Verbal Contracts and Texas Law

January 26th, 2015

Verbal Contracts do exist and are legally enforceable in Texas,  as a matter of law,  if they meet necessary legal requirements and specificity. Adequate consideration must be given between the two parties of a verbal contract to make it binding. Adequate consideration is defined in two ways: (1) having a mutual reciprocal exchange [bargained for exchange] or (2) having legal value [an individual must do something that he is not legally obligated to do]. If adequate consideration is given between both parties and all other legal requirements are met, then a verbal contract may be held valid in a court of law.

Verbal contracts are also limited by the Statute of Frauds. The Statute of Frauds requires certain types of contracts to only be in writing purportedly to avoid defrauding citizens. The following must be in writing:

(1)  Making a will or Trust

(2)  A contract to answer for the duty of another (Guarantee/Suretyship)

(3)  Marriage (exception common law marriage)

(4)  Sale and contracts affecting Land

(5)  A contract that lasts longer than 1 year from the time it is made and which cannot be performed in one year

(6)  Any sale of goods for a price of $500 or more

(7)  Sales of securities

Verbal contracts in Texas have limitations. Let’s say that a contractor wanted to paint the outside of your house. You decide to pay the contractor seven thousand to paint the outside of the house and the job will take approximately 3-8 weeks. If you have a verbal contract with the painter and pay him this could be legally enforceable in a court of law. The verbal contract with the painter is not invalidated by any provision set above in the Statute of fraud. It is a contract for service, under one year, and adequate consideration has been given with the payment of seven thousand dollars.

Here is another example of a verbal contract that will not be upheld in a court of law. An individual buys fifty acres from his neighbor for fifty thousand dollars under a verbal contract. Before the fifty thousand dollars is exchanged, the neighbor decides to pull out of the deal. This verbal contract would not be enforceable in court and the buyer cannot enforce the contract because it deals with real estate (land).  This is one of the specific types of contracts that must be in writing because of the Statute of Frauds. The individual may get his money back but the point is he cannot enforce the contract since it is not in writing.

The best course of action in the litigious world we live in is to cover your tracks by securing a written contract in almost all circumstances. Do not rely on the limited options that allow a verbal contract to be enforced because in court you will have to deal with the “He said, she said” testimony and incur significant cost of litigation unnecessarily.

Tis the Season for Filing for a Texas Divorce

January 7th, 2015

Welcome to January, the Divorce Month of the New Year! After a bad holiday season, many people have made the decision to file for divorce. The most popular months for filing divorce in the United States occur in January through March.

Going through a Divorce is painful no matter what the circumstances. When you decide to start the Texas Divorce Process, make sure you are financially prepared. Financial planning helps you in making sound decisions and start to prepare for your post-divorce life.

Below is a list of items you need to gather before counseling with an attorney. Financial Documents are a must to show what your true assets and liabilities are in the marriage.

Financial Documents needed when preparing for a Texas divorce:

