too Many People Pitching for a Kid

A Major League baseball team has twenty-five men on its active roster. The active roster consists of the players who suit up to play in a given game. Of these twenty-five players, five will be the starting pitchers. Typically, the bullpen will number seven more pitchers, consisting of relievers, a set-up man and a closer, and sometimes a left-handed specialist. There will be even more pitchers on the forty-man roster, which includes fifteen players who don't suit up for a game but who could be called up for the next one.

Anyone who's ever watched a baseball game – even a Little League game – knows how hard it is to be a pitcher. Not only must you be mentally tough, but the physical demands are extraordinary. So a Major League baseball team can't have enough pitchers, or at least enough good pitchers.

What does pitching have to do with family law? When parents divorce, then later marry someone else, all of a sudden a child has four parents instead of two: Biological mom and dad plus two stepparents. The child also acquires more of an extended family, too. The child has four sets of grandparents plus potentially dozens of new cousins, aunts, uncles and so forth.

Sometimes strains build up, usually in the first tier of relatives – that is, the parents. The biological dad might not get along with the new stepdad, or the biological mom might become upset with the new stepmom.

That's when I give my pitching speech. Just as you can't have enough pitchers on a baseball team, you can't have enough people pitching for a kid. Maybe the adults are having issues, but I tell them, “Look, your child now has four parents looking out for him instead of just two. Isn't that a good thing? Can't we all just get along for the sake of the child, or at least pretend to?”

Recently I attended a wedding where I encountered an unexpected application of the pitching principle. The bride's biological father attended the wedding, as did her stepfather. I don't know the back story – and it really doesn't matter – but apparently the stepfather had raised the bride most of her life.

So when it was time for “here comes the bride,” the bride walked down the aisle with two fathers, one on each side of her. And when the pastor asked, “Who gives this woman in marriage?” the two men responded, “We do.” It was a touching moment.

And it wasn't just for show. Later, during a quiet moment at the wedding reception, I happened to notice the two dads speaking softly with each other. Then they gave each other a bear hug.

They'd be starting pitchers on my team.

Agreements Incident to Divorce and Final Decrees of Divorce

This post is a continuation of Jennifer's Hargrave's series on now various methods of settlement are incorporated into divorce decrees. The series began with Rule 11 Agreements and Final Decrees of Divorce.

Before trial, parties to a suit for divorce can resolve issues related to the division and confirmation of marital property and spousal support through an agreement incident to divorce (AID). Tex. Fam. Code § 7.006(a). The AID can divide the spouses' community property and liabilities, confirm their separate property and liabilities, provide for spousal support, set forth the terms of the agreed parenting plan, and incorporate any other terms to which the parties have agreed (e.g., income taxes, college expenses for children, attorney's fees, health insurance and life insurance.

The AID must be submitted to the court for its approval, either in writing or made in open court and entered on the record. If the court finds that the terms of the AID are just and right, and/or in the best interest of the children, the terms are binding on the court. If the court finds that the terms are not just and right, the court can ask the parties to submit a revised agreement or set the case for a contested hearing. The court, however, cannot supply missing terms to the agreement.

Either party can revise or repudiate an AID before the court renders a final judgment of divorce, unless the agreement conforms with requirements of another law that makes the agreement binding (i.e., irrevocable settlement agreement or Rule 11). It is important to note that a court can approve the AID prior to rendering judgment. For example, if the parties have entered into an AID and submitted it to the court for approval prior to the expiration of the 60 day waiting period, either party may withdraw their consent after the court's approval but prior to the rendering of the divorce. Once the court has rendered the final judgment based on the AID, consent can not be withdrawn. Schwarz v. Schwartz, 247 S.W.3d 804 (Tex. App. – Dallas 2008, no pet).

The AID can be an important tool for preserving the parties' privacy, if that is an issue (especially in Dallas County, and other counties where court filings are readily viewable online). The AID can contain all the details of all the accounts, dollar amounts, and other terms (i.e., drug and alcohol testing) that a party might not want visible as part of the court's records. In this case, the AID will be submitted to the court for approval, the court will sign the decree reciting its approval of the AID and incorporating the terms of the AID by reference, but the AID will not be filed with the court as part of its records. Obviously, this can create an enforcement issue at a later date if one of the parties needed to enforce the terms at a later date, and clients opting for this level of privacy should be advised of the potential issues surrounding its enforceability.

