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San Antonio, TX Family Law and Military Divorce Blog

Thursday, October 30, 2014

Reimbursement Claims-Part 3: Prohibited Claims

This is the third post in a three-part series on "reimbursement claims" in divorce.  Recall that all claims for reimbursement are "equitable" in nature, meaning the court has wide discretion in deciding and balancing the outcome.  Some claims, however, cannot be considered by the court since that are prohibited by statute.

Texas Family Code Section 3.409 prohibits courts from considering the following:

  1. Payment of child support, alimony or spousal maintenance;
  2. Living expenses for your spouse or a child of your spouse;
  3. Contributions of nominal value; and,
  4. Payment of student loans owed by your spouse.

The first three categories make sense to most people.  That last one -- payment of your spouse's student loans -- often comes up as a sore spot during discussion with clients.  For better or worse, there really is no room for discussion.  The Texas legislature has handed down its decision.  In divorce, a reimbursement claim for contributions made to compensate for payment of your spouse's student loan debt is dead on arrival.

A close reading of Texas Family Code Section 3.402 adds to the list of prohibited claims any desire to claim an offset for "use and enjoyment" by the community of a spouse's separate property primary or secondary residence (e.g. a spouse's separate property homestead or vacation home)

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region. 


Monday, October 20, 2014

Reimbursement Claims-Part 2: Offsets

This is the second post in a three-part series on "reimbursement claims" in divorce.  In Part 1, wife established a reimbursement claim on behalf of the community estate for the reduction in the principal amount of debt on husband's separate property home that accrued during 10 years of marriage.  In Part 1, we determined that the mortgage principal had been reduced by $60,000.  Here, we'll examine the effect of the husband's "offsetting" reimbursement claim for the benefit his separate property home conferred on the community.

For simplicity, let's assume that husband and wife filed a joint Federal income tax return during each year of marriage.  An examination of those tax returns revealed that the community's tax liability had been reduced by $40,000 by virtue of claiming the mortgage interest and property tax paid on husband's separate property home among the couple's itemized deductions.  Thus, husband's separate property estate (i.e. his home) conferred a benefit on the community estate (i.e. reduction in the spouses' tax liability).  Does husband's offsetting claim automatically reduce wife's reimbursement claim on behalf of the community to $20,000?  Not necessarily.

Courts are not required to offset reimbursement claims on a dollar-for-dollar basis.  As the court in Pennick said, evaluating equitable claims for reimbursement "is not merely a balancing of the ledgers" between the spouses' separate and community estates.  As in all "equitable" matters, courts have wide discretion to effect a "just and right" division based on all the factors at play in each parties' divorce.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.  This blog cites Penick v. Penick, 783 S.W.2d 194 (Tex. 1988).


Friday, October 10, 2014

Reimbursement Claims-Part 1: The Basic Concept

This is the first post in a three-part series on "reimbursement claims" in divorce.  In fashioning a property settlement in divorce, claims for "reimbursement" are a common factor faced by the parties and courts.  In simple terms, a reimbursement claim requests "payback" for the benefit one marital estate conferred on another marital estate, such as when the community estate conferred a benefit on one spouse's separate property estate.  An example will help explain how this might work.

Husband bought a house prior to marriage.  Husband marries wife and they live together in husband's house for 10 years prior to wife filing for divorce.  In her divorce petition, wife asks the court to reimburse the community estate for the benefit it conferred on husband's separate property estate by way of the community's payment of the mortgage during 10 years of marriage.  How does this claim arise?  Well, each spouse's income, which was used to pay the mortgage, is community property.  The claim for reimbursement would hold even if husband was the only wage earner during the marriage because his income is community property.  A plea that "I used 'my' income to pay the mortgage on 'my' house" would ring hollow.

How much is the reimbursement claim?  Let's say the mortgage payment is $1,000 per month, which includes principal, interest, taxes and insurance.  Simple math might suggest that wife's reimbursement claim should be $120,000 ($12K/year for 10 years).  Is that the right amount?  You might think so, but the answer is, "no." 

