Divorce Pitfalls for Small Business Owners

 The prospect of getting a divorce can be daunting, and even more so if you own a small business. When a marriage ends and both parties own a business, it can be complicated to navigate the legal and financial aspects of a divorce. What are are the top considerations for small business owners facing divorce?  

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Whether you are considering filing for divorce, or your spouse has already initiated the divorce process, there’s important considerations when a small business is part of the equation.

If you're a business owner and one or both of you are seeking a divorce, there are some particular points of concern that you need to keep in mind. First and foremost is the value of the business itself. The court may order an appraisal of the business to determine what the fair market value is. This is so each party can receive an equitable share in the assets. If one of you was the sole owner of the business prior to marriage, the court may decide that ownership of the business isn’t subject to division but the increased value of the business is.

Another point to consider is how much of your time and resources the divorce process will take up. Divorce can impact how much time and attention you can put into your business, as well as how smoothly operations run while the divorce is underway. It’s important to make sure that both parties understand their respective roles in the business during the divorce proceedings. If one or both spouses are also employed by the business, those roles need to be specified in order to ensure that everyone remains in compliance with any court orders that may be issued.

If you are considering filing for divorce and are a small business owner, it’s important to seek professional counsel on how best to protect your rights and interests in the process.

A (NOT SO) Simple Equation To Calculate What Your Case Is Worth.

A while ago, Jimmy Buffet wrote a song called "Math Sucks", a sentiment shared by many mathphobes.  But math probably never sucked harder than when it is being used to deconstruct your life and reduce years of memories and hard work down to such a feeble thing as a raw number.  But when you are involved in a divorce, getting the right number is critical in determining whether you will come out ok, or getting financially destroyed.  Now that REALLY would suck.

If your attorney is a good one, he is getting your case ready for the worst possible scenario and will be busily preparing your case for trial- that is the ultimate goal of his efforts.  However, the client’s calculations should be geared towards settlement, as that is often the most favorable result.  So how can you decide if a settlement offer is a good one or not?  Once again we have to turn to our old "frien-emy": math.

Knowing the total value of your property is the first and hardest step but unfortunately, it is not the only part of the equation.  You should also add in the costs of litigation to your calculation. So when you are considering whether to accept a settlement offer, you can use the following formula.

Total value of assets you think the judge will award you  -  the total amount of debt you think the judge will award you -litigation fees (Legal fees + Expert fees + other costs + time missed from work + mental health costs + time value of money)  < settlement offer.

In other words, if the value of the settlement offer is more than what you think the judge would award you LESS all the costs of litigation, you should take the offer.  

Obviously there are lots of variables in this equation and the values for each of these may be constantly changing.  But that is why the help of a good attorney team is essential to helping you decide if a settlement offer is even in the ballpark and even worth considering.

How Much Do You Have to Cooperate With Visitation?

Recently, I was asked how much a mother has to cooperate in getting her children to go to visit with their dad.  She says that even though her divorce decree gives the father the right to see the children, they do not want to go with him for visitations and she doesn't want to push them to go.

Each case is different based on the facts of the case.  The age of the children, and the recent events that affect their relationship with the father would change the specific answer I would give.  But generally, I would say that even though the mother's legal obligation may be limited, her moral and ethical obligation to the kids means she should do more than the minimum demanded by law.  The mother's very question is subject to scrutiny and even a little suspicion.  The natural state is that children love their father and want to be with him.  If this is not the case, then something is very wrong and social science has shown that this this broken relationship with the father will have long term negative consequences for the children. The fact that the mother seems unconcerned that the children don't want to see their father- and is more focused on her own legal obligations suggests that she may be engaging in some passive parental alienation.

