Breaking Up a For Profit Corporation
A For Profit Corporation can be a useful tool if utilized appropriately. One major problem with a For Profit Corporation is the lack of flexibility to dissolve the Corporation when a disagreement arises between the equity shareholders. If ownership in a For Profit Corporation consists of 50% – 50% split in equity then there may be issues down the road.
Many future circumstances may warrant a dissolution of the For Profit Corporation, such as a dispute on the direction of the business, the profitability of the business, or simply a disagreement regarding employment and management duties. When these disputes arise, it may make the For Profit Corporation untenable and impractical. This can be a problem if one owner of the company wishes to continue business as usual and the other owner wishes to dissolve the corporation.
When making the decision to enter into a For Profit Corporation and splitting equity within the Corporation at a 50/50 ratio please keep in mind a couple of things:
- It will be hard to dissolve the Corporation with a 50/50 split in equity;
- It will cost additional expenses to appoint a receiver to manage the company;
- It will cost additional expenses to retain a lawyer for the purpose of forcibly winding down a For Profit Corporation;
- It will be an uphill battle to dissolve a For Profit Corporation that creates jobs in the community because the policy of Texas Courts’ is to find any alternatives to a dissolution that may bring termination to many employees.
- It will be a complex and time consuming undertaking to dissolve a For Profit Corporation if both equity shareholders do not agree.
Prior to forming a For Profit Corporation, you should research all of your options. Many business organization can provide tax relief and flexibility without the rigidity of a For Profit Corporation. Please seek an experienced attorney when creating or amending any business organization and ask the pros and cons of all business entities.
How an Executor of “The Will” Might Be Breaching His/Her Fiduciary Duty
The executor of a Texas will is the person chosen by the deceased to administrate the provisions of the will of his/her estate. The executor must be at least eighteen years old and have no prior felony convictions. Executors are usually family members, accountants, or lawyers. The duties of the executor start at the time of death and finish when the last state and federal taxes, if any, are paid. And the estate is closed or otherwise fully disposed of. Executor responsibilities include accounting of assets in the estate, payment of estate liens and debts, and final distribution of assets to the beneficiaries.
An executor has legal fiduciary responsibilities and must act with utmost honesty, impartiality, and scrupulousness on behalf of the deceased and the estate’s beneficiaries. Rational decisions must be made; and the executor must overcome emotion caused by loss and adhere to the terms of the will.
But what if the Executor decides to put his/her own interests ahead of the estate’s beneficiaries or neglects to carry out his/her responsibilities. Has the Executor of the will breached their fiduciary duty? Some serious examples of an executor’s breach of fiduciary duty include:
- Mismanaging estate assets
- Misappropriating estate assets
- Hiding estate assets
- Failing to notify beneficiaries of their interests
- Using estate assets for the executor’s own benefit
- Unnecessarily delaying distributions to beneficiaries
- Paying themselves large and exorbitant, unearned fees
- Selling estate assets for an inappropriate price
- Ignoring important probate deadlines
- Failing to collect money owed to the estate
If an executor has breached his/her fiduciary duty in an estate where you are a beneficiary, this is a very serious issue that needs immediate attention. If you, as a beneficiary, feel that your interest in an estate is being compromised by your current executor, you should contact a Professional Probate Litigation Attorney immediately for help or the estate could experience serious consequences that will not only cause horrible problems between family and friends but also financial issues in the estate from possible fraud, theft of cash/property, or total disregard of all legal fiduciary responsibilities and duties.
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The Nacol Law Firm P.C.
Probate Litigation Attorneys in Dallas TX
972-690-3333
Infidelity or Adultery in a Texas Divorce
In Texas, adultery or infidelity may play a significant role in how a divorce unfolds, impacting asset division in a divorce and even custody issues to a certain extent. Here’s how adultery generally affects the divorce process in Texas:
1. Grounds for Divorce:
- No-Fault Divorce: Texas allows for “no-fault” divorces, where neither spouse has to blame the other for the breakdown of the marriage. Commonly, the reason cited is “insupportability,” which means that the marriage has become insupportable due to discord or conflict of personalities that destroys the legitimate ends of the marital relationship and prevents any reasonable expectation of reconciliation.
- Fault-Based Divorce: Adultery is also one of the grounds for a fault-based divorce in Texas. If one spouse can prove the other’s infidelity, it can influence the divorce proceedings, particularly in financial settlements and custody decisions. The Court of Appeals has given the following definition of Adultery: “the voluntary sexual intercourse of a married person with one not the spouse.” In re S.A.A., 279 S.W.3d 853, 856 (Tex. App.—Dallas 2009, no pet.)
2. Impact on Division of Assets:
- In Texas, the court divides marital property based on what is “just and right.” While this typically starts with the presumption of a 50/50 split, proven adultery can lead the court to award a more favorable division to the non-adulterous spouse. This is because the court may consider the circumstances and factors under which the property was acquired and the behavior of the parties during the marriage. Such factors include: Such factors include (1) the nature of the marital property, (2) the relative earning capacity and business opportunities of the parties, (3) the parties’ relative financial condition and obligations, (4) the parties’ education, (5) the size of separate estates, (6) the age, (7) health, and (8) physical conditions of the parties, (9) fault in breaking up the marriage, (10) the benefit the innocent spouse would have received had the marriage continued, and (11) the probable need for future support. Murff v. Murff, 615 S.W.2d 696, 698 (Tex. 1981).
3. Impact on Child Custody and Visitation:
- While adultery by itself does not necessarily impact custody arrangements, the circumstances surrounding the adultery might. For instance, if adulterous behavior also involved other conduct that could be deemed harmful to the children it could influence the court’s decisions regarding custody and visitation rights. More common repercussions for Adultery or Infidelity in a divorce are what the Court’s call a “morality clause”. This provision usually prohibits one parent from having a romantic third-party guest stay in the house while the children are present from 8:00 pm to 9:00 am the next day.
4. Proving Adultery:
- Proving adultery in a divorce case requires evidence that convinces the court of the likelihood that infidelity occurred. Direct evidence is not necessarily required; circumstantial evidence that suggests the likelihood of both opportunity and inclination to commit adultery might suffice. The burden of proof is the preponderance of the evidence, thus just a little more than 50%. It should be known that actions of adultery and infidelity are still probably even after separation and during the divorce litigation.
Adultery and Infidelity are not as damaging in the modern era, though it is completely fact intensive and dependent on the Judge in your case. Some Judges take Adultery in a Texas Divorce more seriously than others. It is a liability to mitigate if it has occurred.
Julian Nacol
Nacol Law Firm P.C.
Dallas Divorce Attorney
(972) 690-3333
Civil Litigation in Texas – Do You have a Case
Have you been harmed by the actions of another person or business in Texas? The Nacol Law Firm PC, in Dallas TX, represents clients in a broad scope of civil disputes, including:
Business Litigation,
Contract Disputes,
Real estate litigation and disputes,
Corporate litigation,
Probate and Will contests,
Employment agreements,
Breach of contract,
Breach of non-disclosure agreements,
Violation of fair-trade practices,
Breach of fiduciary duty,
Home-builder and seller warranty disputes,
Construction litigation,
Fraud.
Verbal Contracts and Texas Law
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.
NACOL LAW FIRM P.C.
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Dallas, Texas 75231
972-690-3333
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Attorney Mark A. Nacol is board certified in Civil Trial Law by the Texas Board of Legal Specialization