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TX divorce lawyerAlthough dissolving a marriage always has the potential to be a complicated process, high asset divorces tend to be particularly difficult to resolve. This is largely due to the fact that the property division portion of high asset divorces is often extremely complex, as couples are required to take into account the significant tax implications of any settlement agreements. For instance, some of the most notable tax liabilities for which many high net worth couples should, but often fail to account for are capital gains assessed on the sale of the family home.

An experienced high asset divorce attorney can be instrumental in helping divorcing couples identify and limit exposure to potential tax liabilities, so if you and your spouse have decided to file for divorce, it is critical to contact an experienced high asset divorce lawyer who can ensure that your financial interests are protected.

What Is the Capital Gains Tax Exemption?

One of the most important tax breaks for married couples is the capital gains tax exemption. The capital gains tax is imposed on any sales of capital investments, such as real estate. For many couples, this means that they must pay a capital gains tax when selling the family home. Fortunately, single homeowners who decide to sell their residences can exclude up to a $250,000 gain. The benefit for married couples is even higher, as couples who jointly own a home can take advantage of a capital gains tax exemption that allows them to avoid paying a tax on profits totaling $500,000.

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TX divorce lawyerThere are a number of issues that couples must address before a court will finalize their divorce, one of which is how their marital property, or the assets that were acquired during the marriage, should be divided. Under Texas law, divorcing couples must divide their marital assets in a fair and equitable way, an endeavor that is only possible if the parties have a thorough understanding of the current monetary value of the assets in question, which can vary significantly depending on the date that is chosen for valuation.

Determining an asset’s valuation date can be a difficult and often contentious process, so if you and your spouse have decided to file for divorce and own unique or valuable marital assets, it is important to contact an experienced high asset divorce lawyer who can ensure that those assets are properly appraised and divided fairly upon the finalization of your divorce.

Establishing Value

The valuation of marital assets can be established in a number of different ways, including by:

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TX divorce lawyerMost married couples share financial advisors. However, once a couple decides to get divorced, it is usually a good idea for each party to hire a new financial advisor, accountant, and tax advisor, who can ensure that his or her interests are protected. This is especially important in cases where one spouse had the majority of contact with the family’s financial advisors during the course of the marriage. Hiring a new financial team can give divorcing parties peace of mind that their advisors have no shared or conflicting loyalties and will treat them in a fair and impartial manner. If you and your spouse are thinking about filing for divorce and you are in need of recommendations for a financial team of your own, please contact our dedicated high asset divorce legal team today for assistance.

Financial Teams

Financial teams hired to assist with high asset divorces are usually made up of a number of individuals, including:

  • Business valuation experts;
  • Certified divorce financial analyst;
  • Certified public accountants;
  • Certified financial planners;
  • Commercial property appraisers;
  • Personal property appraisers; and
  • Residential property appraisers.

All of these individuals play an important role in valuing property. For instance, certified public accountants can help explain the tax implications of retaining certain assets, while a forensic accountant can help ensure that one spouse isn’t hiding assets or attempting to commit fraud by identifying and valuing marital property.

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TX divorce lawyerOne of the most common points of contention in any divorce is how a couple’s assets will be divided upon dissolution of their marriage. Although most couples understand that this will involve dividing relatively common assets, such as bank accounts, the family home, and vehicles, it’s important to remember that more unusual property, like retirement accounts, will also need to be divided. In most cases, at least some of the contents of a retirement account are considered marital property, which means that they must be divided equitably between the spouses. While this could mean that each spouse receives an equal share of the benefits, this is not always true, as courts are generally guided by what would qualify as equitable distribution when making their decisions.

Whether your retirement account pays out on a regular basis or you can withdraw as you see fit depends in large part on the type of account in question and the contents of your Qualified Domestic Relations Order (QDRO). To learn more about dividing your own retirement account upon divorce, please contact a member of our high asset divorce legal team today.

What Is a Qualified Domestic Relations Order?

QDROs, or Qualified Domestic Relations Orders, are court orders that lay out the ground rules for how a retirement account will be used following a divorce, including how its contents will be divided. These documents are necessary for most types of retirement accounts, including 401(k)s and IRAs and are used to verify a person’s right to receive a portion of the benefits paid out of a retirement account. Basically, this means that QDROs are used to name a former spouse as an alternate payee upon divorce, even if he or she didn’t actually participate in the plan.