As far as her legal obligations goes, the Texas Penal Code sets out the offence of Interference with child custody:

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      (a)     A person commits an offense if the person takes or retains a child younger than 18 years when the person: (1) knows that the person’s taking or retention violates the express terms of a judgment or order of a court disposing of the child’s custody; or (2) has not been awarded custody of the child by a court of competent jurisdiction, knows that a suit for divorce or a civil suit or application for habeas corpus to dispose of the child’s custody has been filed, and takes the child out to the geographic area of the counties composing the judicial district if the court is a district court of the county if the court is a statutory county court, without the permission of the court and with the intend to deprive the court of authority over the child.  (b) A noncustodial parent commits an offense if, with the intent to interfere with the lawful custody of a child younger than 18 years, the noncustodial parent knowingly entices or persuades the children to leave the custody of the custodial parent, guardian, or person standing in the stead of the custodial parent or guardian of the child. (c) It is a defense to prosecution under Subsection (a)(2) that the actor returned the child to the geographic area of the counties composing the judicial district if the court is a district court of if the court is statutory county court, within three days after the date of the commission of the offense. (d) An offense under this section is a state jail felony.

[Tex. Penal Code 25.03]

There if very little case law on this subject but one court attempted to set out some guidelines:  In Ex parte Morgan, 886 S.W. 2d (Tex. App—Amarillo 1994, no writ), this court ruled that a parent could not be held in contempt where she passively failed to insist that her children visit their father, but not seek to impede the visitation or encourage the children to resist it.  The court stated that if “a parent has encourage minor children to resist court ordered visitation with the other parent, the line has been crossed between passivity, which is punishable by contempt, and overt conduct, which would be punishable. Again, the well-being of the children is served by both parents’ encouragement to the children to love and respect the other parent.”

Within the spectrum of visitation disputes, there may be instances in which: (1) a parent actively discourage or impedes visitation; (2) a parent passively fails to insist that a child comply with visitation; or (3) a parent is legitimately unable to compel a child to comply with visitation.  The courts have held that the defense of involuntary inability to comply applies only to the third alternative, and not to the first two.  Ex parte Rosser, 889 S.W. 2d 382, 386 (Tex. App.-Houston[14^th Dist.], 1995, no writ). 

While I see nothing in the law that says the mother is required to drag a child to his father’s car and put him in the front seat, the mother should do everything to encourage the visitation within reason as this is best for the child and make the child available at your front door at the designated time.  The mother has an obligation to put her own feelings aside and do truly EVERYTHING as a parent she can to foster a positive relationship and get the children to go with the dad.  The Court in the Ex Parte Morgan case clearly stated this obligation: "It is imperative that both parents recognize that their personal feelings must be submerged in cary8ing out their responsibility to obey the law and, by doing so, demonstrate to their children that they should do so as well." ( 831).

If you need more information on these issues, please visit our website at www.thepalmerlawfirm.com

Top Ten Ways To Be A Great Example To Your Children

Whether you are a parent contemplating a divorce, a parent involved in an ongoing custody dispute, or a parent struggling to be cope after a divorce, one thing remains unchanged- you are the parent of a child who, now more than ever, needs you to be a source of strength and stability.  
Parents are role models to their children at all times- even when you think your kids aren't looking (maybe even ESPECIALLY when you think they aren't looking!)  And if you involved in a Texas custody dispute, then there are many OTHERS who are also evaluating your ability to be a role model to your child or children.  Those who are carefully watching you can including your ex-spouse, his or her lawyer, attorney ad-litems, child protective services, grandparents, grandparents attorneys, custody evaluators, parent coordinators, mediators..and of course (and ultimately) the judge in your case.
The best way to appear to be the best parent you can be..is to ACTUALLY be the best parent you can be.  You need to be an excellent example to your children because they learn by example.  Aside from your legal case, you owe this to you children.

Here then are the top ten ways to be a great example to your children.

1. Live a Healthy Lifestyle

How can you say your are keeping your children healthy when your cupboards are filled with junk food and cookies, you watch T.V. for hours on end?  By eating properly and getting regular exercise, it not only sets and example for our children but gives you the energy to play with them and be involved with their busy schedule.  If you live a sedentary lifestyle, chances are your children will too.  Childhood obesity has become an epidemic in American society which can lead to depression and disease. Be a healthy example for your kids by living a healthy lifestyle.

