COBRA Continuation Health Coverage

Posted on February 24, 2010 by Jimmy Verner

 As Congress searches for ways to stimulate the economy and lessen the impact of the recession, one idea being floated is to extend the 65% health insurance subsidy under COBRA. So what is COBRA, and what does it have to do with family law?

If you get divorced, and your health insurance is through your spouse's job, you must find new insurance. But COBRA - the Consolidated Omnibus Budget Reconciliation Act of 1986 - permits you to stay insured under your ex-spouse's insurance for up to eighteen months, provided you pay the premium at group rates. The Department of Labor's Employee Benefits Security Administration explains:

Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since usually the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves. It is ordinarily less expensive, though, than individual health coverage.

The Administration's "stimulus bill" (the American Recovery and Reinvestment Act of 2009) included a 65% subsidy in the form of a tax credit to insurance companies that insure "assistance eligible individuals." Per the Employee Benefits Security Administration's Fact Sheet: COBRA Premium Reduction, such an individual must be an employee who lost his or her job (and therefore his or her insurance) after September 1, 2008, and who is not "eligible for other group health coverage (such as a spouse's plan) or Medicare."

The subsidy originally spanned six months; Congress extended it to fifteen months in early 2010. The current debate is whether to extend the subsidy again.

The stimulus bill's effect on those who are divorced but have insurance through their employment is the same as for anyone else: If you lose your job and therefore your insurance, then you are eligible for the subsidy unless you are eligible for other group insurance or Medicare.

But what about those who already have elected COBRA coverage through their ex-spouse's employment? If the ex-spouse loses his or her job, may the other former spouse take advantage of the subsidy if he or she otherwise qualifies? Frankly, we don't know the answer, but we're sure this issue will come up one of these days as the recession continues.

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Family Law From Around the Nation - Summer 2009

Posted on February 22, 2010 by Jimmy Verner

 State Bar of Texas Section Report - Family Law - Summer 2009

by Jimmy L. Verner, Jr.

Agreements: The Washington Supreme Court characterized a premarital agreement as substantively unfair because it “severely restricted the creation of community property,” but the court split on whether providing the first draft of the agreement to the bride eighteen days before the wedding amounted to procedural unfairness. In re Bernard, 204 P.3d 907 (Wash. 2009). A Virginia appellate court refused to uphold a marital agreement that purported to transfer all marital assets to the wife and all marital debts to the husband upon divorce because the husband had signed it while on a weekend furlough from a hospital’s psychiatric ward where he was being treated for chronic and severe schizoaffective psychosis. Bailey v. Bailey, 2009 WL 1438245 (Va. App. May 26, 2009). When the parties divorced in 2005 under a settlement agreement that required the husband to pay the wife $7.5 million in 2006, but the former husband paid his ex-wife twelve days late, a divided Connecticut court of appeals upheld an award of interest from the date of the parties’ 2005 settlement agreement because the settlement agreement required interest ‘from the date hereof’ if the ex-husband were late on the 2006 payment. Dougan v. Dougan, 2009 WL 1328955 (Conn. App. May 19, 2009).

Child Support: A New York appellate court upheld imputation of $750,000 in annual income to a father when an independent forensic accountant identified cash flows not reflected on tax returns and the father, a convicted felon, documented $3 million he received from his father, also a convicted felon, as a loan by signing a promissory note to his father two days before trial. Fabrikant v. Fabrikant, ___ N.Y.S.2d ___, 2009 WL 1444155 (App. Div. May 26, 2009). A statutory percentage could be applied to the full amount of a Mississippi father’s annual income given the family’s lifestyle, the child’s private school tuition and the fact that the mother did not intend to work until the child reached eighteen. Smith v. Smith, 2009 WL 1451340 (Miss. App. May 26, 2009). A Washington trial court erred when it ordered reimbursement of child care expenses in the amount of $400 per month plus medical expenses because the obligee did not introduce any canceled checks or other documentary evidence showing that she actually paid the expenses. In re Fairchild, 148 Wash. App. 828, 201 P.3d 1053 (2009).

Custody: That a mother had an affair with a married man, borrowed $43,000 to buy a car and intended to enroll in law school were among the factors leading the Georgia Supreme Court to affirm a trial court’s grant of primary custody to the father. Rembert v. Rembert, 674 S.E.2d 892 (Ga. Mar. 23, 2009). The Mississippi Supreme Court reversed a trial court’s change of custody from the mother to the father when the trial court “was so combative, antagonistic, discourteous, and adversarial” toward the mother that she was denied a fair trial. Schmidt v. Bermudez, 5 So.3d 1064 (Miss. 2009).
 