Amended Dallas County Standing Order

Many courts have adopted "standing orders." These order incorporated the injunctions regarding divorces and suits affecting the parent child relationship in the Texas Family Code. The Dallas County Family District Courts amended their standing order effective April 1, 2013. The amended Standing Orders are: 

AMENDED DALLAS COUNTY FAMILY DISTRICT COURTS

GENERAL ORDER

(Revised April 1, 2013)

DALLAS COUNTY STANDING ORDER REGARDING CHILDREN, PETS, PROPERTY AND CONDUCT OF THE PARTIES

No party to this lawsuit has requested this order. Rather, this order is a standing order of the Dallas County District Courts that applies in every divorce suit and every suit affecting the parent–child relationship filed in Dallas County. The District Courts of Dallas County giving preference to family law matters have adopted this order because the parties, their children and the family pets should be protected and their property preserved while the lawsuit is pending before the court.
Therefore, it is ORDERED:

1. NO DISRUPTION OF CHILDREN. Both parties are ORDERED to refrain from doing the following acts concerning any children who are subjects of this case:
1.1 Removing the children from the State of Texas, acting directly or in concert with others, without the written agreement of both parties or an order of this Court.
1.2 Disrupting or withdrawing the children from the school or day–care facility where the children are presently enrolled, without the written agreement of both parents or an order of this Court.
1.3 Hiding or secreting the children from the other parent or changing the children's current place of abode, without the written agreement of both parents or an order of this Court.
1.4 Disturbing the peace of the children.
1.5 Making disparaging remarks regarding the other party in the presence or within the hearing of the children.

2. PROTECTION OF FAMILY PETS OR COMPANION ANIMALS. Both parties are ORDERED to refrain from harming, threatening, interfering with the care, custody, or control of a pet or companion animal, that is possessed by a person protected by this order or by a member of the family or household of a person protected by this order.

3. CONDUCT OF THE PARTIES DURING THE CASE. Both parties are ORDERED to refrain from doing the following acts:
3.1 Using vulgar, profane, obscene, or indecent language, or a coarse or offensive manner to communicate with the other party, whether in person, by telephone, or in writing.
3.2 Threatening the other party in person, by telephone, or in writing to take unlawful action against any person.
3.3 Placing one or more telephone calls, at an unreasonable hour, in an offensive or repetitious manner, without a legitimate purpose of communication, or anonymously.
3.4 intentionally, knowingly or recklessly causing bodily injury to the other party or to a child of either party.
3.5 Threatening the other party or a child of either party with imminent bodily injury.

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Divorce Without Disaster - More on Privacy

This is the 12th of a serialization of Janet P. Brumley's book about Collaborative law, called Divorce Without Disaster. This post is Chapter 2, part 4 of the book.

When litigants go to the courthouse for a hearing or an attorney's office for a deposition or witness statement, proceedings are usually on the record. People who value privacy are suddenly in an open courtroom discussing their sex lives, their finances and their taxes. This is all recorded by a court reporter and saved for posterity. Inventories and appraisements listing all the parties' assets and liabilities (complete with account numbers) are routinely filed with the district clerk of their county of residence.

Parties who resolve their divorces with collaborative law do so behind closed doors in their attorneys' offices. The law prohibits attorneys from disclosing anything they have heard, except in cases where someone declares an intent to commit a crime or poses a continuing threat of child abuse.

"Collaborative law is a cooperative effort, not a public forum," observes Mary Jo McCurley, a partner in the Dallas firm of McCurley Orsinger McCurley Nelson & Downing L.L.P. and former chair of the family law section of the State Bar of Texas. "With collaborative law, you can settle the case with a scalpel rather than a hatchet, which is what you get in court. Because the parties have crafted the agreement themselves, they own it more than if a judge has told them what to do. They're more likely to follow the terms of the agreement."

The Differences Between Collaborative and Cooperative Law

Collaborative divorce and cooperative divorce are processes by which parties may attempt to resolve their divorce cases by use of negotiation and use of professionals. They are alike in that the processes both attempt to avoid the courthouse with its incidental court appearances, formal discovery and the arbitrary deadlines of the statutes and rules. However, collaborative law and cooperative law differ in important respects.

Collaborative law is codified into the Texas Family Code in Chapter 15. The statute requires that a collaborative family law participation agreement be signed and that agreement must:

  1. Be in a record;
  2. Be signed by the parties;
  3. State the parties' intent to resolve a collaborative family law matter through a collaborative family law process under this chapter;
  4. Describe the nature and scope of the collaborative family law matter;
  5. Identify the collaborative lawyer who represents each party in the collaborative family law process;
  6. Contain a statement by each collaborative lawyer confirming the lawyer's representation of a party in the collaborative family law process.
  7. Include provisions for suspending tribunal intervention in the collaborative family law matter while the parties are using the collaborative family law process; and
  8. Unless otherwise agreed in writing, jointly engage any professionals, experts, or advisors serving in a neutral capacity.

The statute further allows the parties to include other provisions in a collaborative family law participation agreement which are not inconsistent with this chapter.