2. Improve Yourself Constantly

There is always something new in life and you need to be an example to your children to be a lifelong learner.  You should always be looking to improve your "game" because your children will adopt that attitude too.  Learn a new skill.  Try a new activity.  Explore whatever is exotic. Not only will you be a good example of a well lived life for your children, your own life will improve and will make you a happier parent.

3. Give Back To The Community

By going out and helping in the community, you will give your child a deeper sense of responsibility for, and attachment to a home and place.  This is especially important if your are experiencing a time of upheaval in your family.  One of children's greatest fears during divorce is that they will loose their place in the world.  By making it a regular habit to get out in your community with your family and volunteer your time and talents your child will know they belong. 

4. Open Up To Your Kids

You should NEVER share the details of your divorce with your children, but that doesn't mean you shouldn't let your children know who you really are.  Children are looking to you give them the model of how to behave in society.  And they will learn not only when you show them how you have successfully navigated life, but they also learn if you open up and show them how you overcame those times when you fell short of societies expectations.  Do not hide who you are as a person to your children. Being strong means showing vulnerability.  I am not saying you should talk about your divorce in detail or use your children as your own emotional crutch.  But you can share your past experiences when it is appropriate: mistakes and victories. Take your children to work with you and let them see your daily life. Let them see how you interact with other adults and how you carry yourself. 

5. Maintain Self-Control

If you are involved in a legal battle, you will be stressed as never before.  Releasing your emotions, whatever they may be, is healthy and will reduce stress. However NEVER do that in front of your children.  If you allow yourself to loose your cool in front of your kids, it will damage them psychologically, will damage your relationship with them, and may very well damage your law suit.  Every healthy adult should have enough self-control to not regularly blow up in front of their children.  If you can't- then you need to seek out help such as a counselor or therapist. 

6. Right Relationships

We have many important relationships and not all of them are going to be pleasant. Maybe there are issues with your parents, stepparents, brothers, sisters, or ex-wife. Forgive and give grace. Seek to be right in your relationships over being right. Make it as hard as possible for anyone to say anything bad about you. Be an initiator and take always personal responsibility first.

7. Respect and Listening

If you want to teach your kids how to be confident, it starts with showing them respect for who they are and listening to their own unique thoughts. This is a tough aspect of leadership, but the best leaders listen carefully and talk far less. Open your mind and your ears to what your children are telling you. They will, in turn, learn to do the same later in life.

8. Positive Attitude

There is plenty of negativity to be found in society today. Do not add to the daily chorus your child experiences. Instead, display a positive and reassuring attitude and optimism. They need to be able to look at you and know that you are a believer and not a cynic.

9. Goal Setting
Setting goals is important to give us a benchmark of where we are going and the progress we are making. Implementing and achieving those goals are of equal importance. When our kids see us moving along exactly according to plan, it shows them the importance of organization and self-discipline in their daily life. Help them come up with their own set of goals and praise them when the goals are met.

10. Walk the Talk
The single most important aspect of being your children’s role model is to always say what you mean and mean what you say. Walk the talk. Back up your words with visible and concrete action and be a man of integrity and value. Actions speak volumes. “Well done is better than well said.” – Benjamin Franklin

Top 7 Questions To Ask When Taking Care of Kids During a Divorce

If you are divorcing or are recently divorced, it is vital that you keep your children's best interest in mind.  It is often easy to loose your bearings as you are caught in a whirlwind of legal activity and emotional distress which all divorces bring.  This turmoil can make it hard to determine if you are doing all you can do to for your child.  So here are the top seven questions you should ask yourself to make sure you are still being the best parent you can be during a divorce.

1.  Are you being there for your child?  You will be drained and you will want to withdraw into yourself during a divorce, but your children need to know that you are still there for them and you will continue to provide emotional support during this time.  Divorce is stressful on everyone and your child needs to know that you are there to answer their questions and help them process their painful feelings.  You do not need to be instantly available 24/7, and everyone needs some mental downtime, but you must make it a point to generally be there when your children need some answers, or just some hugs.