  1. Tax Returns (at least three years) or Tax Liens and all IRS related documents
  2. Wills and Trusts with all attachments reflecting corpus and trust holdings
  3. Listing of all liabilities (including mortgages, credit card debt, personal loans, automobile loans, etc.):
    -Name of entity, address and telephone number
    -Account number
    -Amount owed
    -Monthly payment
    -Property securing payment (if any)
    -Most current statements and account status of lenders
  4. A Listing of all Real Property, address and location, including (includes time-shares and vacation properties):
    -Deeds of Trust
    -Notes including equity loans and second liens
    -Legal Descriptions
    -Mortgage Companies and Loan Servicers (Name, Address, Telephone Number, Account Number, Balance of Note, Monthly Payments)
    -Current fair market value
    -Appraisals
  5. Motor Vehicles (including mobile homes, boats, trailers, motorcycles, recreational vehicles; exclude company owned):
    -Year
    -Make
    -Model
    -Value
    -Name on title
    -VIN Number
    -Fair Market Value
    -Name of creditor (if any), address and telephone
    -Persons listed on debt
    -Account number
    -Balance of any loan and monthly payment
    -Net Equity in vehicle
  6. Cash and accounts with financial institutions (checking, savings, commercial bank accounts, credit union funds, IRA’s, CD’s, 401K’s, pension plans and any other form of retirement accounts):
    -Name of institution, address and telephone number
    -Amount in institution on date of marriage
    -Amount in institution currently
    -Account Number
    -Names on Account
    -Company loans and documents related to benefits
  7. A listing of separate property (property owned prior to marriage, family heirlooms, property gifted, inherited property):
    -Records that trace your separate property. These assets will remain yours if properly documented
  8. Retirement Benefits:
    -Exact name of plan
    -Address of plan administrator
    -Employer
    -Employee
    -Starting date of contributions
    -Amount currently in account
    -Balance of any loan against plan
    -Documents
  9. Publicly traded stock, bonds and other securities (include securities not in a brokerage, mutual fund, or retirement account):
    -Number of shares
    -Type of securities
    -Certificate numbers
    -In possession of
    -Name of exchange which listed
    -Pledged as collateral?
    -Date acquired
    -Tax basis
    -Current market value
    -If stock (date option granted, number of shares and value per share)
    -Stock options plans and related documents
  10. Insurance and Annuities Policies and Inventory:
    -Name of insurance company
    -Policy Number
    -Insured
    -Type of insurance (whole/term/universal)
    -Amount of monthly premiums
    -Date of Issue
    -Face amount
    -Cash surrender value
    -Current surrender value
    -Designated beneficiary
    -Other policies and amendments
  11. Closely held business interests:
    -Name of business
    -Address
    -Type of business
    -% of ownership
    -Number of shares owned if applicable
    -Value of shares
    -Balance of accounts receivables
    -Cash flow reports
    -Balance of liabilities
    -List of company assets
    -Possible hobbies or side businesses that generate income
  12. Mineral Interests (include any property in which you own the mineral estate, separate and apart from the surface estate, such as oil and gas leases; also include royalty interests, work interests, and producing and non-producing oil and gas wells:
    -Name of mineral interest
    -Type of interest
    -County of location
    -Legal description
    -Name of producer/operator
    -Current market value
    -needs leases or production documents related to the asset
  13. Money owed by spouse (including any expected federal or state income tax refund but not including receivables connected with any business)
  14. Household furniture, furnishings and Fixtures
    -photos
    -purchase documents
  15. Electronics and computers including software and hard drive
  16. Antiques, artwork and collectibles (including works of art, paintings, tapestry, rugs, crystal, coin or stamp collections) Other large collections need to be appraised! (Guns, quilts, action figures, books)
  17. Miscellaneous sporting goods and firearms
  18. Jewelry including appraisals
  19. Animals and livestock
  20. Farming equipment
  21. Club Memberships
  22. Safe deposit box items
  23. Burial plots including documents of ownership
  24. Items in any storage facility
  25. Travel Awards Benefits (including frequent flyer miles)

Texas Child Support Guidelines Update

January 4th, 2015

On September 1, 2013: Important Texas Child Support Guideline Changed!

The Texas Child Support Division of the Attorney General increased the “CAP” on net resources for purposed Child Support from the past amount of  $7500 to be $8550, which became effective Sept. 1, 2013.

This “Cap Increase” affects any child support case filed or pending after September 1, 2013.

Under the Texas Family Code §154.125 the guidelines for Child Support are as follows:

(a) The guidelines for the support of a child in this section are specifically designed to apply to situations in which the obligor’s monthly net resources are not greater than $8,500 or the adjusted amount determined under Subsection (a-1), whichever is greater.

(a-1) The dollar amount prescribed by Subsection (a) above is adjusted every six years as necessary to reflect inflation. The Title IV-D agency shall compute the adjusted amount, to take effect beginning September 1 of the year of the adjustment, based on the percentage change in the consumer price index during the 72-month period preceding March 1 of the year of the adjustment, as rounded to the nearest $50 increment. The Title IV-D agency shall publish the adjusted amount in the Texas Register before September 1 of the year in which the adjustment takes effect. For purposes of this subsection, “consumer price index” has the meaning assigned by Section 341.201, Finance Code.

(a-2) The initial adjustment required by Subsection (a-1) shall take effect September 1, 2013. This subsection expires September 1, 2014.

(b) if the obligor’s monthly net resources are not greater than the amount provided by Subsection (a), the court shall presumptively apply the following schedule in rendering the child support order:

CHILD SUPPORT GUIDELINES
BASED ON THE MONTHLY NET RESOURCES OF THE OBLIGOR

  • 1 child 20% of Obligor’s Net Resources
  • 2 children 25% of Obligor’s Net Resources
  • 3 children 30% of Obligor’s Net Resources
  • 4 children 35% of Obligor’s Net Resources
  • 5 children 40% of Obligor’s Net Resources
  • 6+ children Not less than the amount for 5 children

Depending on the number of other children an obligor has a duty to support, the percentage of child support may be lower. For example, if the obligor was previously married and has 1 child to support in the previous marriage, the amount of support paid for one child before the court decreases to 17.50 percent. See the chart below.

Net resources are determined by deducting the following from the obligor’s income:
1. Social Security Taxes;
2. Federal Income Tax based on the tax rate for a single person claiming one personal exemption and the standard deductions;
3. State Income Tax;
4. Union Dues (if such deductions are being withheld); and
5. Expenses for Health Insurance Coverage for Obligor’s Child(ren) (if such deductions are being withheld).

See Texas Child Support Infographic , provided by Dallas Texas Attorney Mark Nacol, of the Nacol Law Firm PC

Nacol Law Firm - Mark Nacol - Attorney Dallas Texas Child Support Infographic

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