5 Things You May Find Surprising About Cohabitation Agreements

Millennials are waiting longer than their parents did to get married and baby boomers are taking a second (or third or fourth) chance at love. Whether you’re putting marriage off or you simply don’t want to get married, getting a cohabitation agreement can be a smart financial move. Along with establishing how finances will be handled during the relationship, cohabitation agreements are especially beneficial when one or both of the parties enters the relationship with sizable assets. In Texas, these contractual agreements can be used to: No. 1: Disprove common law marriage. In Texas, a couple that cohabitates faces the risk that their relationship will constitute common law marriage, unless they mutually sign a written agreement stating that they are not married. According to Texas law, the following three requirements must be met in order to constitute common law marriage: There is an agreement between the two parties that they are married; The couple lives together as husband and wife; and The couple has presented themselves to other people as husband and wife. Since Texas is a community property state, any property, earnings and debt acquired during the relationship may be subject to division by a court of competent jurisdiction if the court decides a common law marriage exists. By mutually signing a cohabitation agreement, you can avoid the entanglements of common law marriage. No. 2: Clarify financial obligations during the relationship. While this is one of the key reasons to get a cohabitation agreement, there are many financial concerns people don’t think about before moving in together. First, it’s important to spell out who will cover what expenses and for how long, such as: Household expenses (rent/mortgage, association dues, utilities, repairs, etc.) Car payments and repairs Insurance (home, auto and health) Pet food, care and vet bills Club memberships and dues In relationships where a monied party will cover the majority of the expenses, the cohabitation agreement can also include provisions for the non-monied spouse, including: A “signing bonus” at the outset of the agreement Monthly spending budget for miscellaneous expenses Shopping budget Guaranteed date nights Requirements pertaining to wills, trusts, life insurance, etc. No. 3: Define who gets custody of the pets. Though you may consider your fur baby to be a member of your family, the state of Texas views pets as property. However, judges will consider legal agreements that explicitly spell out who will take custody of – or own – the pet should the relationship dissolve. If you want to ensure you maintain custody of your pets, be sure to include those wishes in your cohabitation agreement. No. 4: Set the rules for disengagement should the relationship end. Cohabitation agreements can help eliminate confusion and minimize stress related to a messy breakup, because both parties will know where they stand financially and otherwise. The rules for disengagement may include: How assets or property acquired during the relationship will be split. Who will be responsible for debts, such as credit cards and other monies owed. How joint financial accounts will be handled, closed, money distributed, etc. Who will have to move out of any shared residence and when. What financial support (if any) the monied party will provide to the non-monied party, as well as under what circumstances the support would be paid (i.e., if the monied party instigates the breakup). No. 5: Provide peace of mind. There are a number of ways a cohabitation agreement can provide peace of mind to the parties involved. For example, if you are the non-monied party, your cohab could establish what money and/or assets you will receive in...

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Royal Wedding: Should Prince Harry and Meghan Markle Get a Prenup?

