It’s not a stretch to say that divorce tends to bring out the worst in people, and financial matters can become serious sticking points. The overwhelming emotions associated with divorce can push otherwise upstanding people to engage in less-than-fair practices, and the higher the assets, the more risk there is of financial wrongdoing, such as hiding funds.
In fact, many people going through divorce are blindsided by the lengths their spouses will go to in order to skew property division in their favor. If you’re facing a high asset divorce, don’t delay reaching out for the skilled counsel of an experienced Round Rock high asset divorce attorney.
High Asset Divorce
Just because you are facing a high asset divorce doesn’t mean that your spouse is going to engage in unfair financial practices, but it is important to be proactive and protect your financial rights throughout the legal process. As such, you’ll need to employ considerable scrutiny with relation to your marital estate, and this holds true if your spouse is on the up-and-up or not.
When high assets are involved, there is more property and more financial bookkeeping to assess, the need for valuations is more likely, and there are generally far more opportunities for asset hiding. If your spouse is more involved with your family’s assets, it puts you in a more challenging position.
Regardless of the situation, however, it’s time to roll up your sleeves and determine what your marital assets are before you can get down to the important task of a just and right division of marital property.
Property Division in Texas
In the State of Texas, the division of marital assets in a divorce tends to be complex. While Texas is one of the nine community property states in the nation, this doesn’t mean that your assets will necessarily be divided evenly between you.
Community Property
Anything of value that you and your spouse – or either of you separately – acquired during your marriage is considered community property, or marital property, and it is owned by both of you. In the event of divorce, these assets must be divided between the two of you fairly based on a range of factors like the following:
The length of your marriage
Any significant age differential between you
Each spouse’s level of education and employability
Each spouse’s earning power
The contributions either spouse made to the other’s career
Wrongdoing by either spouse – even in a no-fault divorce
The dissipation of marital funds, such as hiding assets
Each spouse’s mental and physical health
The tax considerations for the various property division proposals
Separate Property
Any separate property that either of you owns prior to marriage will remain the original owner’s but only if the asset was kept strictly separate during the marriage. Any commingling of finances can shift the asset’s separate nature.
Additionally, any increase in its value will likely be considered marital. The higher the assets involved, the more challenging it can be to disentangle separate assets from marital.
Common Means of Hiding Assets
People often go to considerable trouble to protect what they consider theirs – whether the law agrees with them or not – and this is never more apparent than during divorce. If the divorce involves high assets, the stakes tend to be even higher. While divorcing spouses can get very creative when it comes to hiding assets, most of their efforts fall into basic categories.
The Diversion of Funds
Suppose one spouse knows that divorce is on the horizon. In that case, they may slowly shift funds from joint accounts to other people for safekeeping, to accounts that are difficult to find, or into high-dollar purchases made in the names of others. In this way, they funnel community property away from the marriage, and if they get away with it, they’ve got more for themselves.
When the spouse doing the hiding does so incrementally over time, their partner is far less likely to notice. In a high asset divorce, the practice may not set off any red flags and may be completely lost in the shuffle. In fact, moving money around isn’t necessarily a form of financial wrongdoing and isn’t uncommon, which may embolden your spouse.
Getting Creative with Taxes
Another specific form of diversion is paying bills ahead of time, and taxes are a prime example. Paying the IRS considerably more than they’re owed will eventually lead to a refund, but the lag time is significant. Overpaying taxes now, during the buildup to divorce, isn’t likely to be rectified until after the divorce is over, and your spouse may clean up nicely.
This is especially effective when it comes to paying business taxes, which tend to be high. If your spouse receives the business in divorce, you may never be the wiser. Working closely with an experienced high asset divorce attorney is always to your advantage.
The Misrepresentation of Assets
If your spouse is far more involved in the business end of your marriage, it affords them considerable leeway if they choose to hide assets from you in the divorce process. If you don’t know what you have, it’s far more difficult to fight for what’s rightfully yours. In these situations, forensic accounting is generally called for.
The misrepresentation of assets refers to downplaying their value, which may not be difficult to do if you’re not privy to the financial circumstances involved. For assets of high worth, valuations can become a challenge. Your divorcing spouse may present you with valuations that you presume are legit. Obtaining your own valuation, however, may tell a very different story.
Coming to a mutually acceptable agreement to use a specific professional for your valuation needs is one solution. If your spouse is actively involved in hiding assets, however, they might be difficult to pin down in this regard, and thorough forensic accounting and asset tracking is likely called for.