Dissipating property: An Iowa appellate court found that a husband dissipated marital property when he “single-handedly spent most, if not all” of his wife’s military pay earned while she served for a year and a half in Iraq. In re: Leininger, 2009 WL 606233 (Iowa App. Mar. 11, 2009). A New York appellate court upheld a dissipation finding when a husband who claimed physical injuries but refused to furnish medical authorizations simply closed his masonry business during the parties’ divorce. Scala v. Scala, 59 A.D.3d 1042, 873 N.Y.S.2d 787 (2009). Evidence that a husband spent at least $383,551.83 over a five-year period on a translator in Belarus named “Nina,” who sent the husband sexually explicit emails and photos, supported a Florida court’s finding that the husband had dissipated marital resources. Rabbath v. Farid, 4 So. 3d 778 (Fla. App. 2009).
 
Division: In New York, telling your husband that a child is his when it isn’t does not constitute “egregious fault” to be taken into account when distributing marital property equitably upon divorce. Howard S. v. Lillian S., 876 N.Y.S.2d 351 (App. Div. 2009). Neither maintenance payments to a former spouse nor payments on a spouse’s student loan were considered for equitable distribution purposes when both parties had used martial funds “to pay for their own obligations or to aid other family members.” Mahoney-Buntzman v. Buntzman, ___ N.E.2d ___, 2009 WL 1227875 (N.Y. May 7, 2009). Despite the parties’ inadequate financial presentations at trial, resulting in “a Gordian knot of poorly documented and otherwise unexplained premarital and marital financial dealings,” a Maine trial court nonetheless erred by applying partnership law to determine the parties’ assets and liabilities upon marriage because the parties were not partners before marriage. Ayotte v. Ayotte, 966 A.2d 883 (Me. 2009).
 
Move-away cases: A Virginia appellate court allowed a wife to move the parties’ children to Wisconsin, where her extended family lived, noting that the husband had “exhibited little to no interest in spending time with his sons until he learned wife was keeping a detailed log of his behavior toward the children and was planning to file for divorce.” Judd v. Judd, 53 Va. App. 578, 673 S.E.2d 913 (2009). When divorced parents disagreed about nearly everything (e.g., whether a child could “swim without adult supervision, go out on a lobster boat, help load a wood stove [or] ride a razor scooter”), and the mother displayed a more nurturing and supportive parenting style, a Connecticut court allowed the mother to move the child to Virginia when her employer transferred her there. Lederle v. Spivey, 113 Conn. App. 177, 965 A.2d 621 (2009). Holding “that the right to travel guaranteed by the United States Constitution includes the right to travel within Montana,” the Montana Supreme Court reversed a trial court decision changing custody to the father when the mother wanted to move from Terry to Kalispell, a distance of about 700 miles. In re Marriage of Guffin, ___ P.3d ___, 2009 WL 1395412 (Mont. May 19, 2009).

Troxel update: A New York court held that a former domestic partner lacked standing to seek joint custody of the other’s child, born while the parties were together, because standing requires that one be a biological or adoptive parent of a child. Debra H. v. Janice R., 877 N.Y.S.2d 259 (App. Div. 2009). The Delaware Supreme Court ruled identically when only one partner had adopted the child. Smith v. Gordon, 968 A.2d 1 (Del. 2009). In Arizona, a court of appeals vacated a trial court’s temporary order granting a parent and her former partner equal visitation with the parent’s child, holding that the trial court had “failed to employ adequate procedural and evidentiary safeguards to protect the interests of the legal parent.” Egan v. Fridlund-Horne, ___ P.3d ___, 2009 WL 995794 (Ariz. App. Apr. 14, 2009). A couple with whom a deceased mother and her son had lived obtained custody of the son because the trial court found the father to be an unfit parent, evidenced by his lack of interest in the child, his failure to pay any child support and his lengthy criminal record. Florio v. Clark, 674 S.E.2d 845 (Va. 2009).
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Family Law From Around the Nation - Spring 2009

Posted on February 12, 2010 by Jimmy Verner

State Bar of Texas Section Report - Family Law - Spring 2009

by Jimmy L. Verner, Jr.