2.  Are you giving your kids needed encouragement and approval?  Kids of all ages seek out the encouragement and approval of their parents.  It is vital to their self esteem to know that you think of them often and are proud of them.  Particularly at a time when they are submerged in self doubt over the divorce, you have to show them in both expressed and subtle ways that you think they are great.  Be generous with your praise.  Carry their pictures in your wallet and their drawings on your desk.  Constantly stoke their self-esteem by praising them.  Now more than ever, they need to be assured that they are worthy of being loved.

3.  Are you treating your kids like people?  Your kids are unique individuals with their own personalities, and perspectives.  You need to be sensitive to their experience of the divorce and how they can be different from yours.  

4.  Are you trying to have a positive relationship with the other parent?  Even though you feel you would be better off having less contact with your ex, or soon to be ex, spouse, this may not be what is best for your kids.  Research has shown that children make the best recovery from divorce when both parents are actively involved in the children's life and the interaction is conflict free.

5.   Are you modeling to your kids how to handle stress?   Divorce is an extremely stressful time.  If you demonstrate your ability to handle the stress of divorce without resorting to becoming violent, verbally abuse, or using drugs or alcohol, you kids will know that it is ok if you occasionally express anger and frustration.  Kids need to see you handle stress without losing control.  They then won't be fearful when you get angry.   

6.  Are you maintaining family and community ties?  Chances are you kids are experiencing the loss of a full-time parent.  They should be allowed to find the comfort of familiar surroundings and support such as scout leaders, church leaders, friends and neighbors.  You may feel like you want to get away and start a new life from your old, but your children need the familiar ties of their community especially at this time.

7.  Are you making every effort to peacefully resolve issues with your ex, or soon to be ex, spouse?  Your kids will be less fearful and stressed if they see you and the other parent working cooperatively.  If they observe examples of flexibility, consideration and cooperation, in resolving parenting issues, they will be less fearful that the aftermath of the divorce will be a never-ending battle of wills- with them in the middle.

Divorce is one of the most painfully stressful times in anyone's lives - and even the most well meaning of parents can fall into a spiral of emotion where they forget to keep their children's best interest at the front of their attention.  When you find yourself in an emotional tailspin from divorce, ask yourself these seven questions to keep your perspective - and your focus on being the best parent you can to your children.   

Divorce Signs In Tax Preparation

My husband and I have been have been fighting over finances, the kids, his job..just about everything lately. But one thing I could always rely on about him over the last twelve years is that he has always handled all the financial stuff, and he always filed our taxes on time. But this year is different. It is almost the end of April and he still hasn’t filed our taxes yet. He said he was just too busy this year. He said he filed an extension, that he’ll get to it when he can, and that I should stop nagging him about it. But I’m worried. Could I get in trouble with the IRS if he doesn’t pay our taxes?

Yes, you definitely can, and getting in trouble with the IRS may not be the only thing you have to worry about.

Everyone knows (or should know) that federal tax returns must be filed by April 15 of each year. Extensions can be filed, but asking for more time without a good reason is generally a bad move. Soon you’ll find yourself filing another extension and then another. Over the period of borrowed time, records can be lost. You will have to pay late filing penalities and compounding interest. Most tax experts recommend that you file your taxes on time unless there is a real reason they can’t be done by the deadline.

You probably have been filing “married filing jointly”, as most married people do. However, just because your husband is the one who has been filing the taxes doesn’t mean you can’t get in trouble. Filing jointly creates “co-liability” for the tax. This means that the IRS can go after either spouse for the entire tax amount as well as penalties and interest. And it does not matter if your husband is the major, or only, wage earner. You are still liable for the entire tax burden if you file jointly.