By Christine Powers Leatherberry Britain’s Prince Harry and actress-philanthropist Meghan Markle are scheduled to wed May 19, 2018. Prince Harry’s net worth is estimated at $40 million, while Markle’s net worth is speculated to be around $5 million. MarketWatch also reports that she will not return to her role in the popular TV series “Suits,” and she shut down her lifestyle website “The Tig” last spring. By all accounts, Markle is all in when it comes to joining the Royal Family. She even deleted all of her social media accounts recently. However, the question remains, will the couple sign a premarital agreement before they walk down the aisle? Neither his father, Prince Charles, nor his brother, Prince William, signed prenups prior to getting married. Quitting your job for marriage or have considerable wealth in your family? Consider a prenup Premarital agreements can provide a number of benefits for both monied and non-monied parties. They can allow wealthy individuals to protect their assets, provide peace of mind for the lesser-monied party and potentially help couples avoid a litigious divorce. Since Markle has given up her career and income received through acting and endorsements, a prenup could provide financial resources to ease her back into life as a commoner should the couple split. For Prince Harry, a premarital agreement could protect his assets and those he is likely to inherit from his family – grandparents, Queen Elizabeth II and Prince Philip, and father, Prince Charles. Five things Prince Harry and Meghan Markle should consider including in their premarital agreement While laws pertaining to marriage, divorce and premarital agreements differ in the United Kingdom, many of the laws overseas are similar to those in the United States. Following are five things typically recommended for wealthy couples wanting a premarital agreement based on laws in Texas: No. 1: Keep individual property separate. Frequently referred to as a “roommate” prenup, this type of premarital agreement follows a “what’s mine is mine, and what’s yours is yours” philosophy. Many wealthy individuals want to ensure NO community property is created during the marriage. Instead, Prince Harry could agree to cover monthly living expenses and give Markle an allowance and other concessions, while requiring that she give up any community property rights. No. 2: Include a signing bonus. Some people view premarital agreements as a sign of distrust and may be reluctant to sign. To encourage the lesser-monied party to agree to a prenup, the wealthy party may offer a set dollar amount – or “signing bonus” – to be paid to the other party upon the signing of the agreement. No. 3: Address other financial considerations. Spelling out how much money the non-monied spouse will have at his or her disposal following the wedding is a good way to set expectations. Agreeing on specific budgets and clarifying potential payouts to be offered in the event of a divorce may also help couples avoid friction over money later on. Typical line items include: During the marriage: Monthly spending budget for miscellaneous expenses Shopping/clothing allowance Car/travel/entertainment allowance Upon divorce or death: Alimony or “exit bonus” based on duration of marriage should the couple divorce (may include cash, residence, jewels and other assets) Provisions for treatment of any retirement plans or employee benefits (in Prince Harry’s case, this may include benefits pertaining to his military service) Homestead rights – who will live in the couple’s home (or homes) after death, if the residence was separate property No. 4: Establish guidelines for disbursement of wills and trusts. Since Prince Harry is a member of a long-established family dynasty – the...

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Like, Share, Delete? How to Safely Navigate Social Media During Divorce

For better or worse, social media evidence plays a role in the majority of the cases our divorce lawyers handle every day. If you’re planning to divorce, it’s essential to understand how social media could affect the outcome of your divorce and follow best practices for managing social accounts. Deleting social media accounts and posts is a big no-no One of the first pieces of advice we give clients is DO NOT delete any of their social media accounts, posts, messages, conversations or comments. It’s true, anything you say and do on social media could be held against you. However, deleting accounts or posts that don’t represent you in a positive light is not a good idea, because a judge could find that you destroyed evidence, which is illegal. Just because you delete something, doesn’t mean the opposing party or his or her counsel didn’t find that evidence earlier and preserve a screen grab. Claiming that such evidence doesn’t exist, then having it revealed by your spouse’s attorney could harm your case. Judges don’t look favorably upon people who lie. Live your life like you’re being watched … Because the world IS watching. During a divorce, it’s best to assume that everything you post, message, share and like on social media will be scrutinized by your spouse’s attorney and your judge. While it’s typically best to avoid engaging with social media during a divorce, if you must post, post with care. Only share photos, videos or comments that are positive, such as a family outing or your child performing in a school play. At the same time, don’t think that you can just fake “nice” on social media either. Remember, smartphones are everywhere and someone could capture your bad behavior at anytime – even as you walk away from your child’s baseball game, five minutes after you posted that you were there. Learn how to prevent the cloud from scuttling your divorce in this helpful post. Don’t underestimate the power of social media as evidence Judges in the family courts take social media evidence very seriously and some are even intrigued by it. Video evidence can be especially compelling, because, depending on the content, it is typically more difficult to dispute than a photograph. Social media evidence can make or break your case; so don’t take it lightly. Talk with children about their social media habits While you may not want to stop your kids from using Snapchat, Instagram or Facebook completely, do have a conversation with them regarding what they should and shouldn’t post, like, message and share. It’s also helpful to explain to children that what they post may have consequences. Learn more about the pitfalls of technology during divorce and child custody disputes in this past post. For safety purposes, disable GPS or location access in social media apps Many social media apps allow you to tag your location or even assign a location to your post automatically. If you’re afraid your spouse could harm you or your children, it’s vital to take precautions to keep your location private. Check the settings for all social media apps on all of your digital devices – phones, tablets, laptops – and turn off each app’s access to your location. If you don’t know how, visit the store or service provider where you purchased the device and ask for help. Turn to your divorce attorney for additional guidance Social media apps and capabilities change practically every day, which means how social media factors into divorce cases continues to evolve. Since reputable divorce lawyers monitor social media’s influence on divorce...