A deal’s a deal: The New York Court of Appeals upheld the parties’ French premarital agreement, which characterized property that each spouse “may come to own subsequently by any means whatsoever” as that spouse’s separate property. Van Kipnis v. Van Kipnis, ___ N.E.2d ___, 11 N.Y. 573 (N.Y. Dec. 18, 2008). The Iowa Supreme Court held a premarital agreement valid despite claims of duress, undue influence and unconscionability, observing (among other things) that wife’s counsel had written on a draft of the agreement that it would “waive all [wife’s] rights as spouse!” In re Marriage of Shanks, 758 S.W.2d 506 (Iowa Dec. 12, 2008) (exclamation point in original). In a split decision, a Florida appellate court applied a marital settlement agreement to terminate a former wife’s alimony because she “cohabited” with another person when the prison in which she was incarcerated assigned her a cellmate. The dissent agreed with the trial court that this construction led to “an absurd result, unthinkably bizarre and at odds with any reasonable interpretation intended by the agreement drafters.” Craissati v. Craissati, 997 So. 2d 458 (Fla. App. Dec. 10, 2008). In Oregon, a dissolution settlement agreement could not be rescinded when one of the parties refused dog visitation because the settlement agreement included a severability clause. Wolf v. Taylor, 224 Or. App. 245, 197 P.3d 585 (Dec. 3, 2008).

Child Support: The Ohio Supreme Court held that a court is not required to reject an agreement between obligor and obligee to forgive child support arrearages despite a statutory proscription that a court “may not retroactively modify an obligor’s duty to pay a delinquent support payment.” Byrd v. Knuckles, 120 Ohio St. 3d 428, 900 N.E.2d 164 (Ohio 2008). Depending on several factors, an Indiana court may include a father’s retirement contributions as income for child support purposes; the court also found the mother to be voluntarily unemployed when she moved in with her employer and quit working. Saalfrank v. Saalfrank, 899 N.E.2d 671 (Ind. App. Dec. 31, 2008). A father’s failure to exercise any possession of his children (“residential time” in Washington) can warrant a child support award above the statutory advisory amount. Krieger v. Walker, No. 147 Wash. App. 952, 199 P.3d 450 (Wash. App. Dec. 29, 2009).

Custody/Visitation: In a 3/2 split decision, the South Dakota Supreme Court reversed a change of custody to a father, observing that the father “demonstrated a clear disregard for [the child’s] wellbeing when he fought tooth and nail to maintain his child support obligation [at] $150.00 per month, especially in light of [the mother’s] modest part-time income, higher education expenses, and lack of assets. [The father] used the full power of his financial resources to keep from paying an additional $213.00 per month for the basic necessities of life for his child.” Pietrzak v. Schroeder, 2009 S.D. 1, 759 N.W.2d 734 (S.D. Jan. 7, 2009). The Georgia Supreme Court refused to enforce a punitive self-executing change in visitation as against public policy when the mother moved out of state. Rumley-Miawama v. Miawama, 284 Ga. 811, 671 S.E.2d 827 (2009). The North Dakota Supreme Court affirmed a trial court’s decision to reduce a father’s visitation because his new wife was “hostile” toward his former wife. Siewert v. Siewert, 2008 N.D. 221, 758 N.W.2d 691 (2008).

Division: A Virginia appellate court reversed a trial court’s ruling that a husband pay his wife half his military retirement benefits retroactive to nearly a year prior to the filing of suit. In addition, and even though the husband was a criminal, the husband should not be required to pay the wife’s attorney’s fees of $20,000 when the husband received only a few thousand dollars more than that in the divorce. Cusack v. Cusack, 53 Va. App. 315, 671 S.E.2d 420 (Va. App. Jan. 20, 2009). A California husband’s mere assertion that property purchased during marriage is community property failed to rebut the presumption of separateness arising from the wife taking title to property in her name alone. In re: Brooks, 169 Cal. App. 4th 176, 86 Cal. Rptr. 3d 624 (Cal. App. Dec. 16, 2008). A Florida appellate court abused its discretion by awarding each spouse a half interest in the wife’s veterinary business because the award created an “intolerable situation” by forcing “two parties who have stated that they do not want to continue to work together after their divorce to do just that.” Lift v. Lift, No. 4D07-1168, ___ So. 2d ___, 2009 WL 18678 (Fla. App. Jan. 5, 2009) (Without hint of irony, the court said the parties agreed that the trial court had erred.).