Texas Family Code Section 3.402 defines reimbursement claims.  For our example (one spouse's separate property home, which is a secured debt), the Code limits the claim to the reduction in principal on the secured debt.  For simplicity, let's say that a comparison of the mortgage statement immediately prior to marriage with the statement immediately prior to divorce revealed that the mortgage principal had been reduced by $60,000.  Thus, the community estate that the court will divide in divorce should be increased in value by $60,000.

Reimbursement is not a "right."  Reimbursements are equitable claims that the court may, but is not required, to consider and grant based upon all the factors at play in specific case before the court.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


Tuesday, September 30, 2014

Income Security After Divorce: Collecting Social Security On Your Ex's Earnings Record

Sometimes a survivor's annuity, such as the Survivor Benefit Plan (SBP) or Former Spouse Survivor Annuity (FSSA), isn't available in military or Federal civil service divorce because a the benefit was awarded in its entirety in an earlier divorce.  All hope for income security might not be lost for the newly divorced spouse.  As a divorced spouse, you can collect Social Security on your ex-spouse's earnings record if:

  • Your marriage lasted at least 10 years;
  • You have not not remarried;
  • You are at least 62 years of age;
  • Your Social Security entitlement based on your own earnings record is less than the entitlement based on your ex-spouse's record; and,
  • Your ex-spouse is eligible to receive Social Security retirement or disability benefits--and, if your ex-spouse is eligible for but not yet receiving benefits, then you have been divorced at least 2 years.

Once qualified and receiving benefits, your payments will continue even after your ex-spouse dies.  Visit the Social Security Administration's website for more information as other conditions and restrictions sometimes apply.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  Jim retired from the U.S. Air Force in the grade of colonel after 29 1/2 years active duty service.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


Saturday, September 20, 2014

Locating A Missing Life Insurance Policy

Sometimes the person tasked with handling the estate's affairs after the death of a loved one isn't quite sure whether all of the decedent's life insurance policies have been identified.  Substantial amounts of money could be lost by one or more beneficiaries if a claim is never filed against a valid policy.  The Texas Department of Insurance (TDI) offers a service that might help via its "insurance policy locator."

A requester simply has to submit a Consumer Request Form to TDI.  Then, TDI shares the information about the decedent with participating life insurance companies.  A company will contact the requester with policy information if it determines it holds a valid policy on the decedent's life.  According to TDI, most policies are located within 90 days of a request.  If no response is received within 90 days, it generally means that no policy existed or the requester is ineligible to receive the information.

 Click here to view the list of participating companies on TDI's website.  Click here to obtain a copy of the Consumer Request Form from TDI's website.  Click here to read tips from TDI for tracing missing or old life insurance policies.

To avoid this type of dilemma, it's prudent to keep a list of life insurance policies in the same place that the person stores their estate plan, whether it be a Will or Trust document (e.g. in a safe deposit box, for example).

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


Wednesday, September 10, 2014

Claims During Probate: Medicaid Estate Recovery Program (MERP)

During probate, the executor or heirs often must certify whether the Medicaid Estate Recovery Program (MERP) has a claim against the decedent's estate.  MERP stems from Federal law.  MERP requires States to submit claims against the estate of dededents who received "covered long-term care" for persons age 55 or older paid for by Medicaid.  A few examples of covered long-term care include the following:

  1. Nursing facility services;
  2. Community Living Assistance and support services;
  3. Home and Community-based services; or,
  4. Hospital and prescription drug services received while on the above programs.

Exceptions exist where a MERP claim will not be filed against the estate.  Two examples of exceptions follow:

  1. There is a surviving spouse; or,
  2. There is a surviving child or children under age 21.

In Texas, MERP is administered by the Department of Aging and Disability Services (DADS).  DADS publishes a form that can be sent to its MERP contractor to obtain certification of whether or not a claim exists.  Even if the family is "certain" that no covered long-term care was paid for by Medicaid, obtaining certification is a prudent step during probate.  Click here to get a copy of the MERP certification form from DADS' website.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a
spectrum of family-related legal services in the greater San Antonio Region.


