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TX divorce lawyerIf you were the primary earner in your household during your marriage, and if you also have substantial separate property (as a result of earnings prior to the marriage or a family inheritance, for example), it will be important to think about how you can protect your credit and your financial profile after a high asset divorce in Texas. Even if your soon-to-be ex-spouse does not intentionally make bad financial decisions after the divorce, some of those poor financial decisions could impact your credit if you do not take specific steps ahead of time.

As you may know, Texas is a community property state. As such, most property acquired after the marriage will be classified as “community property,” as opposed to “separate property,” and it will be divisible between the parties. You may be thinking that you do not need to worry about your spouse harming your credit or financial profile since your spouse will receive a substantial amount of community property. However, if your spouse does not have much experience handling financial accounts and assets, that money may go quickly. The following are some recommendations for protecting your credit after a high asset divorce in Texas. If you have additional questions, a Texas high asset divorce lawyer can help.

Close Joint Accounts

If you have joint accounts of any type with your spouse, you should close them. Even if closing joint accounts requires significant work, ensuring that your ex-spouse will not have access to any of your accounts can be worth it in the long run. If you do not close joint accounts, even if your spouse knows that he or she no longer owns the assets in a particular account, your ex could still attempt to use the account to his or her benefit.

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TX high asset divorce lawyerThe first step you should take when you know divorce is imminent is to hire an experienced Austin high asset divorce lawyer. Once you have a dedicated high net worth divorce attorney on your side, it will be important to talk with your lawyer about working with financial experts on various aspects of your case. From forensic accountants to art appraisers, there are a variety of financial experts who may be able to provide necessary knowledge in your divorce case. The following are the top reasons you should consider working with financial experts in your Texas high asset divorce case.

1. Locate Hidden Assets

Locating hidden assets is one of the most important reasons to work with a financial expert in your high net worth divorce. While Texas law requires parties to provide full and complete lists of all property to be classified as community or separate property, one of the parties may attempt to hide assets by unlawfully transferring them through a gift (or otherwise) to another party or moving money between community property and separate property accounts.

Unlike some other accountants, forensic accountants have experience providing evidence for the courtroom and conducting investigations. Forensic accountants are specially trained to identify fraud and hidden assets, and to provide expert testimony about those matters.

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TX high asset divorcePlanning for a divorce is complex no matter what kind of property you own with your spouse. To be sure, even when a couple owns relatively few assets and has a limited amount of debt that will be classified as community property under Texas law, accurately identifying and valuing property can still be complicated. Yet these processes are significantly more difficult and complex in a high asset divorce. And it is not just increased complexity surrounding the division of community property that can make a high asset divorce different. In addition to the division of community property, maintenance or alimony can also have significant implications for your taxes.

Our Texas high asset divorce lawyers want to help. The following are a few key ways that a high net worth divorce is different from other divorces.

More Money Means the Stakes Are Higher

While there is no set monetary figure to define a high asset or high net worth divorce, we typically use this term to talk about divorces in which the couple has $1 million or more in assets. Austin is a city where married couples have family roots for generations while also being a place where musicians and artists have decided to live. Accordingly, there are many married couples in and around the Austin area who might qualify for a high asset divorce. When a divorce involves millions of dollars, the stakes are simply higher.

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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 lawyerEven individuals who take great care when identifying, categorizing, and appraising assets during the divorce process, can overlook things that could impact their financial well-being down the road. This is especially common in cases where couples own particularly unique or valuable assets, such as a business interest, so if you fall under this category, it is important to consult with an experienced high asset divorce lawyer who can ensure that your interests are protected.

Protecting Your Business

Under Texas law, property and assets obtained by a couple before marriage are not considered marital property and so are not subject to division upon divorce. While this legal practice can be used as a form of protecting one’s assets, it should not be the only source of protection for those who own a business interest. This is largely due to the fact that even if a business was created before a person’s marriage, it could still be impacted by divorce, especially if the company is successful and growing and the other spouse had a hand in the business’s increased value. In these cases, the non-owner spouse could be awarded a portion of the increase, or appreciation, in value, which could be a considerable amount if the business owner was just starting out at the time of the marriage, and the business has since become successful.

Active Appreciation

The term active appreciation is used to describe any increase in value resulting from the actual effort of an individual, usually the business owner, to improve a company. When the parties involved in the business are married, but later decide to get divorced, the court could require the individuals to divide the increase in value, but only if the non-owner spouse helped improve the business through:

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TX divorce lawyerWhile most people assume that one of the most difficult aspects of divorce is coming up with a child custody arrangement that meets the needs of all parties or learning to co-parent with one’s former spouse, the reality is that dividing marital property is actually one of the most time-consuming aspects of any divorce. This is especially true for high asset divorces, where couples have significant, diverse, or unique assets that are difficult to inventory, appraise, and divide. Furthermore, while not all divorcing couples have children, most will have at least some assets that need to be divided before a divorce can be finalized. For this reason, it is critical for those who are considering divorce, to contact an experienced high asset divorce attorney who can explain the property division process and ensure that their rights and interests are protected.

What Is Equitable Division?

Texas is a community property state, which means that all of a couple’s marital, or community property, must be divided equitably upon divorce. While in many cases, this could take the form of an equal division, it could also result in one spouse receiving more assets than the other, especially if one of the spouses is receiving alimony. Assets that often fall under the category of marital property include:

  • The family home;
  • Real estate;
  • Vacation properties;
  • Retirement plans and benefits;
  • Vehicles;
  • Jewelry;
  • Antiques;
  • Artwork;
  • Personal possessions;
  • Bank accounts; and
  • Investments.

While dividing a couple’s bank accounts equally between two parties may be a relatively simple feat, dividing other assets, such as vehicles and personal belongings is much more difficult. When it comes to selling the family home, for instance, couples are usually required to engage in a complex process that involves:

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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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TX divorce lawyerThere is a lot at stake for any couple going through a divorce. This is especially true for those who own significant or diverse assets, so if you want to ensure that your own divorce goes as smoothly as possible, you should strongly consider contacting a Leander high asset divorce attorney who can ensure that your filings and disclosures are all made properly and on time.

Hiding Assets

One of the worst mistakes that a person can make when going through a high asset divorce is to try and hide assets from one’s spouse. Not only could this type of conduct lead to an unfair property settlement, but if a court discovers that one of the parties was dishonest when disclosing their financial holdings and debts, it could hold that individual in contempt or require that he or she turn over a larger portion of assets to the other party.

Failing to Fully Investigate Assets

Failing to disclose assets to a spouse is not always done intentionally. In fact, many divorcing couples accidentally fail to disclose assets, properties, and debts because they did not hire an expert to investigate their finances. Taking this step is extremely important, especially for spouses who were not primary earners or who have less knowledge about the family’s financial holdings, as it ensures that any settlement agreements will be fair and equitable. Maintaining an inventory of all of one’s assets is also a good idea and can give financial advisors a better understanding of where certain assets are held, as well as their approximate value.

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