Domestic violence: The federal Gun Control Act, 18 U.S.C. § 922(g)(9), forbids a person from possessing a firearm if the person as been convicted of a misdemeanor crime of domestic violence. After careful parsing of the statute, a divided United States Supreme Court held that the predicate offense need not include as an element of the crime that it was committed against one in a domestic relationship with the offender but only that the victim, in fact, stood in a domestic relationship with the offender. United States v. Hayes, No. 07-608, ___ S.Ct. ___, 2009 WL 436680 (U.S. Feb. 24, 2009).

ERISA: In the Fall 2007 FLS Report, this column reported on Kennedy v. Plan Administrator, in which the Fifth Circuit held that an ex-wife’s waiver of any interest in her deceased husband’s retirement plan in their divorce decree violated ERISA’s anti-alienation clause in the absence of a QDRO. In 2009, the United States Supreme Court affirmed the Fifth Circuit but on different grounds. The Supreme Court held that the ex- spouse’s waiver did not violate ERISA’s anti-alienation clause because the waiver assigned nothing. Nevertheless, a plan administrator must follow the plan rather than give effect to a waiver. But the Court’s decision absolved only the plan administrator: The Court did not “express any view as to whether the Estate could have brought an action in state or federal court against [the ex-spouse] to obtain the benefits after they were distributed.” Kennedy v. Plan Administrator, ___ S. Ct. ___, 2009 WL 160440, at n.10 (U.S. Jan. 26, 2009) (emphasis added). 

Odds & ends: If one applies for a green card for one’s spouse, based on an informal marriage requiring that the parties lived together, then the spouses must have lived together because “living together” means living together. People v. Hassan, No. B194141, 168 Cal. App. 4th 1306, 86 Cal. Rptr. 3d 314 (Cal. App. Dec. 3, 2008). A 17-year-old in foster care was not entitled to payment by the state for her automobile liability insurance based on the statutory requirement that foster parents provide “liability insurance with respect to a child.” In re: Corrine W., 45 Cal. 4th 522, 198 P.3d 1102 (Cal. Jan. 22, 2009). If you hide a recording device inside your daughter’s teddy bear to spy on your ex in Omaha, you might get sued in federal court. Lewton v. Divingnzzo, No. 8:2009cv00002 (U.S. Neb. Jan. 2, 2009) (Complaint).

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Verner Publishes Grandparents' Rights in Texas

Posted on January 19, 2010 by Jimmy Verner

Jimmy Verner announced today that Grandparents' Rights in Texas is now available as a Kindle eBook from amazon.com. A physical copy will soon be available through amazon's CreateSpace feature.

In 2000, the United States Supreme Court decided a case called Troxel v. Granville. The Court ruled that a grandparent may not obtain visitation with a grandchild over a parent's objection unless the grandparent can demonstrate that the parent is unfit. Since 2000, the Texas Supreme Court has addressed grandparents' rights three times, and the Texas legislature has substantially amended the grandparents' rights statute. It is now reasonably clear what rights grandparents have — and what rights they lack — under Texas law.

Mr. Verner became interested in Troxel shortly after the Supreme Court decided the case. He published two articles on the web about Troxel. In response to numerous inquiries, Mr. Verner consolidated, updated and expanded the articles into this book.

The book overviews Troxel v. Granville, then introduces the reader to the sometimes–bizarre Texas terminology describing what other states call custody and visitation. The book then returns to Troxel v. Granville, after which it examines the three Texas Supreme Court cases applying Troxel v. Granville. Next, the evolution of the Texas grandparents' rights statute is outlined. The book concludes with conclusions to be drawn from Texas' interpretation of Troxel v. Granville and a bulleted summary of grandparents' rights law.

The appendix includes copies of Texas' current grandparents' rights statute, Troxel v. Granville, and the three Texas Supreme Court cases applyingTroxel v. Granville to grandparents. The book is designed as a starting point for the attorney's research and as an overview of grandparents' rights law for the nonlawyer.

Continue Reading...
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Tex Parte Blog Features iPhone Child Support App

Posted on July 30, 2009 by Jimmy Verner

Texas Lawyer's "Tex Parte Blog" posted a nice blurb about our iPhone app that calculates Texas guideline child support:

Texas child support? There's an app for that.