Saturday, August 30, 2014

Assisted Reproduction - Part 3: Death

This is the last in a three-part series that describes legal issues in assisted reproduction.  In this blog, we'll explore the parental status of a "deceased spouse."

If a spouse dies prior to the eggs, sperm or embryos being placed, then the deceased spouse is not a parent of the resulting child unless two conditions are met.  First, the deceased spouse must have given written consent to becoming the parent of a child that might be born by assisted reproduction after his or her death.  Second, a record of the deceased spouse's written consent must be on file with the licensed physician providing assisted reproduction services.

Why is this distinction important to someone once they're deceased?  It is important because--if the deceased spouse is the parent--the child born after their death is a "pretermitted child."  We'll delve into the nuances of exactly what it means to be a "pretermitted child" in a later blog.  For now, know that it can impact the inheritance of the surviving spouse and children under the deceased spouse's Will (or the laws of intestacy if there was no Will).  A qualified family law, probate and estate planning attorney can explain options for safeguarding the now-deceased spouse's plan for distribution of their property during lifetime estate planning.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


Wednesday, August 20, 2014

Assisted Reproduction - Part 2: Divorce

This is the second in a three-part series that describes legal issues in assisted reproduction.  In this blog, we'll explore the issue of "divorce."

First, if the parties have a contractual agreement that states in the event of later divorce what will happen to the eggs, sperm or embryos stored for purposes of assisted reproduction, then a Texas court will enforce that agreement.  If no agreement exists, then the eggs, sperm or embryos are community property that a Texas court can award to one spouse or divide between the spouses in divorce.  So, if no agreement exists and the court awards your ex-spouse the eggs, sperm or embryos, do you have to worry about your ex-spouse making you a "legal parent" (to include an obligation for 18 years of child support) against your will?  No.

The law states that if divorce occurs prior to placement of the eggs, sperm or embryos, then the former spouse is not the parent of the child unless two conditions are met.  First, the former spouse must have consented in writing to becoming the father or mother based on assisted reproduction that might occur after divorce.  Second, record of that consent must have been kept by the licensed physician who provided the assisted reproduction services.  The story doesn't end there.  Even if the former spouse had given consent in a written record, his or her consent can be withdrawn any time prior to placement of the eggs, sperm or embryos.

In sum, the key take-away is that neither your ex-spouse nor a Texas court can force you into becoming a "legal parent" of a child born of assisted reproduction that you never agreed to have.

In part three of this series, we'll look what happens if a spouse dies before placement of the eggs, sperm or embryos in storage.  Stay tuned.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


Sunday, August 10, 2014

Assisted Reproduction - Part 1: Consent

This blog post is the first in a three-part series that describes legal issues in assisted reproduction.  In this blog, we'll explore the issue of "consent."

The law states that if a husband either provides sperm or consents to assisted reproduction by his wife, then he consents to being the father of that child.  That statement comes as no surprise.  What might surprise some to know is that the husband's (and wife's) consent, however, must be in a signed record kept by the licensed physician who provides the assisted reproduction services.  So, maintaining documentation of consent is critical.  Mostly.

Without a record of consent, the husband can still be found to be the father of the child if the husband and wife openly treated the child as their own.  If the husband did not treat the child as his own, then he can bring an action to challenge paternity any time prior to the child's fourth birthday.  Then, a court must find that the husband did not consent either before or after the child's birth.  The husband can bring an action after the child's fourth birthday only if three elements are present as follows: (1) he didn't provide the sperm for or consent to the assisted reproduction; (2) he and his wife didn't live together since the probable time of assisted reproduction; and (3) he never openly treated the child as his own.

In part two of this series, we'll look what happens if divorce occurs before eggs, sperm or embryos in storage are placed into the wife.  Stay tuned.   