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Parting Ways? Get in Gear with Our 10-Step Divorce Checklist

If you have decided to file for divorce or your spouse has already filed, taking time to organize your thoughts and plan next steps is essential. As with any big challenge, a checklist can set the wheels in motion and keep you on track. To help prepare, the Connatser Family Law team has created a handy divorce checklist to guide you. 10-Step Divorce Checklist Step 1: Organize financial records and pull credit reports. It’s important to analyze what assets and debts are at stake during a divorce. Key financial records to track down include: Bank accounts. 401ks, IRAs (individual retirement accounts), pensions and other retirement accounts. Investment accounts. Trust accounts. Stock portfolios. Wills Safe deposit boxes. Insurance policies (auto, home, health, life, etc.). W2s and other tax documents. Logins and passwords for financial accounts. It can also be helpful for both spouses to pull their credit reports to make sure all outstanding debts (credit cards, medical bills, auto loans, etc.) are taken into account. Step 2: Hire a divorce attorney. This step may sound obvious, but it’s one that shouldn’t be taken lightly. Your divorce lawyer is the key person who will help formulate a divorce strategy to align with your goals. Interviewing multiple attorneys prior to hiring one can help ensure attorney and client are on the same page. Check out Aubrey’s recent post, Wealthy and Getting Divorced? 6 Essential Tips for Hiring a Divorce Attorney, for additional insight. Step 3: Set the tone early on. If your goal is to have an amicable divorce, then you should communicate that intention from the get-go. When possible, it’s typically best to personally ask your spouse for a divorce as opposed to serving him or her with papers first. During the conversation, explain that you want to settle the divorce amicably, avoid high legal fees and treat each other fairly. Hearing these sentiments can help put your spouse’s mind at ease and get the process off to an amicable start. If you fear for your and/or your children’s safety, take precautions. Abby provides advice in this recent post: How to Leave an Abusive Relationship and Protect Your Kids. Step 4: Decide how and when to tell the children. Do so with the other parent if possible. Divorce can be especially hard on children. In fact, some kids even believe they are at fault for their parents’ divorce. Psychotherapist Linda Solomon, LPC, LCDC, LMFT shares invaluable advice here: Break the News with Care: How to Tell Kids You’re Getting Divorced. Step 5: Sort out living arrangements and budgetary details. Obviously, you need to figure out where each spouse (and children if you have them) will live. Who stays in the family home and for how long? Will you take turns or will someone move to an apartment or live with their parents? It typically proves beneficial to establish a budget, including living expenses and any other financial obligations, during the early stages of a divorce. Christine explains how living arrangements and other issues related to divorce are handled in her post: Calling It Quits? The Top 12 Things You Need to Know About Divorce in Texas. Step 6: Change passwords and create a new email account. While you can’t delete email, text, phone or social media accounts – such spoliation of evidence is illegal – you can change passwords on accounts that belong exclusively to you. This step is critical because it can deter your spouse from accessing those accounts and your private information – especially correspondence related to the divorce with your lawyer or other trusted professionals. Step 7: Untangle...

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It’s No Secret – January Is Divorce Month – Here’s Why