JimmyvernerJimmy Verner Jr. (pictured), a shareholder in Dallas' Verner & Brumley, has begun marketing a Texas child support calculator application for an iPhone.  "I'm kind of a techy person. I developed a formula for figuring out child support payments online, and someone in my office said, 'You ought to turn it into an iPhone application,' " recalls Verner. So, with the help of a freelance software developer and about a month's worth of effort, he did just that. His application has been on sale on iTunes online since July 23. So far, Verner says, 20 customers have bought it, paying $7.99 each -- 70 percent of which Verner pockets, with 30 percent going to iPhone's famous maker Apple Computer Inc. Verner says he is considering developing similar iPhone applications for New York and California child support calculations, but those states have more complicated formulas, so it's taking more time. In the next two weeks, he plans to begin marketing an iPhone application to calculate litigation deadlines, factoring in weekends and holidays. Oh, by the way, Verner didn't even own an iPhone until he needed to test his idea. 
-- Miriam Rozen

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iPhone Application Calculates Texas Child Support

Posted on July 24, 2009 by Jimmy Verner

Verner & Brumley, P.C., announces that Jimmy Verner has created an iPhone application that calculates Texas guideline child support.

With only five inputs, anyone - whether an attorney or a person in the middle of a divorce or modification suit - can calculate the exact amount of Texas guideline child support that must be paid. The inputs are:

  • whether the person who will pay child support is self-employed
  • that person's gross annual income
  • how many children are before the court
  • the amount of annual health insurance premium for the children
  • how many children from prior relationships the person already is ordered to support.

With these five inputs, the Texas Child Support Calculator determines the exact amount of child support that must be paid. 

Support for the calculator - should any be needed - is available at no charge through VernerLegal, a website hosted by Mr. Verner.

The Texas Child Support Calculator can be purchased from the iTunes Store.

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Visitation and the Six O'Clock Hour

Posted on June 8, 2009 by Jimmy Verner

The 81st Texas Legislature has adjourned, having passed two major family law bills. The bills are Senate Bill 866 and House Bill 1012. They make many changes to Texas family law. This post is the first of several to examine these bills' effects.

Changes to the Standard Possession Order

Beginning with section 6, House Bill 1012 implements changes to the Standard Possession Order. An important change is setting out a default time for possession exchanges of 6:00 p.m.

In the past, for example, a possessory conservator could elect that weekend possession begin at the time a child's school is regularly dismissed. Tex. Fam. Code § 153.312(a)(1) (2007). Other parts of the Family Code, although allowing for possession, did not specify a time. E.g., Tex. Fam. Code § 153.312(b)(2)(A) (2007) (summer possession upon written notice). Now all these periods begin or end at a default time of 6:00 p.m. 

How is the default avoided? A conservator must request the court to impose alternative beginning and ending possession times per amended Tex. Fam. Code § 153.317 (effective September 1, 2009) (reprinted in full below). Upon request, the court must alter the standard possession order - unless the court finds that alteration would not be in the child's best interest - to allow possession to begin or end when school lets out or resumes for the following periods of possession:

  • Weekends
  • Thursdays
  • Spring break
  • Christmas school vacation
  • Thanksgiving
  • Mother's Day

Father's Day is the third Sunday in June. School is not in session then, but Father's Day possession can be extended to 8:00 a.m. on the Monday after Father's Day.

Specifying 6:00 p.m. as the exchange time is helpful to parents, lawyers and the courts because now there will be a default time for changes of possession. But if a conservator had the right to elect the alternative provisions before, why did the legislature change those parts of the Family Code? Apparently, the purpose is to allow the court more control over when possession occurs, even though a court already has extensive power over possession.

There is a subtle mismatch between the House Committee Report on House Bill 1012 and the text of new section 153.317. According to the House Committee Report, if a conservator elects the alternative possession beginning and ending times, "and the court finds the election is in the best interest of the child, then the court must change the start and end times to [the] specified, alternative times stated in the statute." (emphasis added). But the statute reads that the court must change the start and end times, upon a conservator's request, "unless the court finds that the election is not in the best interest of the child." (emphasis added). 

Which conservator bears the burden of proof? Is the burden to show that alternative times are in the child's best interest or are not in the child's best interest?