According to the statute, a collaborative family law process is concluded by:

  1. Resolution of all issues;
  2. Resolution of a part of a collaborative family law matter; or
  3. Termination of the process under other specified terms in the statute or which have been agreed by the parties.

Generally speaking, a collaborative family law process terminates according to the terms of statute by the giving of notice by one party or when one party seeks court intervention.

When a party discharges a collaborative lawyer or a collaborative lawyer withdraws from further representation of a party that attorney may not continue to represent or advise that party.

The parties must comply with some reporting deadlines while the case is pending, but, upon compliance with those reporting deadlines, the court cannot intervene with settings and discovery deadlines until after the second anniversary of the date the divorce case was filed.

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Rule 11 Agreements and Final Decrees of Divorce

The Agreed Decree of Divorce is a final decree that contains the terms to which both parties have given their consent. The Decree is both a "judgment" of the court, and a contract between the parties. Some terms can be enforced by contempt, some terms can be enforced as a breach of contract. Parties can give their consent by simply signing the final decree, in which case one party will "prove up" the decree before the judge who may approve the agreements and enter the order. Or the Decree can be based upon some form of a settlement agreement, which has been incorporated into the Decree.

If the decree is based upon a settlement agreement, it is important to understand the different variations of "agreements." Generally, once an agreement is reached regarding the terms of the decree, one party will want to enforce that agreement in the event the other party changes their mind. Understanding the nature of the underlying agreement is important to understand the "finality" of that agreement.

 The Rule 11 Agreement

 The Rule 11 Agreement is an agreement that conforms with the requirements of Texas Rules of Civil Procedure (TRCP) Rule 11, which states:

Unless otherwise provided in these rules, no agreement between attorneys or parties touching any suit pending will be enforced unless it be in writing, signed and filed with the papers as part of the record, or unless it be made in open court and entered of record.

Rule 11 Agreements are used to settle all types of issues between the parties, from discovery matters to final property divisions. They are contractual in nature, and can be enforced as a contract – provided they satisfy the requirements of Rule 11. When incorporating the terms of a Rule 11 Agreement into a final decree of divorce, specify that the parties intend for the decree to supersede the terms of the Rule 11 agreement. That way, if there is a conflict between the two documents, it is clear that the provisions of the decree trump the Rule 11 agreement. Otherwise, the settlement agreement remains enforceable as a contract even if its terms are not incorporated into the judgment. Compania Financiara Libano, S.A. v. Simmons, 53 S.W.3d 365 (Tex. 2001). The terms of the Rule 11 Agreement also remain enforceable as a contract, even if a party withdraws his or her consent. Boyd v. Boyd, 67 SW3d 398 (Tex. App. - Fort Worth 2002, no pet).

Issues Surrounding Distributions from Texas Family Limited Partnerships

The starting point in the division of a marital estate is the characterization of the parties' property as separate or community. Allen v. Allen, 704 S.W.2d 600, 603 (Tex. App. – Fort Worth 1986, no writ). Property acquires its characterization at the inception of title. Henry S. Miller Co. v. Evans, 452 S.W.2d 426, 430 (Tex. 1970). Property owned by a spouse before the marriage is separate property. Tex. Const. art. XVI, § 15; Tex. Fam. Code Ann. § 3.001(1) (West 2006). Property possessed by the spouses upon the dissolution of the marriage is presumed to be community property. Tex. Fam. Code Ann. § 3.003(a) (West 2006); Estate of Hanau v. Hanau, 730 S.W.2d 663, 667 (Tex. 1987). A party claiming property as separate has the burden to overcome that presumption by clear and convincing evidence. Tex. Fam. Code Ann. § 3.003(b); Harris v. Harris, 765 S.W.2d 798, 802 (Tex. App. – Houston [14th Dist.] 1989, writ denied). "Clear and convincing" evidence means the measure or degree of proof that will produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established. Tex. Fam. Code Ann. § 101.007(b); In re C.H., 89 S.W.3d 17, 25 (Tex. 2002).

To overcome the presumption of community, a spouse must trace and clearly identify the property claimed as separate. Hanau, 730 S.W.2d at 667; Cockerham v. Cockerham, 527 S.W.2d 162, 167 (Tex. 1975). If separate and community property have been so commingled as to defy segregation and identification, the statutory presumption prevails. Hanau, 730 S.W.2d at 667 (citing Tarver v. Tarver, 394 S.W.2d 780 (Tex. 1965)). When separate property has not been commingled or its identity can be traced, however, the statutory presumption is dispelled. Harris, 765 S.W.2d at 802.