By Christine Powers Leatherberry Every year divorce attorneys brace for it. Come January, we know our phones will be ringing off the hook. At Connatser Family Law, our paralegals typically field the most calls on January 2nd and throughout the first week in January. Some law firms say their phones are busiest the first day kids go back to school or the first weekday following winter break. The label “Divorce Month” is a bit of a misnomer. For most divorce lawyers, the influx of calls continues into February and March, with actual divorce filings peaking in March, according to researchers from the University of Washington. So why do so many people reach out to divorce lawyers in January? Or February … or March? It depends. In fact, there are several reasons people “make the call” shortly after a new year commences. They want to wait out the craziness of the holidays. Filing for divorce during the holidays can be problematic because holidays are inherently hectic and loaded with competing demands. For many people considering divorce, it’s just easier – and less stressful – to wait. They feel filing for divorce during the holidays, as on other special dates, would be insensitive. Some people don’t want to put a damper on the holidays for their spouse or other loved ones, preferring to make the break after the dust of the holidays settles. This is the same reason people avoid filing on anniversaries, birthdays and other special occasions – they don’t want to tie a sad memory to a special date. They want to wait until after the holidays for the sake of the children. Some parents want to give their children one last, magical, happy Christmas or Hanukkah as an intact family. Holidays are made of memories and many parents don’t want their children to associate what should be a joyous time with their parents’ divorce. Learn how to sensitively break the news to kids that you’re getting divorced in this past post. They find that the holidays magnify existing marital problems. To some, the holiday season can amplify feelings that a spouse isn’t supportive or doesn’t treat them special or help with the kids enough. These heightened sentiments combined with a case of the post-holiday blues can be a tipping point for some spouses. They suspect their spouse has been unfaithful. It isn’t unusual during the holidays for individuals who are having an affair to buy gifts or flowers for a paramour. Discovering credit card charges that the unfaithful party can’t explain can raise suspicions and, ultimately, expose infidelity. Learn how cheating affects Texas divorces in this past post. Divorce is a life-changing decision; proceed with caution While the post-holiday months may be the most popular time to contact an attorney about divorce, that doesn’t mean it’s the best time for every couple – or you. There really is no good or perfect time to get divorced. It’s also important to recognize that divorce is a very personal, emotional and life-changing undertaking. If you’re unhappy in your marriage, consider speaking with a marriage counselor or member of the clergy first. All marriages go through ups and downs, and counseling may help you and your spouse work through challenges and keep your marriage and family intact. Should you find that your marriage is broken beyond repair, take time to find an experienced family law attorney who is equipped to represent you in a manner that aligns with your goals. No two lawyers or law firms are identical, so it’s a good idea to meet with at least two attorneys before...

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8 Key Considerations for Wealthy Couples During a Gray Divorce

By Douglas A. Harrison With four decades of experience practicing family law in Texas, Connatser Family Law attorney Doug Harrison has helped hundreds of affluent clients navigate the complexities of divorce involving sizeable estates, family business concerns, trusts, retirement accounts, insurance and more. We asked Doug to shed some light on the unique challenges older, wealthy couples face during a gray divorce. According to data analyzed by Pew Research, since 1990, the divorce rate has roughly doubled for adults ages 50 and above and tripled for those ages 65 and older. Clearly, gray divorce is on the rise, but why is this happening? Two big contributing factors are that the baby boomer population is getting older, and they are living longer. Boomers are retiring in droves and their kids have left the nest, which means boomer couples are suddenly spending a lot more time alone together. Consequently, some couples realize all of that togetherness isn’t as great as they hoped. The disdain for extended one-on-one time – by either party or both – is exacerbated when one of the partners transitions from eight to ten hours a day in the office to 24/7 at home. Following retirement, some couples also realize they have very different interests. Perhaps the wife is a real go-getter who loves to socialize and participate in cultural and civic endeavors, while the husband prefers to stay home and tinker around the house or play golf. In addition, many gray divorces we see today are second or third marriages, which have a significantly higher failure rate. While gray divorce can be complicated regardless of how much wealth is involved – learn about gray divorce and social security benefits here – affluent couples often face unique challenges, especially when divorcing later in life. No. 1: Tax issues. Most successful people in business try to take maximum advantage of the tax code. Consequently, couples getting divorced, when significant money, business concerns, and a long-term marriage are involved, have probably dealt with some tax issues along the way. It also isn’t unusual for a couple to think everything is fine from a tax perspective, and then receive a notification from the IRS that they are being audited for a return from a few years back. As a result, the parties may find out there are significant taxes owed that need to be dealt with during the divorce and beyond. Caution is encouraged with respect to these types of issues. No. 2: Estate plan changes. Many affluent couples establish elaborate estate plans, trust agreements, and family limited partnerships to ensure family members are provided for over the long term and taxes are minimized. When a couple contemplates a gray divorce, confusion and disagreements can arise pertaining to how these components will serve family members post-divorce. For example, when the couple created their estate plan, their goals were likely based on providing for the parties as a couple – not as individuals. Concurrently, wealthy couples often set up and contribute assets to family limited partnerships, under which both spouses, and possibly their children, own a percentage interest in that partnership. This ownership structure can result in a lower valuation of an individual’s interest in the partnership for estate tax purposes because of lack of control of the entity. This same issue would likely arise in a valuation for divorce purposes as well. Should the couple decide to divorce, the parties often have different interests and goals. Essentially, they are now paddling the boat in different directions, as self-preservation kicks in! How the family limited partnership is valued and dispersed requires careful...

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