Continue Reading...
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Preparing for Divorce

Posted on May 31, 2009 by Jimmy Verner

There are many things one should do to prepare for divorce.  Vancouver's MacLean Family Law Group has prepared a checklist. Although not every item will apply in every case, it is the most complete checklist we've seen. Here it is:

  • MAIL: Review all mail coming into your house and make a list of the sender and return address. It is very important to know the address of stockbrokers, insurance companies, credit issuers, banks, and revenue properties, COPY THESE DOCUMENTS.
  • PERSONAL MATTERS: Have your mail sent to an address other than the Matrimonial Home for your privacy and to ensure that you receive it. For example, a post office box or home of a close friend or relative. File a change of address notice with the post office.
  • FAMILY FINANCES: Review all monthly bank statements and brokerage statements, credit card statements, property assessments, and COPY THESE DOCUMENTS. Give copies of necessary documents to your lawyer for safekeeping.
  • TAX RETURN: Review all tax returns that have been filed by you and your spouse. Demand an explanation as to any item, which may be questionable before signing. Make complete copies of tax returns for the last several years.
  • TAXES OWED: Be certain that all taxes owed to the Federal Government or other taxing agencies are paid to date. IF NOT COPY NOTICES OF ASSESSMENT.
  • SAFE DEPOSIT BOX: Inventory and review the contents of any safe deposit box. List the contents including cash and jewelry. Be sure that all safe deposit boxes are in joint names. TAKE PHOTOGRAPHS AND COPIES OF THE CONTENTS.
  • BUSINESS INTERESTS: Be familiar with your spouse's business interests. Become involved and be aware of financial information regarding the business by getting full information on the business, including bank documents, loan applications, corporate tax returns and financial statements.
  • MATRIMONIAL ASSETS: Do not transfer, sign, or make a gift of marital assets in joint names. Credit cards in joint names may discourage large personal purchases by one party. Conversely, you may wish to cancel credit cards to prevent large purchases by your spouse without your permission.
  • PENSION PLANS: Obtain copies of your pension plan and your spouse's also with any yearly statements and determine when they vest and benefits become payable, ask for the plan booklets and latest contribution statements. These documents will be useful if you file for divorce in BC.
  • WILLS AND TRUSTS: Obtain copies of any wills or trust agreements and be involved in any estate planning.
  • LOANS: Review and make copies of all loan documents, mortgage applications, and financial statements.
  • SIGNATURE: Do not sign any financial statements if blank. Know what you are signing and always keep a copy.
  • MEDICAL: Have a complete medial and dental check up. Be sure that you have medical and dental insurance (if available) in the event of separation.
  • CANADA PENSION PLAN: Obtain Canada Pension Plan statements.
  • SAVINGS AND PERSONAL FINANCES: Separation generally causes immediate economic hardship. Put away cash or keep money in traveler's checks in order to be able to purchase personal necessities in the event of a divorce.
  • AUTOMOBILE: Be sure that your automobile is in good working condition and that it is titled jointly or in your sole name.
  • INSURANCE: Review and make copies of all insurance policies relating to the matrimonial residence furnishings, or other assets. This should include any jewelry, silverware, or other valuable. Make copies of any appraisal that have been prepared. These documents will be useful if you file for divorce in BC.
  • INDEBTEDNESS: Do not create any additional debts and make no large purchases such as a new boat or car. Keep your assets as liquid as possible.
  • LIABILITY: Prepare a complete list of all debts or obligations including credit cards, notes, mortgages, etc. Identify each debts, when it was incurred and the reason for the debt. Identify who has been making payments on them, as well as the monthly or annual amounts.
  • ASSETS: Prepare a complete list of all assets in your name and your spouse's. These documents will be useful if you ever file for divorce in BC. Include whether the assets are held individually or jointly and the source of the assets, whether inherited, gifted, or in the name of a third party on your behalf. It is important to determine whether the assets were acquired prior to or during the marriage. Make copies of any documents which show the details and values of all assets and debts.
  • INHERITANCES: Keep all inheritances separate from the marital estate. Do not put an inheritance into joint names and do not use proceeds to pay for family expenses or purchases or to pay down debts.
  • EMPLOYMENT: Do not quit work if you are employed. It is important to secure your future financial independence and earn enough to maintain assets such as your home and car.
  • RESIDENCE: DO NOT MOVE OUT of the family residence without first discussing it with your lawyer.

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Military Retirement Pay Does Not Include Disability Pay

Posted on May 1, 2009 by Jimmy Verner

This blog entry might be subtitled, "Ah, but what a difference a few words makes!"

