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Dividing a Family Business and the Community Estate in Texas

roofIn the Matter of Marriage of Belcastro and Belcastro considered issues raised by an ex-husband related to the division of the community estate and debt. The case arose from a couple that had married in 2004. The wife was an Army major, assigned to bases in Texas, Iraq, and Germany. She’d been hurt while serving and had a disability rating of 90%. In 2007, she’d set up an LLC that repaired and installed roofs and renovated properties. Her husband had been in construction and roofing for his entire adult life, and he was general manager for the company.

He gave the company tools and equipment he owned before marriage. The company owned real estate and used different names. The wife wanted to increase the odds that the company would qualify for military contracts. She asked her husband to give up his marital rights in the business so that they could claim a disabled female veteran wholly owned the company.

The husband agreed and relinquished his communal marital property rights in connection with the business. The wife retired in 2012, and she moved home with her husband. The next year, she filed for divorce. They tried to reconcile but ultimately separated by the spring of 2014.

The husband took all the files related to the company and took over its websites. He set up his own roofing company and used tools from the wife’s business to operate it. During the divorce proceedings, the trial court ordered the husband to pay some of the wife’s business’ overhead expenses. It also entered a decree dividing the marital estate between the couple, characterizing the wife’s business as community property, and awarding her the business. The husband’s roofing company was awarded to him.

The husband appealed. He took issue with the division of community property, arguing that the wife had been awarded a disproportionate share of it. Specifically, he claimed his wife got property worth $373,871.50, while he only got community property worth $108,256.59. The appellate court explained that under Texas Family Code section 7.001, the lower court needed to divide the community property in a just and fair way with due respect for each party’s rights and their children’s rights. The lower court was permitted to consider what the property was, the earning capacity of each spouse, the relative financial condition of each spouse, the size of each spouse’s separate estate, any fault in the breakup of the marriage, and the probable need of each spouse for future support.

The appellate court pointed out that neither party introduced evidence about the value of their businesses, and therefore he couldn’t prove he’d been awarded a disproportionately small share. The husband also argued he should have been credited for $8,000 in payments made to his wife against debts charged to him in the temporary orders. However, he submitted checks written prior to the temporary orders being signed. The appellate court ruled against him on this issue as well.

The husband also argued that the trial court failed to award him a credit for work he did for his wife’s company. The evidence showed his salary was a little over $12,000 in 2007. His wife had told him to write himself payroll checks, but instead of doing so, he’d withdrawn cash from the business bank accounts for food, cigarettes, and casino trips. Since he couldn’t show how much he’d withdrawn from the business, he couldn’t show he’d gotten $12,126 per year from the wife’s business. The court overruled his third issue. For these and other reasons, the appellate court affirmed the lower court’s order.

If your divorce involves matters related to property division, contact the Texas attorneys at the McClure Law Group at 214.692.8200.

More Blog Posts:

Johnny Depp, Amber Heard, and a Discussion on Family Violence Protective Orders and Temporary Restraining Orders in Texas, June 9, 2016

Divorce and Taxes – What to do if your ex-spouse botched your joint tax return, May 31, 2016

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