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TX divorce lawyerDuring a divorce, spouses are required to disclose detailed information about their income, assets, and debts. This ensures that both parties are able to make informed decisions during the property division process and that any settlement or court order incorporates accurate information about all known financial factors. While many divorcing spouses are careful to provide accurate and detailed financial records to each other, it is also not uncommon for one spouse to attempt to lie about assets or debts in an effort to retain the entire interest in an asset or to force a spouse to pay more than his or her fair share of a debt. This type of conduct is strictly prohibited under state law, so if you believe that your spouse is attempting to hide assets or liabilities, it is important to contact an experienced high asset divorce attorney who can ensure that your interests are protected.

Improper Disclosures

Disclosing all of one’s assets, interests, and liabilities is a complicated process, so there are actually a number of ways that a spouse can avoid telling the truth about his or her financial situation. In many cases, this involves failing to list certain assets on necessary disclosure forms or assigning improper values to property or debts. Alternatively, a party could fail to come clean about when and how he or she acquired an asset or could hide documentation that would reveal the truth about property values or ownership. In other cases, one spouse misrepresents how much the other contributes to the household, lies about how joint funds are used, or even unfairly accuses the other of stealing funds. In either case, this kind of behavior is unlawful in Texas, so spouses that are discovered violating disclosure rules could be held in contempt of court, or lose their interest in certain property.

Document Review

One of the best ways to find out whether a spouse is hiding or lying about his or her assets or debts is to compare the information that he or she provides with financial records, such as:

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TX divorce lawyerAlthough prenuptial agreements are not something that business owners typically think about when they become romantically involved with another person, the reality is that making these types of considerations is extremely important for those who are considering marriage. Entering into this type of contract before a marriage takes place can give both parties peace of mind, while also ensuring that a company’s assets are protected in the event of divorce. For help drafting or enforcing your own prenuptial agreement, please contact an experienced high asset divorce attorney who can assist you.

Owning a Business Prior to Marriage

If a person owns a business going into a marriage, then those assets will most likely fall under the category of separate property in the event of divorce. However, any growth in value and earnings stemming from the business can and probably will be considered community property, which means that if a couple decides to divorce, the original business owner would need to split those earnings down the middle. Furthermore, if the spouse who didn’t originally own the business ended up substantially contributing to it during the marriage, then that business interest could be considered commingled with the couple’s community property and so converted into marital property for the purpose of division upon divorce.

A couple can forestall all of these complications by entering into a prenuptial agreement before getting married. For instance, the agreement could include provisions explaining that any increase in value or earnings from the business during the course of the marriage will still remain the original owner’s separate property in the event of divorce.

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TX divorce lawyerCouples with significant or diverse assets are often forced to grapple with legal issues that don’t apply in most divorce cases. This can make the divorce process not only more complicated, but also more acrimonious, especially when it comes to valuing the family home, so if you are thinking about filing for divorce and have substantial real estate holdings, you should consider contacting an experienced Round Rock high asset divorce attorney who can ensure that your property is appraised by a qualified expert.

Comparable Sales

For a marital estate to be fairly divided, the value of a couple’s property must be accurately assessed. When it comes to real estate, this usually means that the parties will need to hire an appraiser who can estimate value based on current market conditions and recent sales of comparable properties in the area. When dealing with especially valuable properties, the appraisal process also often includes consideration of additional features of the property in question, which could make it more valuable than other similar properties. Unfortunately, valuing the unique features of a property can be a subjective process. For example, one appraiser may include the value of a swimming pool or a four car garage, but fail to take note of marble countertops or custom kitchen appliances during the appraisal process. For this reason, most couples going through a high asset divorce are encouraged to obtain multiple appraisals to ensure that an accurate number is reached.

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Texas divorce lawyerMany couples choose to avoid entering into prenuptial agreements because they think it represents a lack of faith in the couple’s future. This failure to create a premarital agreement can have serious consequences if the marriage later dissolves. Fortunately, even after a couple is married, the parties can still enter into an agreement, in which they decide how certain assets will be divided in the event of a divorce. This type of document is known as a postmarital agreement and is an important tool for couples who have diverse or significant assets. However, there are certain requirements that must be met for postmarital agreements to be considered valid, so if you are thinking about drafting your own postmarital agreement, it is critical to retain and consult with an experienced high asset divorce attorney.

The Benefits of Postmarital Agreements

Drafting a postmarital agreement gives the parties involved the opportunity to assess their separate and marital property, including unique assets like antiques and jewelry, as well as debt, expenses, and spending habits. These agreements, like premarital agreements, allow the parties to not only identify assets but also to convert those assets from marital property to separate property or vice versa. Couples are also permitted to address the following topics:

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