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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 lawyerWhile very few of us ever get married with the intention of later filing for divorce, Texas residents file for divorce more often than you might expect. Making plans in the event of divorce are important for Austin residents of all income levels, but planning is particularly important for wealthy Texans and high earners. We want to discuss some tips for preparing for a high net worth divorce in Austin at multiple points in time—from the time of your marriage to the moments shortly after filing for divorce. If you need assistance with your divorce, an experienced Austin high asset divorce lawyer can help.

1. Sign a Prenuptial Agreement

Under the Texas Family Code, two people who are planning to get married can enter into a prenuptial (or premarital) agreement. While prenuptial agreements are helpful for people at all income levels, they are particularly necessary for individuals who are high earners or would anticipate a high asset divorce in the event the marriage does not last. In a prenuptial agreement, the parties can reach an agreement about how certain assets will be divided or distributed in the event of divorce.

2. Avoid Commingling Separate and Community Property

Avoid commingling separate property and community property wherever possible. In other words, any property you acquired before the marriage, or any property acquired through gift or inheritance during the marriage, should be kept separate. Do not use those assets to contribute to community property, such as investing separate property into a community property account or by using separate assets to improve the marital home.

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TX divorce attorneyWhen you are going through a high asset divorce in Texas, the prospect of dividing valuable collections in your divorce can be devastating. Married couples in the Austin area often acquire many different types of collections that they consider to be priceless, from paintings and sculptures to rare vinyl records and books. Given that one of the points of the collection is to keep it intact, it can be extremely difficult to consider having a collection pieced apart and sold because you are getting divorced. The following are some important considerations for dividing a rare book collection in a high net worth divorce, including possibilities for keeping the collection intact.

Know How Property is Divided Under Texas Law

Texas is a community property state. As a community property state, any property that spouses acquire during their marriage is owned jointly by them as “community property.” Generally speaking, Texas courts will divide community property equally between the spouses recognizing that both have equal interests in the property. However, courts ultimately divide property in a manner that is equitable to both parties, or “just and right,” given their particular circumstances.

If you acquired any part of the rare book collection after the date of marriage, it will likely be classified as community property and subject to division. Exceptions may include a rare book inherited by one of the spouses during the marriage or a gift given only to one of the spouses during the marriage. Any part of the collection acquired prior to the date of marriage usually will be classified as separate property and will not be divided.

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TX divorce lawyerDivorcing couples with unique, diverse, or especially valuable assets face a host of unique issues. For instance, many high asset divorces require couples to decide the fate of multiple properties, including not only the family home but also vacation homes and investment properties. This can be a complicated process, so if you are going through a divorce and have been unable to come to an agreement about who will retain ownership of one or more vacation properties, it is important to contact an experienced high asset divorce attorney who will aggressively represent your interests, whether during negotiations or in the courtroom.

How Are Assets Categorized During Divorce in Texas?

Texas is a community property state, which means that only assets that were acquired during a marriage must be divided in the event of divorce. When it comes to real estate, this is true regardless of whose name is on a title or deed. Unlike community assets, separate property is any property that was owned by either spouse before the marriage took place. The only exceptions to these rule apply in cases of inheritance, in which case, a person’s assets can be considered separate property even if they were acquired during the marriage.

Vacation Homes as Community Property

Under these rules, whether a couple’s vacation home needs to be divided upon divorce would depend on when it was purchased. If it was acquired during the marriage, both parties would have rights to a share in the property. This could take the form of one spouse retaining sole ownership of the family home, while the other took up residence in the vacation home. Alternatively, the couple could decide to sell the property and divide the proceeds.

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Posted on in High Asset Divorce

Texas divorce lawTexas law requires that divorcing couples divide their property in an equitable manner. However, this rule only applies to marital property, as separate property will remain under the sole ownership of the original holder. Inheritances, for example, are considered the separate property of the person to whom they were bequeathed, even if they were given to one spouse during a marriage. In some cases, it is still possible for another party to retain a portion of one spouse’s inheritance, so if you were given a valuable gift or inherited property from a loved one during your marriage and you are now going through a divorce, please consider speaking with a high asset divorce attorney who can help you protect your assets.

Separate Property

Under Texas law there are three types of assets that qualify as separate property:

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Texas prenuptial agreement attorney, Texas complex litigation lawyerNo couple wants to consider the possibility that their marriage will end in divorce. However, it is often in the best interests of all parties to take precautions for this possibility by drafting a prenuptial agreement that will govern how property will be distributed in the event of a divorce. A couple who does not create a prenuptial agreement risks an unfair division of marital property during dissolution, so if you are considering marriage and have questions or concerns about drafting a prenuptial agreement or if you already have one in place and are pursuing a divorce, it is critical to contact an experienced complex divorce attorney who can explain your legal options.

The Contents of a Prenuptial Agreement

Prenuptial agreements can go a long way towards giving couples peace of mind regarding property division and alimony. However, only certain issues can be covered in prenuptial agreements, including:

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Texas high asset divorce attorney, Texas complex property litigation attorneyDivorces are notorious for being time-consuming, emotionally draining, and financially taxing. Unfortunately, in Texas, this is often exacerbated by the unique legal process required to divide community property. In many cases, most of a couple’s assets fall under the category of community property and an unfair division could be devastating, so if you or a loved one is considering a divorce, it is vital to speak with a complex property litigation attorney who is familiar with the process and will aggressively represent your interests.

Separate Property v. Community Property

The Texas Constitution specifically defines separate property as any property that was:

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Texas divorce attorney, Texas complex litigation lawyer, Texas is one of only nine community property states in the Union. The concept originally comes from Spanish law, and was adopted by Mexico in the 19th century and passed onto its possessions in what is now the modern-day United States. The idea is that marital property belongs to both spouses upon divorce, due to the emotional and financial nature of a marriage. Some states have very strict community property laws (in California, a 50-50 split is mandatory), but Texas has a community property presumption in Chapter 7 of the Family Code. Like most all presumptions, this provision can be overcome in certain high-asset divorces.

Identifying Property

The presumption applies to all property that was acquired during the marriage, unless it was a gift. This dividing line is not always clear, because property is often commingled. Assume that Husband bought a car before the marriage (separate property) and makes the payments from his paycheck (community property). Or assume that Wife inherited a rental house (separate property) and used proceeds from a second mortgage on the marital residence (community property) to fund improvements.

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