Overt Nondisclosure of Assets
It’s one thing to get tricky with assets, but it is another to simply not disclose them. Generally, there is a paper trail when it comes to financials, but overseas accounts can be difficult to track, and Bitcoin can make things more challenging. If you don’t know an account or transaction exists, it makes them difficult to look for – and find.
While bank accounts can generally be tracked down, Bitcoin is stealthier. Transfers to Bitcoin brokerage houses are one of the few clues, but funds that disappear and can’t be accounted for have to go somewhere, and Texas courts take this fact into careful consideration. Further, divorce discovery now tends to include language requesting all cryptocurrency financials.
Involving the Divorce Attorney
Some disreputable clients who engage disreputable legal counsel are in cahoots when it comes to hiding assets. We mentioned that divorce can lead to serious financial shenanigans, and this is one of the worst. This ploy generally involves the client paying a massive retainer and prepaying immense legal expenses to their attorney – only to be recouped post-divorce.
While enquiring into what the other attorney is being paid can feel like an invasion of privacy, it may be necessary to weed out financial wrongdoing.
The Legal Repercussions
Texas courts generally have zero tolerance when it comes to hiding assets, dissipating funds, or engaging in other practices designed to cheat one’s spouse out of assets to which they’re entitled. Those assets that you and your spouse acquired during your marriage belong to both of you – whether you know how extensive they are or not.
You may also have legal claim to portions of assets that are primarily the separate property of your spouse. The higher the assets, the more necessary it becomes to drill down, and it can help to know that the law is on your side.
Temporary Orders Are Designed to Thwart the Diminishment of Assets
If your spouse has an asset of considerable value under their control while the divorce is pending and you discover that they’re likely engaging in asset hiding, you don’t have to sit back and let it happen.
The fact is that temporary orders, which are implemented while a divorce is pending, are designed to help thwart practices that hide or otherwise diminish assets. As such, the court may – in response to your credible concerns – shift control of the asset to you while you move forward with the divorce.
In Court
If your divorce heads to court regarding the division of your marital assets and you – with the professional guidance of your trusted high asset divorce attorney – can demonstrate that financial foul play is afoot, you can expect the presiding judge to take the matter seriously.
This fact can directly affect how your marital assets are distributed between the two of you and can play out in your favor. Texas courts take a dim view when one spouse attempts to cheat the other out of a fair property division, and when it’s brought to their attention, it’s likely to guide their orders.
When Asset Hiding Is Discovered after Divorce
Sometimes, asset hiding and other underhanded financial dealings aren’t discovered until after the divorce is finalized, but this doesn’t necessarily mean you have no recourse. If the asset in question was hidden or obscured, such as in Bitcoin form, and, as a result, wasn’t included in the division of your marital property, it is subject to an undivided asset case.
If the property was accidentally overlooked, which does happen, the court will address a fair division in light of the involved circumstances. If, on the other hand, the court determines – after carefully weighing the evidence – that your spouse engaged in fraud on the community by purposefully hiding assets, it’s a very different matter.
In these situations, Texas courts often award the entire asset – if it remains intact – to the harmed spouse. If the asset is no longer intact, the court will assign a comparable alternative. In fact, comprehensive divorce decrees for high asset cases often include language for remedying purposefully hidden assets that are discovered post-divorce.
The Sworn Inventory
Divorcing couples in Texas are required to provide one another with sworn inventories in which each spouse discloses all of their assets and debts – whether they were acquired during the marriage or prior to it. The idea is ensuring financial transparency and setting the stage for an equitable division of marital assets.
If you don’t take this step seriously and, for example, each of you simply keeps your own retirement and bank accounts, you could take a serious financial hit that you won’t have any legal mechanism for rectifying post-divorce.
If You Have Suspicions
If you aren’t convinced that your spouse is being completely honest about your divorce finances, or if there is any chance that they’re not, you’ll want to alert your seasoned high asset divorce attorney. Being thorough about the numbers regarding property division is crucial, but if there is any hint that your spouse is less than honorable, you’ll need to fortify your efforts.
Property division in your divorce will play a pivotal role in you and your children’s financial future, and taking the time to get it right can make a significant difference in the outcome.
Don’t Wait to Consult with an Experienced Round Rock High Asset Divorce Attorney
Brett Pritchard at The Law Office of Brett H. Pritchard – proudly serving Round Rock, Texas – is an accomplished high asset divorce attorney with an imposing reputation for skillfully protecting his clients’ financial rights through exacting documentation and investigation.
Learn more about what we can also do to help you by contacting or calling us at 254-781-4222 and scheduling your free consultation today.