It seems odd that for the last twelve years your husband has managed to file the taxes on time and now suddenly he cannot. Unless he has a good reason which he can clearly explain to you for filing the extention, you should be skeptical. If your marriage is already rocky, procrastinating in filing the tax return may be a red flag that indicates your husband is thinking seriously about his “marriage exit strategy”- divorce. In skirting the tax preparation responsibility he may be buying time so he can put himself in the best financial position, or he may be seeking to get you into trouble with the IRS. He also may be trying to back you into a corner with a deadline so that you must quickly sign the return without reading it. A spouse plotting their strategy for divorce will make all kinds of excuses for their suddenly odd behavior. They will become authorative and tell you to “mind your own business”. But this IS your business because you are jointly liable.

Here are some other tax related red flags that your spouse may be planning a divorce:

Underwithholding. If he is employed, try to get a copy of his paycheck stub and look at how much he told his employer to withhold for taxes. The lowest effective federal tax rate is 10%, so if your spouse is withholding much less than 10% this is a good indication that he is intentionally underwithholding. This may be so he can keep more income from the paycheck for himself and share less with you. He may count on being in the middle of a divorce by this time next year and not worry about the large tax bill because it will be a joint liability and a community debt.

No Prepayments. If your spouse is self-employed, or if there is income not subject to withholding such as interest and dividend income, the law is that he must make prepayments of estimated taxes. If he normally pays theses but lately skips his estimated tax prepayments, this may indicate he is hoarding cash in anticipation of divorce.

Reporting Less Income than Earned. If the return reflects a sudden and unexplained dip in your spouse’s reported income from prior years, be suspicious. Your spouse may be making more and keeping it from you and the IRS. A substantial underreporting of income (more than 25%) could trigger an investigation of the last six years of tax returns. Again, if you have been filing jointly, you may be individually liable for back taxes, penalties, fees and interest- even if your husband is the one who dishonestly reported.

Making Overblown Deductions. If your spouse is suddenly trying to take a large number of exaggerated deductions that are not legitimate, he may be trying to underpay his taxes. If he makes a substantial understatement of his tax, you may be liable for the resulting penalties and interest if and when the IRS catches it.

Intercepting the Refund. A more simple trick your spouse may try is to beat you to the mailbox and grab the refund check before you do. If you forget about the check he may sign your name on it and deposit the entire amount into his private account. Or he may be more subtle and deposit only a portion of the check into your joint account.

Just having any one of these red flags does not prove that your husband is thinking about divorce or that he is plotting against you in any way. You have to take the whole situation into account. Unfortunately, most people can’t spot these tax related warning signs just by looking at their tax return. That is why if you suspect your husband is cheating on your taxes and/or if he is thinking about a divorce, you should go to a tax professional and also to a divorce lawyer. A tax professional such as a Certified Public Accountant will be able to tell you if your taxes were filed correctly and what you can do to protect yourself from getting in trouble with the IRS. A divorce attorney will tell you what your legal rights regarding divorce are, and what the process will involve. You do not have to tell anyone that you have seen these professionals, but you have to protect your interests if a divorce and/or a tax audit is coming, and you have to have the knowledge these professionals can provide to make the right decisions.

For more FREE INFORMATION or to contact a family law attorney about a family law matter in Harris or Galveston counties, Texas, call toll free: 1-800-2MY-DIVORCE. (For cases in Harris or Galveston county only).

Cheaters Pay The Toll

Here is a new way to catch a cheating spouse: toll booth records.

According to the Associated Press, electronic toll collection systems are emerging as a powerful means of proving infidelity. Agencies in seven of the twelve states surveyed indicated that they would provide electronic toll information in response to court orders in criminal and civil cases, including divorces. Even if the state agency refuses to provide the information, it can frequently be obtained from the other spouse through the normal discovery process.

Texas is not among the states that use “EZ Pass” system, but attorneys can try to subpoena the records of the Texas Department of Transportation to the Electronic toll collection records (Texas E-Pass) kept by the department.

Source: “Toll Records Trip Up Philanderers” by Chris Newmarker, published at Yahoo! News.