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm.  The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


Wednesday, July 30, 2014

Alternatives for Formal Probate - Part 3: Family Settlement Agreement

This is the third blog in a three-part series that describes alternatives available in Texas when a full, formal probate either isn't possible or necessary.  Today, we'll discuss the "Family Settlement Agreement."

The Family Settlement Agreement is an agreement among all persons entitled to a portion of the decedent's estate (i.e. the "distributees") about how the estate will be divided.  A Family Settlement Agreement is available for use whether or not the decedent died intestate (i.e. without a Will) or having left a Will. 

An often-asked question is how can persons forge an agreement that is contrary to the decedent's intention as expressed in the Will?  A contrary outcome is made possible by two tenets of law.  First, it is the policy of the State of Texas to encourage resolution of disputes through means that avoid litigation.  Second, and when a Will exists, the Estates Code Section 101.001 provides that the decedent's estate vests immediately in the Will's distributees-- subject to payment of valid debts.  It is this immediate vesting of title that provides the authority for the distributees to craft their own agreement that might alter the Will (and avoid litigation).

This blog post will not attempt a full description of the process for creating a Family Settlement Agreement.  The reality is that the process can change based on the players and interests involved.  For our purposes, it will be sufficient to note that anyone having a property interest in the estate is a necessary party to the Family Settlement Agreement.  It's also important to note two entities that have no standing to object to a Family Settlement Agreement: (1) a Will's Executor, since he or she has no property interest in the estate; and, (2) the decedent's Creditors, as long as payment of their claims is unaffected by the agreement.  Beyond those quick notes, a qualified probate attorney can advise on the potential benefits and pitfalls of the Family Settlement Agreement alternative.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm. The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.

 


Sunday, July 20, 2014

Formal Probate Alternatives - Part 2: Small Estate Affidavit

This is the second blog in a three-part series that describes alternatives available in Texas when a full, formal probate either isn't possible or necessary.  Today, we'll discuss the "Small Estate Affidavit."

The Small Estate Affidavit may used by the heirs of the decedent's estate who are entitled to a share of the decedent's property (i.e. the "distributees") under Texas laws of intestacy.  The laws of intestacy prescribe the order in which descendants (e.g. children and grandchildren), ancestors (e.g. parents and grandparents) and/or other relatives (e.g. brothers, sisters, nieces and nephews, and cousins) share in distribution of the decedent's property when there was no valid Will.

When approved, the Small Estate Affidavit permits distribution of the property directly to the heirs without need for appointment of a Personal Representative to administer the estate. Other requirements that must be met before a Small Estate Affidavit can be used include:

  1. At least 30 days have elapsed since the decedent's death;
  2. No petition for appointment of a Personal Representative is pending or has been granted; and,
  3. The value of the estate's assets, excluding the decedent's homestead and exempt property, does not exceed $50,000.

The Small Estate Affidavit filed with the court must contain sworn statements by two disinterested witnesses and all distributees (i.e. persons who will take property) that list:

  1. All estate property and debts;
  2. The names and address of each distributee; and,
  3. Relevant marital and family history that proves each distributee's right to received property.

Once approved and signed by the court, the distributees must provide a copy of the Small Estate Affidavit to each person who owes money to the estate (i.e. borrowers) or has custody of property off the estate (i.e. banks holding the decedent's money).  Prior to distributing the decedent's property, the distributes must also ensure the decedent's valid debts get paid by liquidating assets other than an exempt homestead and any exempt personal property.

When title to the homestead will transfer, the Small Estate Affidavit can be recorded in the deed records of the county in which the decedent's homestead is located. Then, any bona fide purchaser of the homestead is entitled to rely upon the Small Estate Affidavit to take ownership free and clear from future claims of any potential undisclosed heirs.  A bona fide purchaser of the homestead, however, remains liable to any lawful creditors who were not paid by the distributees prior to distribution of the decedent's property.

Altogether, there a several advantages and potential pitfalls to using a Small Estate Affidavit.  A qualified probate attorney can advise whether use of a Small Estate Affidavit, rather than some other alternative to a full, formal probate, fits your circumstances.

Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm. The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.


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