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TX divorce lawyerDivorces can be extremely contentious regardless of the income levels of the spouses or the amount of assets they share. However, high net worth divorces in Texas often are among the most contentious, given that the parties have more to lose financially than other couples who are going through the divorce process. When one or both parties realize that divorce is likely in their futures, issues about hidden assets may start to arise. If you have concerns about your spouse hiding property or trying to prevent certain assets from being classified as community property, you should reach out to a Texas high asset divorce attorney as soon as possible. At Powers and Kerr, PLLC, we routinely assist clients with this very issue and can discuss options for working with a forensic accountant to locate hidden assets.

In the meantime, we want to provide you with some useful information about recognizing when a spouse may be trying to hide assets before a divorce.

Why Would a Spouse Attempt to Hide Assets?

Why would any spouse in Austin, Texas try to hide assets before a divorce case? As you may know, Texas is a community property state. What this means is that, under Texas law, nearly all property acquired by either spouse after the date of the marriage will be classified as community property and will be subject to division in the divorce case. A spouse might try to hide assets to prevent those assets from being classified as community property and divided. There are many different ways that people can try to hide assets, and it is important to recognize the signs. If you do have concerns, you should speak with your divorce lawyer as soon as possible.

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TX high asset divorce lawyerWhile the art scene in Austin is not quite like the art scenes in New York or London, many Austin residents have large collections of valuable artwork, including sculptures, paintings, and other art objects. Many married couples in Austin collect art together, and their homes are filled with their collection. In the event such a married couple decides to get divorced, the matter of the art collection can become extremely contentious. Dividing an art collection can be quite a battle, especially when the parties do not want to see the collection divided at all. To be sure, many people who collect art feel that the collection is priceless and do not want to see any of it sold or distributed. Yet in a high asset divorce in Austin, all community property will need to be distributed between the spouses. And while the parties may personally believe that the collection is priceless, it is possible to place a market value on almost any work of art for the purposes of dividing it in a divorce. Let our Texas high asset divorce lawyers tell you more about dividing art collections in a Texas divorce.

Recognize That the Whole Collection May Be Community Property

As you may know, Texas is a community property state. What does this mean for a high asset divorce and an expensive art collection? Under Texas law, nearly all property (aside from a few exceptions) acquired after the date of the marriage is classified as “community property.” In a Texas divorce, all community property is divided between the spouses. For many married couples in Austin who have been collecting art for years or even decades, most if not all of the collection is likely to be classified as community property and will be divided as part of the divorce.

Determine the Date of Purchase and Other Documentation

If you believe that one or more pieces in the art collection are not community property, you will need to get documentation to prove it. If you purchased the painting prior to the marriage, it is important to find any receipts you have for the piece. Even if you cannot locate a receipt, it may be possible to work with your Austin divorce attorney to gather evidence that proves the painting was in your possession long before you got married and that, accordingly, it should not be part of the division of community property.

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TX divorce lawyerWhen we think about “gray divorce” in Austin, Texas, we often consider studies that suggest older adults will face more financial difficulties if they decide to file for divorce. However, it is not as common to consider gray divorce in the context of a high asset or high net worth divorce. If a couple has accumulated substantial assets during the marriage and has multi-million dollar investments, does gray divorce really pose the same types of financial risks as a gray divorce involving a middle-class couple? We want to explore some of the financial issues that are common in gray divorces and to consider them in relation to high net worth couples in Texas.

If you are planning for a divorce after a long-term marriage, you should know that a Texas high asset divorce attorney at Powers and Kerr, PLLC can help.

Common Financial Issues in a Gray Divorce

If you have read anything about gray divorce recently, you probably know that much of the research suggests that older couples who get divorced will experience some financial difficulties. To be sure, gray divorce can be particularly hazardous to your emotional and financial health, far worse than doing so at younger ages. For many people, divorce after age 50 is a major financial shock.

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TX divorce lawyerWhen you are thinking about the financial issues and economic realities of a high asset divorce in Austin, Texas, one of the things you may be considering is whether it makes sense to stay in your marital home or to sell the property and share the profits. First, you will need to determine whether the home is likely to be classified as community property. If so, it is important to consider all factors in determining whether it makes sense to keep the property. Our Austin high asset divorce lawyers will say more about the complications of keeping a marital home after a high asset divorce.

Is the Marital Home Community Property?

Before you start to consider whether it could make sense to negotiate a property settlement in which you keep the house, you will need to know first whether the house is even likely to be classified as community property.

As you likely know, Texas is a community property state. Accordingly, under Texas law, courts divide community property (or property of the marriage) between the spouses, while usually, separate property is not divided. For many Austin couples, the marital home is considered community property or, at least, part of the value of the home is community property. While a number of Texas couples purchase a home together after they are married, there are a variety of ways that a marital home may have characteristics of both community property and separate property. For example, if a couple uses separate funds to place a down payment on the house but makes mortgage payments from community funds, commingling has occurred and the types of property will need to be traced out.

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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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