Here's the background: When a service member retires, he or she is entitled to receive military retirement pay, either voluntary retirement benefits or disability retirement benefits.  If the service member becomes divorced, his or her spouse might well be awarded a part of the military spouse's retirement pay (if, as and when received) as part of the division of the community estate.

If a service member is disabled, or becomes disabled, he or she may elect to receive Veteran's Administration disability benefits instead of military disability retirement benefits.  Veteran's Administration disability benefits are considered personal to the service member and cannot be divided upon divorce because they are not part of the community estate.

What sometimes happens is that a retired, disabled service member will opt to waive all or part of his military retirement pay for Veteran's Administration disability benefits.  To the extent that the former service member receives Veteran's Administration disability benefits in lieu of military retirement pay, his or her military retirement pay is reduced.  As a result, the amount of military retirement pay the former spouse then receives decreases because there is less of it to split.

Nearly twenty years ago, in Berry v. Berry, 786 S.W.2d 672 (Tex. 1990) (per curiam), the Texas Supreme Court ruled on a case in which this situation occurred.  In that case, the former spouse was to receive a percentage of her ex-husband's "gross Air Force disability retirement pay" which was to be "computed on the gross amount thereof before any deductions."  The retiree elected to receive Veteran's Administration disability benefits; his military retirement pay was reduced accordingly. The Court upheld the former wife's attempt to require the former husband to continue paying her a portion of the former husband's retirement pay based on the amount of his retirement pay before the reduction caused by accepting Veteran's Administration disability benefits because that reduction amounted to a "deduction" from the retirement pay.  Thus, because of the way the divorce decree had been drafted, the former wife continued to receive her full share of the former husband's military retirement pay.

On May 1, 2009, the Texas Supreme Court ruled on another case of this nature, Hagen v. Hagen, in which the divorce decree granted the non-military spouse a portion of "all Army Retirement Pay or Military Retirement Pay" that the service member might receive.  The decree did not mention Veteran's Administration disability benefits or contemplate that the former husband's military retirement pay would be reduced if the husband became disabled and opted to receive Veteran's Administration disability benefits in lieu of military retirement pay.  Accordingly, the Court upheld the reduction in payments to the ex-wife caused by the ex-husband's decision to accept Veteran's Administration disability benefits.

Had the decree in Hagen read like the one in Berry, the result in Hagen would have been the same as in Berry.  But those crucial few words were missing, so the result was different. 

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Premarital Agreement Signed "Involuntarily"

Posted on April 17, 2009 by Jimmy Verner

In Martin v. Martin, the Dallas Court of Appeals ruled that a trial court had erred by granting summary judgment that a marital property agreement was valid. The wife admitted she had signed the agreement, but she said she had signed involuntarily. The court remanded the case to the trial court for further proceedings.

One of the defenses to the validity of a marital property agreement is that "the party did not sign the agreement voluntarily." Tex. Fam. Code § 4.105. An action is taken "voluntarily" when it "is taken intentionally or by the free exercise of one's will," said the court.

This case is notable because of the facts it relied upon to conclude that the wife had signed the agreement involuntarily. In short, the husband told the wife that the agreement was necessary "to protect the family's assets from possible financial ruin in the event of litigation against the business" and that he had no intention of divorcing her.

The wife's attorney advised her not to sign the agreement. The husband

constantly threatened that the family would be financially ruined and would have nothing if [the wife] did not sign the agreement. When [the wife] tried to discuss her attorney's concerns with [the husband], he became outraged and called [wife's attorney] “incapable,” “unqualified,” and insisted that [the wife] ignore [the attorney's] advice. [The wife] said that she had no choice but to sign the agreement because her sole concern was the welfare of the family.

Some years later, the husband filed for divorce. On these facts (as fleshed out in the court's opinion), the Dallas Court of Appeals concluded there was some evidence that the wife signed the agreement involuntarily.

This case appears inconsistent with cases such as Sheshunoff v. Sheshunoff, in which the Austin Court of Appeals held that a husband had voluntarily signed a marital property agreement even though his wife threatened to withdraw her guarantee of his bank loan, which would ruin the husband's business by causing the bank to call its line of credit, if the husband refused to sign; and Nesmith v. Berger, in which the same court upheld a marital property agreement where a husband refused to go on the couple's honeymoon unless the wife signed the agreement. The Dallas Court cited, but did not distinguish, Sheshunoff; the court neither cited nor distinguished Nesmith.   

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