Dallas, Texas
The following Article is the Author's draft as submitted to The Texas Lawyer for its Special Issue in Family Law dated December 8, 1997. The published article varies slightly.
MEDIATION, ALIMONY AND PROPERTY
A "M.A.P." TO FAMILY LAW IN
TEXAS
By: Kenneth G. Raggio
Raggio & Raggio, P.L.L.C., Dallas, Texas
Alimony | Texas a Divorce Dumping
Ground? | Pure Form Mediation | When
Is A Deal Really a Deal? | Valuing
Stock Options | Dividing A Bonus | Common Law Mariage
Family Law, besides touching almost everyone, encompasses many areas of the law. The "M.A.P." that follows is a snap shot look at some unique and evolving issues in Family Law in Texas, including pure form Mediation, Alimony, and certain Property Interests.
What has been granted when asked for, would have been granted
if asked for, and granted even when it couldn't
have been granted? The Answer: Statutory alimony in Texas.
Texas, as with homestead equity liens, became the last state
in the union to approve post-divorce spousal support. The
statute, effective only for cases filed after September 1, 1995,
takes the general view- point that spouses who have been married
for more than 10 years can get up to 36 months of alimony up to a
maximum of $2,500.00 per month, and only providing for the
spouse's minimum needs. These needs have been widely interpreted
as being a re-education-for-gainful-employment provision. (See
Tex Family Code § 8.001, et seq).
"I have granted alimony in the cases that I been asked to
do so," said Judge Richard Johnson, of 303rd District Court
in Dallas. "And there were cases that I would have granted
it in, if I had only been asked." This sentiment was shared
by judges around the state. "I have noticed a lot more
agreed divorces paying alimony since the statute was
passed," said Judge Brian Carper of the 324th District Court
in Fort Worth. Judge Jim Squier, presiding Judge of the Harris
County Family Courts, said "We have seen a definite increase
in agreed divorces providing for short term alimony payments
since the statute passed."
Finally, the only published cases involving statutory alimony
are those where alimony was granted in cases filed prior to
September 1, 1995, when the statute specifically barred such an
award. The trial court judges in Casey v. Casey, 14-96-01043-CV
(Houston, 14th, 08-07-97), and in Combs v. Combs, 07-97-0052-CV
(Amarillo, 10-21-97) were evidently trying to do equity, using
the fact that the cross-action for divorce was filed after the
effective date of the statute as justification for awards of
alimony. Both awards were reversed.
The trick is to meet stringent eligibility requirements for alimony in Texas - or by - passing them.
To be eligible to receive maintenance, the marriage must have lasted for more than ten years (or there being a conviction for family violence) and the recipient spouse must not receive sufficient property in the divorce to provide for the spouse's minimum reasonable needs. Further, the spouse must be unable to support himself or herself through appropriate employment, or clearly lack earning
capacity in the labor market adequate to meet the spouse's
minimum reasonable needs. [See § 8.002 (2)(c)].
The interpretation of many judges around the state, according
to my informal survey, is that the standard of "minimum
needs" was somewhat above a "keep the
ex-spouse off the welfare rolls" standard and somewhat below
the "accustomed standard of living and lifestyle"
standard. It is also a trend that the property received in the
divorce need not be consumed before there could be an award of
alimony, but merely the income such property
produces, or should reasonably produce.
For instance, if the spouse received property worth $50,000.00
in the divorce which produced income of only $3,000.00 per year,
it is only the $3,000.00 that is used as a possible offset to the
alimony award. Even if a spouse uses all the property received in
the divorce (say $60,000.00) to buy a house for the spouse (and
presumably the children), there can still be an award of alimony.
The property awarded in the divorce went into a non-productive
asset that met some, but not all, of the ex-spouse's minimum
needs. The spouse has a much lower monthly carry on the house and
therefore less in total monthly expenses, but still may have
needs that might justify alimony. Therefore, purchase of a house
may be a "minimum need" and would not disqualify a
spouse from receipt of alimony, if under the facts of the case
use of property was somewhere between the "welfare"
standard and the "accustomed lifestyle" standard. Also,
the Court can consider the needs of the children in setting the
child support (where applicable) and factor this in with the
possible award of alimony.
Texas Migration?
Another issue involving alimony is whether it will induce migration to Texas. The 1995 alimony statute, passed as a welfare reform bill, was hailed as a giant step in Texas law, but also sparked concern that Texas would become a divorce dumping ground for spouses in high income and low estate situations. Since there is a absolute maximum of a 36 month term and maximum of $2,500.00 per month in payments for alimony, it was thought by many attorneys of the Family Law Bar that corporate executives would try to move their employment to Texas to avoid the substantial lifetime alimony that could be awarded in other states. Despite the fact, corporate migrations have continued in Texas, there appears to be few contested cases involving alimony that reaches the appellate level, possibly because of the success of parties in mediating divorces.
