Getting a divorce can be a difficult and laborious process for any couple, but it can be especially complicated for those who have a high net worth. In these cases, spouses will likely need to address multiple different types of high-value assets, and complex property litigation may be needed to ensure that spouses each receive an equal share of their marital assets. A skilled divorce attorney can help you understand how different types of property should be addressed as you work to complete the process of dissolving your marriage.

Division of Community Property

In Texas, all assets that a couple acquires during their marriage are considered community property, and each spouse should receive an equal share of the marital estate. Some types of high-value assets that may need to be addressed during divorce include:

• Real estate - A couple’s primary marital residence, vacation homes in the state of Texas or other states or countries, and any other real estate property should be appraised to determine their monetary value. Spouses should be sure to understand whether they will be required to pay capital gains taxes on any property sold during or after divorce.
• Investments - Spouses may own stock options, foreign bank accounts or investments, retirement funds, pensions, or other complex financial assets. A forensic accountant can review these assets to determine their full value so they can be properly divided during divorce. When dividing retirement assets, QDROs should be used to avoid taxes and penalties.
• Business interests - If either spouse is a business owner, operates a professional practice, or has an ownership share in a family business, a business valuation will need to be performed to determine the present and future value of the business. This can ensure that business interests will be considered properly when dividing marital assets.
• Valuables and collectibles - Spouses may own items such as artwork, jewelry, designer clothing, sports memorabilia, or other property that may have both a monetary and sentimental value. Appraisals should be performed on these assets to determine their actual worth.
• Inheritances - An inheritance received by a spouse either before or during their marriage will typically be considered separate property rather than community property. However, inheritances may become commingled with other assets, making it difficult or impossible to distinguish these funds from other marital property. In these cases, assets that were inherited may be converted from separate property to community property.

Contact Our Austin High Net Worth Divorce Lawyers

At Powers and Kerr, PLLC, we have represented spouses in divorce cases involving a wide variety of different types of complex assets. We can ensure that you address these matters correctly, and we will fight to protect your financial interests and help you reach a positive outcome for your case. Contact our Austin, TX high-value property division attorneys by calling 512-610-6199.

Business interests are often an important consideration in a high net worth divorce. A family business can represent a significant source of income, and it is likely to be one of the most valuable assets owned by a married couple. Since business interests must be included along with other assets when dividing marital property between spouses, determining the value of a business is crucial for making sure all assets can be allocated fairly. In these cases, spouses should be sure to understand the methods that may be used when performing a business valuation.

Three Methods of Business Valuation

There are multiple different approaches that can be taken when determining a business’s value. Typically, they fall into the following categories:

• Asset-based valuation - The simplest method of business valuation involves a calculation of the total value of the assets owned by a business. The business’s debts or liabilities are then subtracted from this total to determine the value of the company. While this approach can determine the cash value of the tangible assets owned by a business, it may not take other factors into account, such as the business’s goodwill in the community, its relationship with its customer base, and the value that an owner brings to the organization.
• Income-based valuation - This approach can be used to obtain an idea of the income that a business will likely generate in the future and its potential growth over the next several years. Methods such as discounted cash flow can look at the business’s past earnings and projected future earnings, while also considering how these earnings may increase if they are reinvested in the business to promote growth. This approach will often provide a better understanding of how a business will increase in value, ensuring that spouses understand the benefits of retaining ownership of business interests.
• Market value - Another method that may be used to determine a business’s value will look at recent sales of other similar businesses in the same geographic area. This can provide an idea of how much the spouses would be able to receive if they sold the company during their divorce. However, this method is not always completely accurate, since factors that affected the selling price of other businesses, such as poor management, may not apply to the business owned by the divorcing spouses.

In many cases, a combination of these approaches is used to place a monetary value on a business. Once spouses have a full understanding of the value of this and other assets, they can determine how to divide their marital property fairly. In some cases, one spouse may retain full ownership of a business, while the other receives other assets of a similar monetary value. Spouses may also decide to sell a business and divide the profits, or they may choose to continue to co-own a business after they complete their divorce.

When you are in the midst of divorce, it is necessary to protect your rights from all angles, especially when it comes to finances. The lengths you go to in order to secure your financial well being and how you handle those proceedings will determine a great deal in terms of your quality of life and your overall lifestyle once the marriage has officially ended.

Why You Should be Concerned About Marital Assets

There are multiple reasons you should be aware of the possibility of hidden assets within your marriage as you undergo divorce. While it is obvious that every spouse should naturally be concerned about finances during a split, if you are not vigilant, hidden assets, in particular, can significantly affect your bank account, investments, and other financial resources after the divorce is final.

When your spouse conceals assets, it places you at risk for losing large chunks of marital property that you would otherwise be eligible to claim. This loss of property can affect everything from your day-to-day bills to your general financial stability. It can also trigger more long-lasting consequences, such as creating obstacles to your future financial plans, as retirement funds, savings accounts, and more can be affected.

There are a variety of financial issues that may need to be addressed during a high-asset divorce, and one of the key considerations for many spouses is the possibility that their former partner may be attempting to hide assets. This is often done with the intent of influencing the property division process or to reduce the amount of spousal support or child support payments that a person would be required to make.

