By Gary Ashmore, Managing Attorney, Family Law — The Ashmore Law Firm, P.C.
This week The Wall Street Journal reported on a dispute that will sound familiar to any Dallas family law attorney, even if the dollar figures are larger than most. Gerald J. Ford, the 82-year-old banker behind Hilltop Holdings, is in litigation with four of his adult children over control of his stake in the company, which the Journal values at roughly $600 million. The children, including the son who now runs the company, allege their father's memory has declined and that his wife of more than 25 years is influencing his decisions. His side calls the allegations false and says the older children are simply seeking more than they have already been given.
I don't know the Fords, and I have no idea who is right. What I do know is the shape of the dispute, because I have seen it play out in families whose "fortune" was a ranch, a dental practice, or a few rental houses. The pattern is almost always the same: a long second marriage, children from a first marriage, a business built over decades, and no written agreement about who owns what.
Why a second marriage changes everything in Texas
Texas is a community property state. With narrow exceptions, everything a spouse earns or acquires during the marriage belongs to the community, regardless of whose name is on the account or the stock certificate. Property owned before the marriage, or received by gift or inheritance, is separate property — but only if it can be traced and proven. After 25 years, dividends, reinvested earnings, salary, and the ordinary mixing of accounts can turn what started as separate into something a court will treat as community.
Now put children from a first marriage on one side of that equation and a second spouse on the other. The children may believe the business is "Dad's," built before the marriage and destined for them. The spouse may reasonably believe a quarter century of partnership earned her a share. Neither belief is unreasonable. And neither is written down.
That is not an estate planning failure. It is a family law failure that shows up years later wearing an estate planning costume.
The agreement that would have ended the argument before it started
Texas law allows married couples to decide these questions for themselves. A premarital agreement before the wedding, or a postmarital agreement (including a partition and exchange agreement) at any point afterward, can:
- confirm which assets are one spouse's separate property, including a business interest and its future growth;
- convert community property into separate property, or the reverse, by mutual agreement;
- set out what each spouse will receive at death, so children and the surviving spouse aren't left to negotiate against each other in a courtroom.
The critical point is timing. A marital agreement signed when both spouses are indisputably sharp, each represented by independent counsel, with full financial disclosure, is very difficult to attack later. Every allegation now aimed at the Ford family — diminished capacity, undue influence, a spouse "controlling" decisions — loses its force when the governing document was executed twenty years earlier, before anyone was ill and before anyone had a motive.
That is the whole value of doing this early. You aren't just dividing property. You are removing the story your children will otherwise tell about why the division happened.
The next generation needs the same protection
There is a second lesson in the Journal's reporting: the children in these disputes have marriages too. A parent can build a careful plan to pass business interests to a son or daughter, and that plan can unravel the day that child's divorce is filed. An inheritance is separate property in Texas, but the income it produces during the marriage is community, and a spouse who worked in the business may have claims of their own. Tracing that separate property, valuing the business, and untangling a family entity is exactly the work of a complex divorce — and in a high-net-worth divorce the stakes of getting it wrong are measured in the family's legacy, not just its balance sheet.
In our practice, when a family business or trust is part of the picture, we bring in my sister, Lori Ashmore Peters, who leads our estate planning and probate work. The two of us look at the same family from both directions: what a divorce would do to the plan, and what the plan would do in a divorce. That is what we mean when we say Where Family Law Meets Family Legacy — the answers have to fit together, and they rarely do when they are drafted in separate offices.
What to do about it
If you are in a second marriage and own a business, or expect to inherit one, here is where I would start:
- Find out what you actually own. Have someone trace the character of the major assets. Many people are surprised.
- Talk to your spouse about a postmarital agreement while it is easy. The conversation is far more comfortable at 55 than at 80, and it is impossible after a diagnosis.
- Get independent counsel for each spouse. It costs more up front and saves the agreement later.
- Coordinate with your estate plan. The marital agreement and the will or trust should say the same thing about the same assets.
- Talk to your children. Not about the numbers necessarily, but about the fact that a plan exists and was made deliberately. Silence is what breeds the "you got yours" resentment on display in the Ford case.
Our approach in family law is peaceful settlement when possible, aggressive litigation when necessary. The best version of a marital agreement is the one that never has to be litigated at all, because by the time anyone thinks to challenge it, there is nothing left to argue about.
The Ashmore Law Firm, P.C. has represented Dallas families since 1987 in family law, estate planning, and probate. Relationships that matter. Experience you can count on.
Read Lori Ashmore Peters' companion article: Capacity, Undue Influence, and the Family Entity: What the Ford–Hilltop Litigation Teaches.