With these principles in mind, we turn to the characterization of a spouse's partnership interest and the distributions made from a Texas Family Limited Partnership ("FLP"). The Supreme Court has determined that the only partnership–related property a trial court can award upon dissolution of a partner's marriage is the partnership interest, not the partnership property. McKnight v. McKnight, 543 S.W.2d 863, 867–68 (Tex. 1976). A partnership "interest" is a partner's right to receive his share of the profits and losses and to receive distributions. Tex. Bus. Orgs. Code Ann. §1.002(68) (West Pamph. 2009). "Partnership property" is not property of the individual partners; a partner's "interest" does include an ownership interest in partnership property. Id. §152.101 (West Pamph. 2009); Marshall v. Marshall, 735 S.W.2d 587, 594 (Tex. App. – Dallas 1987, writ ref'd n.r.e.). Nor does a partner retain an ownership interest in his capital contribution; rather, the contribution becomes partnership property. Lifshutz v. Lifshutz, 199 S.W.3d 9, 26 (Tex. App. – San Antonio 2006, pet. denied). Thus, a partner's right to receive his share of the profits is the only partnership right subject to characterization. Marshall, 735 S.W.2d at 594.

Partnership earnings are owned by the partnership prior to distribution to the partners and cannot be characterized as either separate or community property. Cleaver v. Cleaver, 935 S.W.2d 491, 494 (Tex. App. – Tyler 1996, no writ). "[A] partnership can be an effective means of preserving the separate property character of assets contributed to the partnership and the undistributed income thereon." Lifshutz, 199 S.W.3d at 26 (citation omitted) (emphasis added). The partner's spouse has no interest in the assets of a partnership until they are actually distributed. Id. The portion of partnership income retained in the capital account is therefore partnership property, and as such, is neither the separate nor community property of either party. See Cleaver, 935 S.W.2d at 494. In fact, even the increase in the partnership interest remains partnership property and would not constitute property acquired after marriage until distributed. See Lifshutz, 199 S.W.3d at 26; Cleaver, 935 S.W.2d at 494.

The Marshall case, Marshall v. Marshall, 735 S.W.2d 587 (Tex. App. – Dallas 1987, rehearing denied), remains the leading authority that the distributions from the limited partnership are community property. In Marshall, the husband owned a separate property interest in a partnership. The partnership engaged in oil and gas exploration and production. Id. at 594. The partnership acquired all of its oil and gas leases before the marriage. Id. The partnership disbursed $542,315.72 to the husband during the marriage. Id. The husband maintained that only the $22,400.00 paid as salary was community property. Id. The court rejected the husband's argument and held that the distributions of partnership income or profits were community property. Id. at 595. So, if the partner receives her share of the profits during marriage, those profits are also community property, regardless of whether the partner's interest in the partnership is separate or community in nature. Even if the distribution was of an asset or cash, and the distribution was from the capital account, Marshall states that the "mutation of a partner's separate contribution" does not apply and the distributions will be characterized as community property because the partnership becomes the owner of the capital contribution. As such, in this case, all of the partnership distributions that a spouse received during the marriage would be considered community property.

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Using Social Media in Family Law Cases

Frequently, Facebook, Instagram, Twitter and other social media sites provide a plethora of incriminating evidence that can be used in divorces or custody proceedings. Whether it's a picture of the teenage child using drugs, the wife caught in a compromising situation, or the identification of valuable assets, social media has made obtaining damaging information readily accessible and inexpensive. The challenge is getting that evidence admitted in a court of law.

If the evidence is obtained from the opposing party's social media account, it can easily be used as an admission of a party opponent if the opposing party is willing to admit that yes – they did make that statement. However, from time to time, that witness might think they can outsmart the legal system by claiming that they never made such an offensive statement. In this post, we will explore how to admit evidence from social media when a party denies authorship.

Rule 901 of the Texas Rules of Evidence sets forth the process for authenticating the evidence – i.e., establishing that the matter in question is what the proponent claims it to be. The rule sets forth "by way of illustration only, and not by way of limitation," examples of authentication. For example, an exhibit may be authenticated by a witness with knowledge that the evidence is what it claims to be. Texas Rules of Evidence, Rule 901(b)(1). An item can also be authenticated by establishing distinctive characteristics, such as "appearance, contents, substance, internal patterns or other distinctive characteristics...." TRE, Rule 901(b)(2).

When the opposing party or hostile witness denies making the statement on his or her social media account, the proponent of the evidence will need a witness who can testify that the computer print out of the social media is accurate. Printouts of pages from a social media website can be authenticated by establishing: 1) that the witness printed the exhibit; 2) the witness is familiar with the computer and printer used to print the exhibit; and the exhibit accurately depicts the web site as it appeared on that day. Rule 1001 Definitions (a), (c) & (d). The witness does not need to be the author of the website, but rather can testify to the fact that the pages printed from the website are accurate. Id.

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