Financial matters are an important aspect of every divorce, and they tend to be complicated. However, if your divorce involves large or multiple assets, you can expect the related financial concerns to be that much more challenging.
While there is no dividing line that separates other divorces from high-net-worth divorces, the title tends to apply to divorces that involve considerable liquid assets and the kind of financial complications that generally accompany high assets. If you’re facing a high-asset divorce, turn to an experienced Austin high-net-worth attorney.
High Assets Come with Increased Complications
The more valuable a couple’s assets, the more likely they are to face financial complications in the divorce process. To begin, simply identifying the full range of assets that need to be divided fairly can be challenging. There is also the matter of identifying which assets are separate and which are marital, as well as identifying the value of each, which can require a significant amount of effort in and of itself.
The Division of Marital Property in Texas
In Texas, those assets that either spouse or both spouses together acquire while they are married are considered marital property that must be divided in a just and right manner in the event of divorce. While this just and right division can mean equally, a more accurate definition is fairly – in relation to a range of relevant factors.
If the asset came to you while you were married, it’s almost certainly marital – with very few exceptions, which include the following types of property:
A gift given to one spouse only
An asset inherited by one spouse only
The pain and suffering portion of one spouse’s personal injury settlement
If you need help determining if an asset is marital, contact an Austin divorce attorney. He or she will be able to discuss your case and help you protect your financial rights.
Separate Property
The assets that you own or your spouse-to-be owns prior to marriage and that you keep separate throughout your marriage are considered separate property that isn’t subject to division in divorce. However, it’s important to point out that the spouse who claims the separate asset is on the hook for proving its separate nature.
All of the following factors can affect the separate nature of an asset:
The use of marital funds to maintain or grow the asset
The commingling of marital and separate finances
The act of working for the asset, such as a business, without paying oneself a fair wage, which puts the marital estate at a disadvantage
Any increase in the value of the separate asset is likely to be considered marital.
Valuing Property
Putting a value on an asset that you and your divorcing spouse can both agree to is unlikely to be an easy feat. The higher a property’s value, the more wiggle room there is in terms of pinpointing its exact value, which means there could be a considerable amount of distance between your valuation and your divorcing spouse’s.
While the surest means of putting a value on something is selling it and seeing what price it brings, this approach rarely makes financial sense in the face of a divorce. As such, there is likely a good deal of work ahead regarding valuations.
Factors that Affect Property Division
Texas courts take a wide range of factors into consideration in the division of marital property:
The duration of your marriage
Your and your divorcing spouse’s separate estates
Your and your spouse’s age and overall health
Your and your spouse’s earning potential and level of education
The value of any benefits that may be lost with the divorce, such as health and life insurance
The spousal and child support awards the court will be making
The degree of the marital estate’s liquidity
The tax implications of the proposed division
The standard of living achieved during the marriage, which can play a significant role in a high-asset divorce
The cost of sale, transfer, or liquidation of specific assets
The proposed child custody determination
Whether fault played a role in the breakdown of the marriage
Whether fraud on the community was committed, which is far more common and more difficult to identify in high-asset divorces
Anything else the court considers relevant to your divorce case
Fraud on the Community
Fraud on the community refers to a spouse who engages in practices that are designed solely to deprive the other of the use and enjoyment of an asset or assets. Fraud on the community estate involves either the intent to deceive or a dishonest purpose, and when assets are complex, such fraud can be difficult to root out.
Generally, spouses are allowed to engage in reasonable spending, transferring, or gifting of marital assets to third parties for just purposes. However, doing so immoderately, excessively, or arbitrarily harms the other spouse. Courts consider the following factors in relation to the fairness of such acts:
The relationship between the giver and the recipient
Whether there were any special circumstances that justified the gift, expenditure, or transfer
Whether or not the gift, expenditure, or transfer was reasonable compared to the overall estate
Hiding Assets
Too many spouses hide assets as a simple means of not having to share them in divorce, and the practice is more common and easier to hide in high-asset divorces. Texas courts frown on these less-than-fair practices, but if you can’t identify them, you could be out of luck.
If you suspect your divorcing spouse of stooping to this level, inform your trusted Austin high-asset divorce lawyer immediately.
Your ex may employ any of the following common techniques when it comes to hiding assets:
Maintaining a separate account to transfer funds from a shared account
Storing money or other assets in a secret safe deposit box
Transferring funds or assets to friends or family members, which are transferred back once the divorce is final
Buying high ticket items (such as artworks, collectibles, or antiques), underreporting the associated value, and recouping the funds by reselling them post-divorce
Overpaying taxes, which can take a considerable amount of time to discover and can be returned in the form of a refund or can go toward a future tax obligation – while keeping liquid assets out of the divorce
Prenuptial Agreements
Often, high-asset divorces spring from marriages that started out with high assets, and couples in these situations are more likely to have prenuptial agreements in place. A valid prenuptial agreement can address all of the following financial concerns:
The division of marital property
Spousal support (also known as alimony)
Child support, as long as the amount and the considerations included exceed those required by law
To be valid, the prenuptial agreement must meet the following requirements:
The contract must be in writing.