When spouses have a high net worth, complex property litigation may be needed to sort out multiple different types of assets and ensure that they are divided properly. Litigation may also address any attempts to conceal assets or income. Concerns about hidden assets are likely to arise if one spouse is a business owner. Some common ways that a business may be used to hide assets include:

• Misreporting income and expenses - A business’s financial records can be used in a variety of ways to conceal assets, such as by failing to report cash payments or reporting fraudulent expenses.
• Paying nonexistent employees - A business owner may claim that they are paying a salary to an employee while funneling this money into a private account. In some cases, a person may employ a friend or family member and overpay them as a way to have them hold money until the divorce is complete.
• Depreciating business assets - A person may claim that assets owned by a business, such as equipment, vehicles, or real estate, are worth less than their actual value. By attempting to reduce the overall value of the business, a spouse may attempt to avoid dividing this or other marital property fairly.
• Overpaying taxes - A business owner may purposely pay more taxes to the government than are owed with the intent of receiving a refund after their divorce has been finalized.
• Delayed transactions - A person may wait to sign business contracts or complete major transactions until after a divorce has been completed, allowing them to avoid reporting this income or any increase in the value of the company during the divorce process.
• Transferring business assets to others - A spouse may give an ownership share of their business to a family member or friend, or they may transfer other assets into someone else’s control. This may be done with the intent of removing these assets from the marital estate while planning to resume ownership of the assets after the divorce has been finalized.

Contact Our Austin, Texas Business Valuation Lawyers

If your spouse is a business owner, you will want to make sure all of the financial issues related to the business are considered properly during your divorce. At Powers and Kerr, PLLC, we will work to make sure all business assets and financial records are uncovered during the discovery process, including working with forensic accountants to gain a full understanding of the value of business assets and all forms of income and cash flow. We will help you determine how these matters should be addressed during the divorce process, and we will work to protect your rights and financial interests at all times. Contact our Austin high asset divorce attorneys today at 512-610-6199.

While most wealthy couples in Texas will have more than one retirement account that will be subject to division in a divorce, it is important to understand how the court is likely to treat your 401(k) accounts, and how those accounts can be divided without incurring substantial penalties. You should learn more about the classification of 401(k) accounts in a community property state like Texas, and whether there are options for preventing the distribution of your 401(k) accounts in your divorce case. When you have questions or need assistance, you should reach out to a Texas high asset divorce lawyer for help. In the meantime, the following includes information about 401(k) classification in Texas and details about distribution.

Community Property and Your 401(k) Account

As you likely know, 401(k) plans are a particular kind of defined-contribution retirement account, and employers offer them to their employees. The term 401(k) refers to the Internal Revenue Code section that governs these plans. With a 401(k) account, employees make automatic contributions from their paychecks, which are then matched by an employer (the percentage of the match depends on the employer). In traditional 401(k) plans, funds are not taxed until they are withdrawn, although withdrawals from Roth 401(k) accounts are not taxed since those are funded with “after-tax” contributions.

For most married couples in Austin, at least a portion of their 401(k) accounts will be classified as “community property.” According to the Texas Family Code, there is a presumption that assets acquired after the date of marriage are community property unless one of the spouses can prove by clear and convincing evidence that the asset is separate property. Then, community property will be divided in a manner that is “just and right” based on the circumstances of the parties. To be clear, any contributions to a 401(k) account during the marriage will most likely be classified as community property.

When you are planning to file for divorce in Austin, TX and you know that you and your spouse have significant earnings, or that you have substantial and valuable assets, you may have heard the phrases “high asset divorce” or “high net worth divorce.” Yet you may be wondering whether these terms do indeed apply to you and, if so, what they mean for your ultimate divorce process. Under Texas law, regardless of whether you have a high asset divorce, your property will be classified either as community property or separate property, and all community property will be divisible. When community property is of high value, often nearing or upwards of $1,000,000, there will be particular considerations you will want to take into account.

For example, in a high asset divorce, you may need to hire a property appraiser with expertise handling niche property, or you may need to seek multiple estimates for real property to ensure that it is appropriately valued and classified. Moreover, you may need to work with a forensic accountant who can uncover hidden property that one of the spouses was attempting to conceal. An experienced Texas high asset divorce lawyer can tell you whether you should anticipate a high net worth and what you should expect. In the meantime, the following are types of community property that may signal a high net worth divorce and the need to seek advice from a high asset divorce lawyer in Austin.

High Earnings

If either you or your spouse has had particular high earnings after the date of marriage, then you should likely be anticipating a high asset divorce that may involve additional complications.

If you are planning to file for a high asset divorce in Austin, or if you or your spouse recently filed for divorce in Texas, we know that you likely have questions about what the division of community property will look like when your investments, including mutual funds and stocks, are worth much less than they were even a month ago. You may be wondering if it could make sense to put your divorce on hold until the stock market resurges, or you might be thinking that you could end up faring better in the long run if you can ensure that community property from your marriage gets divided before the stock market resurges. Divorces are stressful enough without the added anxiety of a declining stock market and a global pandemic.

We want to discuss some of the issues concerning high net worth divorce when the stock market is in decline. If you have questions or need assistance with your divorce during this complicated time, an experienced Texas complex litigation attorney at our firm.

Benefiting and Suffering from Falling Stocks During Your Divorce Case

Depending upon the types of investments you have, some spouses could stand to benefit while the other spouse suffers from falling stock prices during a divorce in Texas. One of the spouses might have specialized knowledge about investments while the other spouse has none of that knowledge at all, and the first spouse might use that knowledge to his or her advantage in order to come out with a community property distribution or settlement that stands to benefit that spouse in the long run.

Divorces 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.