There are many complex financial issues that need to be addressed in a high-net-worth divorce. Unfortunately, one of those issues is taxes. When marital assets are divided in a divorce, the IRS considers this income. This is why it is critical to have a skilled high asset divorce attorney advocating for you and ensuring your financial future is protected.

Spousal Support

Prior to 2019, spousal support payments were fully deductible for the spouse who was making the payments and the receiving spouse was required to claim the payments as income on their tax returns. However, for anyone divorced after January 1, 2019, the law was changed so that the spouse making the payments must pay taxes on this money since it is no longer deductible. The receiving spouse no longer has to report the payments as income.

Dependent Exemption

Whenever there are children in the marriage, a decision must be made in the divorce agreement over which parent will be able to claim the child as a dependent on their tax return. There are several common options that the court may order. For example, the parents may alternate years, where one parent takes the claim on even years and the other parent takes the claim on odd years. If the couple has more than one child, the option may be to “divide” the children on their tax returns.

When it comes to divorce, Texas is a community property state. This means that the marital estate is supposed to be divided 50/50. Unfortunately, many spouses do not feel that their spouse is entitled to half of everything the couple owns and will do all they can to prevent that from happening–even if what they are doing is illegal. If you suspect your spouse is hiding assets, there are steps you can take to determine how they are doing it and where the assets are. A skilled Austin complex divorce attorney can help.

Steps Your Attorney Can Take

During the divorce process, there are many types of legal documents and records that must be shared between both parties. Many of these documents are handed over during the discovery phase. All information exchanged between spouses is done so under oath and consequences of intentionally omitting or covering up information can result in serious consequences.

An attorney can also use written interrogatories as a tool to gain information from a spouse. A skilled attorney will know how to ask questions in a certain way in order to glean significant information from the other party.

One of the most contentious part of a high asset divorce is the division of assets. Although Texas is a community property state – which means all assets are divided 50/50 – it is not uncommon for some spouses to do everything they can to try to keep more of the marital estate “pie” for themselves by hiding assets. Other spouses commit asset dissipation. The legal definition of dissipation of assets is “The use of an asset for an illegal or inequitable purpose, such as a spouse’s use of community property for personal benefit when a divorce is imminent.”

In some divorces, the spouse will hide their asset dissipation, but in other cases, the spending is obvious. One of the more common obvious signs is when a spouse begins spending money from the marital estate on elective cosmetic surgery.

The Use of Marital Estate Funds for Cosmetic Surgery

It is quite common for a person going through a divorce to also begin to go through some physical changes, especially if they had been married for some time. They may begin working out more consistently, change the color of their hair, begin dressing in a different style, etc. In some cases, this self-improvement journey can also result in undergoing cosmetic surgery.

When a couple with a high net worth makes the decision to end their marriage, it is not uncommon for the divorce process to become complex and drawn out. Along with the “normal” acrimony couples may have due to the breakdown of the relationship, now there is the added stress and frustration of child custody, the division of assets, and other issues that may need to be decided. This is why it is important to have a seasoned Austin high net asset divorce attorney representing you.

Having a Long-Term Plan

One of the critical components for a successful outcome of your divorce is to have a long-term plan that addresses child custody, child support, division of assets, division of property, and spousal support. Working with your attorney and putting a solid strategy in place is one of the best ways to protect the interests of your children, have a less contemptuous divorce, and achieve the best possible outcome for you and your children.

Preparation is the first step to developing a long-term plan. Although your attorney will be preparing the legal documentation for your divorce, there are documents and records that you can gather that will help your attorney prepare your case, as well as help save time and legal fees. In addition to your marriage license and prenuptial agreement, if you have one, you will also want to gather the following documents that apply to you and your spouse:

One of the most complex parts of a high asset divorce is the division of assets and property. This division becomes even more complex when there is a family business involved. Since Texas is a community property state and in order to ensure the division of the marital estate is equal, it is critical that the parties have an accurate dollar amount of the company’s value.

How Is the Value of a Family Business Determined?

There are three types of methods that high asset divorce attorneys can use to determine the actual worth of the business – asset, market, or income valuation. Business valuations are usually conducted by either a certified public account (CPA) or an appraiser, and that person will determine which of the three approaches will work best for your family business.

With an asset valuation, all of the assets of the company are listed. This includes the intellectual, the physical, and the personnel. This is the best type of valuation for companies that are fairly young and has not really begun showing a profit yet.