The tax reform laws that went into effect early last year have had a significant impact on American taxpayers, especially couples with diverse or valuable assets who are attempting to obtain a divorce. Fortunately, there are a few tax strategies that can help divorcing couples reach a settlement agreement that is in all parties’ best interests. For help navigating your own complex divorce, please contact a dedicated high asset divorce lawyer who has the resources and experience to assist and advise you.

Selling the Family Home

Spouses who have made the decision to file for divorce are encouraged to take a number of steps that could assist them with their tax situation following the dissolution of their marriage. Selling the family home, for instance, can save couples a significant amount of money following divorce. This is largely due to the fact that property taxes are now no longer fully deductible, which means that if one party retains the family home, he or she could end up with a much higher property tax payment that in previous years. Similarly, selling secondary real estate or vacation homes can help couples consolidate their funds and secure their financial future going forward.

Negotiating the Value of Dependents

Tax experts also recommend that divorcing couples with significant assets who also share children, negotiate the value of those dependents during the settlement process. This is an important step because the recent tax reform also lowered the exemption that a parent can claim for each child, although the child tax credit was increased from $2,000 to $1,000. Unfortunately, that credit begins to phase out for those with $200,000 or more of income. However, this can be countered through negotiation by allowing the lower-earning spouse to claim those credits in exchange for other assets.

While ending a marriage is always a complicated process, certain types of divorces are notorious for being especially difficult. Couples with significant, unique, and diverse assets, for instance, often face more difficulties when it comes to accounting for and dividing up marital assets when dissolving a legal union. Fortunately, many of these problems can be avoided if the parties involved retain experienced high asset divorce attorneys who can ensure that their divorce is resolved as quickly and as smoothly as possible.

Identifying Assets

There are a number of complications that can arise during any divorce. Some, however, are particularly common in high asset divorces. Dividing marital property, for instance, tends to be much more difficult for couples with significant assets. This is largely due to the fact that a couple’s finances become more complicated as wealth is amassed. As a result, accounting for the many forms of property, which could range from real estate and business interests to stocks and other investments, can become a complex process. For these reasons, couples with significant assets are often encouraged to retain a forensic accountant who can help them track down all of their financial holdings, which in turn, can help ensure that any property settlements reached by the parties will be as fair as possible.

Appraising Assets

It is also much more difficult to appraise all of a couple’s property in a high asset divorce, as the assets tend to be more complex. For this reason, couples who decide to dissolve their marriages and who own diverse or unique property will need to obtain individual appraisals from experts for assets, such as:

Cryptocurrency, or virtual currency, has existed in one form or another since 2009, but has become a much more mainstream investment over the last few years. While it is true that investing in cryptocurrency can be a lucrative endeavor, it can also make for a difficult and lengthy property division process for couples who later decide to divorce. For instance, it is becoming increasingly common for one spouse to use cryptocurrency as a means of hiding assets from the other during the divorce process.

Fortunately, there are ways to prevent this type of behavior, which is unlawful under Texas law, so if you and your spouse have decided to file for divorce and you have questions or concerns about how your marital assets will be divided, you should strongly consider contacting an experienced high asset divorce lawyer who can ensure that you reach a fair and equitable settlement.

Tracing Cryptocurrency

As stated earlier, cryptocurrency is virtual currency that exists only online and is traced on an encrypted ledger that details all transactions. Unfortunately, it is the very nature of cryptocurrency that makes it an ideal means of hiding assets, as it tends to be difficult to trace and hard to value. Divorcing spouses are required to disclose all of their assets and liabilities at the outset of proceedings and while many are forthright in these disclosures, some are not so scrupulous. Cryptocurrency is the perfect vehicle for many of those who fall under the latter category.

Although 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.

Finance-related issues are often the biggest source of conflict amongst divorcing couples, something that is especially true for couples with a high net worth who own unique, significant, rare, or particularly valuable assets. In these cases, conflicts can quickly escalate, derailing negotiations and resulting in months or even years of litigation. Fortunately, high asset divorces don’t have to be accompanied by conflict and disagreement, as there are a number of important steps that couples can take to help their divorce move towards amicable relations and a secure financial future for both parties. For help ensuring that your own divorce goes as smoothly as possible, it is critical to speak with an experienced high asset divorce lawyer who can advise and assist you.

Obtaining a Clear Picture of Your Asset Portfolio

While many married couples have an equal say in financial decision making, it is also not uncommon for one spouse to be more involved in overseeing the family’s financial holdings than the other. Unfortunately, this can leave the non-involved spouse at a disadvantage if a couple later decides to obtain a divorce. For this reason, spouses who are considering filing for divorce are strongly encouraged to begin taking steps now to document their financial situation by collecting copies of bank statements, loan documents, tax returns, invoices, and receipts.

Hiring a financial expert can be crucial to the success of this endeavor, as can retaining an experienced family law attorney who can ensure that the parties receive equitable treatment during the property division process.

Even 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:

Texas residents who file for divorce and who are unable to come to an agreement regarding how their assets will be divided are often concerned about how their inherited assets will be handled by the court during the process of property division. While it is true that for the most part, inheritances that are left to only one spouse during a marriage are considered the separate property of that spouse, this is not always the case. For help determining whether your own inheritance could be divided between you and your soon-to-be former spouse upon divorce, please contact our dedicated high asset divorce legal team today.

What Is Separate Property?

Texas is a community property state, which means that during divorce, all of a couple’s marital property must be divided equally. For this reason, determining which assets qualify as marital and which are considered separate is extremely important to the results of the property division process. Marital property is made up of assets accumulated by the couple during the marriage, regardless of which spouse purchased or acquired them. The term separate property, on the other hand, refers to assets that the parties brought into the marriage.

Important Exceptions

While determining which type of property an asset qualifies as depends largely on when the asset was acquired, there are a few exceptions to this general rule. For instance, inheritances that are left to one party exclusively are usually considered to be separate property, even when the bequest is made during the course of the beneficiary’s marriage. Similarly, assets that would initially qualify as separate property can become marital property if they were commingled with the couple’s marital property during the marriage. This same rule applies to inheritances, so just because a person received an inheritance during his or her marriage, does not automatically mean that it will be considered separate property. Instead, courts will also look at what the inheritor used the bequest for when determining whether it should be divided equally.

All divorce proceedings are complex and potentially emotional for the parties involved. High asset divorces, however, tend to come with their own set of unique issues. For instance, hiding assets is much more common in divorces where one or both spouses have significant, unique, diverse, or particularly valuable assets. Fortunately, there are steps that divorcing parties can take to ensure that their spouses are not attempting to hide assets, so if you and your spouse have decided to file for divorce and you are concerned that he or she may be attempting to hide or waste assets, it is critical to speak with an experienced high asset divorce attorney who can explain these steps to you and ensure that your property is protected.

Most Common Methods of Hiding Assets During Divorce

Unfortunately, it is not uncommon for one spouse to try and hide assets from the other during divorce by utilizing one or more of the following methods:

• Transferring marital assets out of a joint account into a newly created or already existing account that is only in one spouse’s name;
• Transferring cash or investments to a friend or relative’s account until the divorce is finalized;
• Purposely overpaying the IRS and instructing the agency to use the current year’s refund for next year’s taxes;
• Taking cash withdrawals on debit cards;
• Delaying any promotions, raises, or bonuses until after the divorce is finalized;
• Delaying receipt of commission payments; and
• Purposely failing to report employer retirement accounts or stock options to the financial analyst.

Couples who own an interest in a business have even more options when it comes to hiding assets, including: