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TX custodyWhen a couple chooses to end their relationship, they will usually need to address a variety of issues as they decide how they will proceed with the process of separating their lives from each other. While any type of breakup can be difficult, a situation can become much more complicated when children are involved. Married parents who are planning to get a divorce or unmarried couples who wish to establish their parental roles and responsibilities going forward will need to consider multiple different legal issues. While this is true for all couples, there are some cases that involve complex child custody disputes, and parents in these situations will want to be sure to understand their rights and the steps they can take to protect their children’s best interests.

Situations That May Involve Complex Child Custody Concerns

Texas child custody cases typically involve two separate issues: conservatorship and visitation. Conservatorship, which is also known as legal custody, refers to the right to make decisions about how a child will be raised. In most divorce cases, courts prefer to name parents as “joint managing conservators,” meaning they will share in the responsibility of making decisions for their child. Parents will usually also share physical custody, meaning that they will both have reasonable amounts of visitation time with the child.

During a child custody case, a parenting plan will be created that specifies how conservatorship and visitation will be handled. While parents may be able to reach an agreement on a parenting plan, there are some cases where disputes over child custody must be resolved in court. Some situations that may lead to complex child custody disputes include:

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TX divorce lawyerEvery divorce case will involve financial issues that a couple will need to address as they divide the property they own and determine whether one spouse will pay financial support to the other. However, high net worth divorces will often require spouses to consider complex financial matters related to high-value assets, multiple real estate properties, investments, business interests, and different forms of income, including bonuses, executive compensation, and retirement plans. When determining how to handle these concerns in a way that ensures that each spouse receives a fair and equitable share of the marital estate, it is important to consider tax issues that can affect the spouses both during their divorce and in the future.

Common Tax Concerns in High Asset Divorces

Some tax-related issues that divorcing couples with a high net worth may need to address include:

  • Capital Gains Taxes - Certain types of assets may be liquidated during the divorce process to ensure that their value can be divided between spouses. If these assets appreciated in value since they were acquired, capital gains taxes may apply to the profits earned, and spouses should be sure to understand who will be responsible for paying these taxes. When selling a marital residence, up to $250,000 of gains can be excluded from capital gains taxes when filing as a single person, or $500,000 can be excluded when filing as a married couple. These exclusions will be available if the person or couple lived in a home for at least two of the previous five years prior to the sale.
  • Carryforwards - Business owners and others with high incomes can realize tax benefits by carrying forward certain types of losses, expenses, or deductions and applying them to future tax years. These may include carryforwards for capital losses, investment interest expenses, charitable contributions, or a business’s net operating losses, These carryforwards are considered marital assets, and they should be divided between spouses along with other types of marital property.
  • Retirement Assets - Either or both spouses may own retirement savings accounts, or they may be eligible for pension benefits. Funds from these retirement accounts may be transferred between spouses as part of their divorce settlement, and to avoid paying taxes on these withdrawals, spouses should be sure to use Qualified Domestic Relations Orders (QDROs). Spouses may also want to work with a financial advisor to understand whether taxes will apply to pension benefits or other retirement assets either at the time of the divorce or when they begin using these benefits after retirement.

Contact Our Austin, TX Divorce Tax Planning Lawyers

With the proper planning, you can ensure that you will be on good financial footing following your divorce. If you and your spouse have a high net worth, you will want to be sure you have considered all aspects of your financial situation, including the income you earn, the assets you own, and the taxes that will apply both before and after your marriage ends. The attorneys of Powers and Kerr, PLLC can advise you of the issues that you will need to address, and we will help you negotiate a divorce settlement that will meet your needs, or we will advocate for your interests when litigating your divorce in court. Contact our Austin high asset divorce attorneys at 512-610-6199 to schedule a consultation and learn how we can help with your case.

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TX high asset divorce lawyerWhile many high net worth divorces in Texas involve spouses with nearly equal earning power or separate assets, a significant number of high asset divorces also involve spouses where only one was the primary earner during the marriage. Whether the other spouse was a stay-at-home parent or simply earned significantly less in the marriage, the prospect of divorce can be extremely daunting for that spouse. Although gender roles are shifting, the non-primary earner spouse often ends up being a woman. And many women who go through high asset divorces in this position do not take all the steps they can to position themselves well financially. It is particularly important for women to consult with financial advisors more often than they do and to work with a divorce attorney who has experience handling high net worth cases.

The following are some of the reasons women should consider a financial advisor in a high net worth divorce. If you need help with your divorce case or have questions about financial matters, an experienced Austin high asset divorce attorney at our firm can speak with you today.

Not Enough Women Work with Financial Experts, But They Should

According to a new study, women do not work with financial advisors and other financial experts nearly as often as they should in divorce cases. This is even true for women who are non-primary earners who are going through high asset divorces. Indeed, over 95 percent of women do not use a financial advisor when going through a divorce despite having financial goals they want to achieve.

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TX divorce lawyerDivorce involving business owners can be particularly complicated, especially in an Austin high asset divorces. When one or both of the spouses own a business, the division of community property can become extremely complex. The following are just a few special considerations for dividing a business in a high asset divorce. If you have questions or need assistance, you should get in touch with an Austin high net worth divorce lawyer as soon as you can.

Business Appraisals Are Extremely Complicated and Should Be Done Early

Chances are good that much (if not all) of your interests in a business will be classified as community property and will be subject to distribution. Sometimes spouses own a business together, while in other scenarios only one of the spouses is involved in a business. In either circumstance, it will be essential to have a proper business appraisal done to ensure that the court knows precisely how much your business (or business interests) are worth when determining how to divide community property.

Business appraisals are extremely complex and require the skills of an experienced business appraiser. A business appraiser can complete different types of business appraisals, including those for the purposes of selling the business and those for the purposes of identifying the value of a business in a divorce. Businesses can be valued in various ways, as well. For example, a business appraiser can provide a fair market value, which can take into account all intangible assets of the business as well as tangible assets (like equipment and furniture). A fair market value provides a number that reflects what the business might sell for. You can also consider a capitalization of earnings valuation which attempts to calculate the “net present value” of the business based on “its projected future earnings.” In addition to appraising the business, you may also need a valuation of your business stock.

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TX divorce lawyerHandling real estate can be an extremely complicated process, especially when you own a mix of residential properties and commercial properties with your spouse. As you may know, under Texas law, most property acquired after the date of marriage is “community property” and will get divided between the spouses upon divorce. If you are anticipating a high net worth divorce in Austin and own significant real estate, it is important to work with a divorce attorney who has experience handling complex property in a high net worth divorce.

While the division of community property is often complicated under any circumstances, real estate or real property can pose particular issues. The following are some tips from our Texas high net worth divorce attorneys for handling real estate in an Austin high asset divorce case.

Classifying Real Estate: Know Whether It is Community Property or Separate Property

For most married couples in Texas, the family home will be classified as community property and will be subject to division. In addition, any property that you acquired—whether it is a vacation property, a rental property, or a commercial property—after the date of your marriage can also be classified as community property. Moreover, even if you purchased one of these properties prior to the date of marriage, if you made payments on any of them or invested in updates during the marriage, those increases in value may constitute community property.

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TX divorce lawyerA high asset divorce does not necessarily involve contested litigation. In many cases, the divorcing spouses are eager to resolve their outstanding issues and end their marriage as quickly as possible. To facilitate this, Texas law does allow for mediated settlement agreements (MSA).

An MSA is a legally binding contract signed by both parties. A mediator serves as a neutral facilitator who assists the parties, and their attorneys, in reaching an agreement. But unlike an arbitrator, the mediator does not have the legal authority to force a decision. The spouses are still free to abandon mediation at any time and take their case to litigation.

Texas Supreme Court Clarifies Law Governing Mediated Settlement Agreements

The Texas Supreme Court recently addressed an important legal question regarding MSAs: Are such agreements enforceable if they are signed before either spouse actually files for divorce?

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TX divorce lawyerCouples who own especially valuable or unique assets face a number of difficulties when it comes to divorce. Fortunately, individuals who find themselves in this situation do have certain tools at their disposal that can help them prepare for the property division process. Creating a property division checklist, for instance, has helped countless divorcing couples account for, categorize, value, and fairly divide their marital property. Creating a property division checklist, however, can be a difficult endeavor in its own right, so if you are considering divorce and have questions about how your marital assets will be divided, please contact an experienced high asset divorce lawyer who can walk you through the property division process.

Marital Property Categories

One of the biggest challenges faced by divorcing couples is deciding who will retain which assets. To help simplify this process, many divorcing couples are encouraged to create a property division checklist, in which they account for and categorize all of their assets. Although each couple’s property division checklist will look different, there are some basic categories under which most assets fall, including:

  • Personal property, which can include everything from home furnishings and electronics to jewelry and collectibles
  • Financial assets, including bank accounts, stocks and bonds, life insurance policies, retirement accounts, cash, and pensions
  • Real property, which includes not only the marital home, but also any vacation homes, rental properties, undeveloped land, or commercial properties
  • Business assets, including any ownership interests in a business or company equipment

Once a couple has each of these categories in place, they can go through their assets one at a time and place them in the proper category.

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TX divorce lawyerIn the absence of a pre or postmarital agreement, a couple who has decided to divorce and who owns businesses will need to decide how those assets will be divided, which will also require an accurate business appraisal. These appraisals are conducted by experts, but it’s still important to carefully review them for accuracy. However, the technical language of these documents can make their review a difficult process, so if you are considering divorce and own one or more businesses, it is important to retain an experienced Austin, TX high asset divorce lawyer who can go over the appraisals with you and ensure that the terms of any property settlement agreements are fair.

Professional Standards

Before requesting a business valuation, it is important for divorcing couples to ensure that the appraiser is qualified to perform the analysis and has the proper credentials. There are three main professional associations that issue valuation standards for appraisers: the American Society of Appraisers, the American Society of Certified Public Accountants, and the National Society of Certified Valuation Analysts. Ensuring that your own appraiser has been credentialed by one of these groups is one of the first steps that a divorcing couple should take when seeking an appraisal.

Clarity and Thoroughness

Once a business valuation has been completed, the appraiser will create and submit a valuation report. Upon review, this report should be clear as to the purpose of the appraisal and include information about:

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