Both spouses must have signed the contract.
The contract must have been entered voluntarily and without duress.
Each spouse must have provided the other with a clear accounting of any debts and assets – or the requirement must have been waived in writing.
Further, if the agreement is considered unconscionable – or extremely prejudicial toward one spouse or the other – the court won’t uphold it.
If you have a valid prenuptial agreement in place, it will help guide the financial terms of your high-asset divorce, but it does not guarantee smooth sailing ahead – considerable complications can still arise. If you do not have a prenuptial agreement, do not panic, but do consult with a savvy Austin high-asset divorce attorney today.
Keeping the Matter out of Court
Divorcing couples with high assets tend to be very motivated to keep their cases out of court, and there are a range of good reasons for this. To begin, settling your divorce out of court provides you with considerably more privacy. Most of us value privacy, but it can be even more advantageous to those in the middle of noteworthy divorces, which high-net-worth cases tend to be.
When you resolve your divorce out of court, you also maintain decision-making authority, which can prove invaluable. Handing over the power to make financial decisions on your behalf to a judge who knows virtually nothing about your situation doesn’t sit well with most of us.
You and your soon-to-be ex don’t have to be best friends or even have to be on speaking terms to negotiate terms between yourselves and your respective divorce attorneys. If negotiations stall, mediation is an excellent option.
However, if your divorcing spouse is more interested in thwarting you than in fairly addressing the terms of your divorce, cutting your losses and heading to court may be your best bet. Your practiced Austin high-asset divorce lawyer will help you make the right choices for you throughout the legal process.
Overcoming a Sense of Entitlement
Whether you are the spouse who was the primary breadwinner during your marriage or your ex is, there may be a sense of entitlement involved that can gum up the divorce works. The bottom line is that you amassed the wealth that you did as a team, and divorce requires a fair division, which often means an equal division or a division that is close to equal.
Letting go of that sense of entitlement or finding a way to help your divorcing spouse do so can save you both a considerable amount of time, frustration, heartache, and expense. While fiercely advocating for what is rightfully yours is always advised, allowing a sense of entitlement to prevail is unlikely to serve either of you well.
Divorce Attorneys Are Not Interchangeable
High-asset divorces are more complicated and generally require considerably more legal finesse than run-of-the-mill divorces, which are complicated enough on their own. As such, you need focused legal representation with a wealth of experience successfully guiding challenging high-net-worth divorces toward advantageous resolutions.
Don’t settle for an attorney who dabbles in divorce or who doesn’t have the necessary background in high-asset cases.
Do Your Homework
While you may not think your spouse would stoop to unsavory practices, the truth is that financial shenanigans are very likely in high-asset divorces, especially if your divorcing spouse has a sense of entitlement. As such, it is to your advantage to do your homework and involve a forensic accountant early on.
The American Bar Association shares that forensic accountants employ precise processes and systematic data investigation in an effort to solve financial puzzles, and their expertise helps you defend your financial rights in a high-asset divorce. Your accomplished Austin high-net-worth divorce lawyer can help you find a skilled forensic accountant for your case.
It’s also important to point out that, while it may be tempting not to disclose assets of your own, this approach can backfire spectacularly. Texas courts factor in fraud and asset hiding in the division of marital property, and engaging in the practice can leave you with considerably less than you would have otherwise been entitled to.
Child Support and Alimony Are More Complicated in a High-Asset Divorce
In addition to the division of marital property, spousal and child support are also more complicated in a high-asset divorce.
Texas has careful guidelines for child support, but there is an upper limit, and the court has the discretion to go outside the state’s calculation process when there is a compelling reason to do so. High assets tend to be more complicated than income alone, which can serve as a compelling reason.
While alimony is always calculated on a case-by-case basis, high-asset divorces tend to involve significantly higher standards of living and are more likely to involve alimony.
An Experienced Austin High Asset Divorce Lawyer Is Standing By to Help
Brett Pritchard at The Law Office of Brett H. Pritchard is an esteemed Austin high-asset divorce attorney with an immense amount of experience protecting the financial rights of clients facing high-net-worth divorces, and he’s on your side. To learn more, contact us online or call us at (254) 781-4222 and schedule your FREE consultation today.