Divorce Mediation: Pure form and Enforceability.
The model used predominantly in Texas divorce mediation is the
"caucus model" which is essentially a negotiated
settlement conference with both sides, their attorneys and the
facilitator. However, "pure form" divorce
mediation, commonly used in the West, Midwest and East, is now
being used in Texas as clients demand a better way to resolve
their divorces than methods rooted in the adversary system.
Whereas, caucus mediation typically is one marathon session very
late (after hearings and relatively complete discovery) in the
case that often leads to a settlement, Pure mediation differs in
that both parties meet with the mediator (attorney or a
lay person) in a number of short sessions that, often leads to
resolution. Each of the mediating parties are encouraged to have consulting
attorneys, who render legal advice as an advocate to each
party because the attorney - mediator as a neutral party provides
only legal information.
Advocates of pure mediation feel that pure mediation is
generally less expensive than litigation and the parties are
happier with the results, as they are more directly in control of
the outcome than in the adversary system. For more information
about pure mediation, please see http://www.raggiolaw.com/mediate.html,
an article that explains pure divorce mediation at length. Client
demand for both efficiency (cost savings and emotional savings)
in divorce proceedings and a desire for controlling the process
will see pure mediation continue to increase.
When is a deal a deal?
A mediated settlement agreement is now enforceable if it has a
specific separate paragraph stating the agreement is not
revocable and is signed by the parties and their attorneys if the
attorneys are present. (Tex Fam Code §6.602 for divorce,
alimony, and property rights, and §153.0071 for child custody,
visitation, and child support).
This means a party cannot unilaterally withdraw consent prior
to the entry of a judgment based on the mediated settlement
agreement. Alvarez v. Reiser, 11-96-206-CV (San
Antonio, 10-09-97). But a party had better get the judgment
signed anyway before acting like it's an over. In In
Re Bland, 01-97-01070-CV, (Houston, 1st, 10-03-97), the
parties did an oral prove up before the court based upon their
mediated settlement agreement with the decree to be signed a few
days later. The decree wasn't signed, and when the wife
discovered her husband had remarried, she wouldn't sign and
requested a jury trial. The Houston Court (1st District) refused
to grant a mandamus to prevent the jury trial ordered by the
trial court. So, is a deal ever a deal until it's done?
Difficult Valuation
How does Texas about unvested stock options or bonuses
received after the divorce?. Texas has adopted the inception
of title rule, which means the character of property is
determined at the time the right to the property is acquired. The
problem with stock options is that in most cases
the options are not vested and have as a subsequent condition of
exercise the employment of the employee - spouse on the exercise
date. Employee spouses often took the position that since his or
her employment after the divorce was a condition for the options
becoming exercisable, it was therefore part of the spouse's
future income and separate property in which the non-employee
ex-spouse was not entitled to participate. In Bodin v. Bodin,
04-96-00146-V (San Antonio, 10-01-97 ), the appellate court
affirmed the trial court's determination that stock options were
contingent interests and community property, subject to division
with the rest of the estate of the parties.
The bonus situation.
What if the divorce is in midyear, and the employee spouse
receives a discretionary bonus after the end of the year? Some
employee-spouses take the position that the bonus is worth little
or nothing at the time of mid-year divorce but worth a
substantial amount at the end of the year due to work performed
at the end of the year, and hence should not be divisible. The Bodin
case extended the rule established in Cearley, 544 SW2d
661 (Tex. 1976) (unvested military retirement was subject to
division on a pro rata formula) so that a workable standard has
now become a pro rata division of the bonus between the marital
portion of the year and the post divorce period.
Common Law Marriage is Alive and Well in Texas
What does Texas do to help people in long-term
relationships who have not ceremonially married? A: Common Law
Marriage. Texas is one of 13 states (plus Washington D.C.)
that recognizes common law or informal marriages. The elements
necessary to establish an informal marriage in Texas, given in
§2.401 of the Family Code, are (1) the man and woman agreed to
be married, (2) after the agreement they lived together in this
state as man and wife and (3) they represented to others that
they were married. The suit must be filed within two years of the
last cohabitation of the parties.
Proof of the required agreement to be married may be made by
circumstantial evidence or conduct of the parties under Russell
v. Russell, 865 SW2d 929 (Tex. 1993). That proof is subject
to legal and factual sufficiency review on appeal to the court of
appeals and to legal sufficiency review upon appeal to the Texas
Supreme Court. And under Russell, a finding that there
is legally and/or factually sufficient evidence of cohabitation
and public representation will not necessarily constitute legally
and/or factually sufficient evidence of an agreement to be
married.
Endnote: Family Law cases comprise the majority of cases filed in Texas. There are other family law and divorce articles elsewhere in this issue mapping out other aspects of the "People's Court."