During a high net worth divorce, couples will need to address multiple different types of assets, including financial accounts, vehicles, jewelry, furniture, valuable artwork or collectibles, and family businesses. Real estate, including the marital home, vacation homes, or commercial properties, are often among the most valuable assets owned by a couple, and complex property litigation may be needed to determine how the division of this property will be handled. During the divorce process, spouses should be sure to understand their rights regarding real estate property and the legal and financial issues that they may need to address.

Community Property Vs. Separate Property

The first thing to consider when addressing real estate is determining whether it is considered community property or separate property. Community property includes any assets acquired by either spouse during their marriage, and Texas law requires these assets to be divided equally during a divorce.

A home or other real estate property purchased during a couple’s marriage will be considered community property, while real estate owned by one spouse before getting married will usually be considered separate property that will remain in the possession of that spouse. However, these issues can become more complex if a spouse contributed toward an increase in the value of the other spouse’s separate property during their marriage.

If you are planning to end your marriage, you will need to address a wide variety of legal issues. In a contested divorce, disputes with your spouse can become highly contentious, and if you have children together, you will likely disagree about how you will share in parenting duties and divide the time that your children spend in each of your homes. If you are struggling to reach agreements about complex child custody issues, the judge in your case may decide that a child custody evaluation is needed. Depending on the circumstances of your case, either a guardian ad litem or another type of child custody evaluator may be appointed.

What Is a Guardian ad Litem?

The court may appoint a person who will represent the best interests of the child in a divorce or child custody case. In many cases, a guardian ad litem will be an attorney, but they may also be another person who has the training and experience necessary to determine what is in a child’s best interests.

The guardian ad litem, or GAL, will conduct an investigation and gather information about the case. They may conduct interviews with a child who is at least four years old, the parents, and anyone else who has knowledge about the child’s history and circumstances, such as teachers or childcare providers. They will also be able to obtain records related to the child’s education, medical care, or psychological treatment.

Financial issues are likely to be a concern for anyone who is splitting up with their partner. In many high asset divorce cases, one spouse earns the majority of the family’s income, and the other spouse may be unable to make enough money to provide for their needs on their own. A spouse may ask for spousal support, which is also known as spousal maintenance or alimony, to be paid, giving them the means to pay for their ongoing expenses. However, spousal support is not awarded in every case, and spouses should be sure to understand how Texas’ divorce laws will apply in their situation.

When Is Spousal Maintenance Awarded?

The purpose of spousal support is to provide for the needs of a spouse who is unable to provide for their own minimum reasonable needs. Typically, a spouse will be eligible to receive spousal maintenance if the parties have been married for at least 10 years, and the spouse who is seeking spousal support does not currently have the means to support themselves. This will allow a spouse to receive ongoing support payments if they did not work during their marriage or relied primarily on their partner’s income to meet the family’s needs.

While spousal maintenance is rarer in marriages of less than 10 years, there are some situations where it may be awarded. These include cases where a spouse has a physical or mental disability that causes them to be unable to earn enough income to support themselves or where a spouse will be the custodial parent for a child who has a disability that requires a level of care that would prevent the parent from earning a sufficient income. A spouse may also be required to pay spousal support if they were convicted of family violence against the other spouse or their child during the marriage or divorce. Even if a spouse would not normally be eligible to receive spousal maintenance, a couple may agree that support will be paid as part of their divorce settlement, or the terms of a prenuptial agreement may require support to be paid.

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.

During a high net worth divorce, you will need to address a wide variety of financial issues, and the decisions you make can have a significant impact on your finances and your ability to provide for your family in the future. As you address matters related to the division of property, spousal support, and child support, you will need to be sure to understand how these issues will affect your taxes. This will help you avoid surprises related to tax debts, unexpected tax obligations, or other concerns that could affect your financial stability. Some of the tax-related concerns that you may need to address during a high asset divorce include:

• Filing status - Once your divorce is finalized, you will no longer file taxes jointly with your spouse. However, it may be beneficial to file joint tax returns if you were still married in the year(s) before your divorce, and you may need to work with your spouse to ensure that all relevant financial issues are considered, including how you will divide any tax refunds or who will be responsible for paying taxes owed. Following your divorce, you will likely need to make a variety of adjustments when filing as a single person, and you may need to review the deductions or exemptions that you may be able to take and determine the best strategies for minimizing your tax burden.
• Dependents and child tax credits - If you and your spouse have children, only one of you may claim them as dependents and receive any applicable tax credits. In many cases, the custodial parent will claim children, although you may be able to negotiate an arrangement that will provide you both with the maximum tax benefits. Following your divorce, you should be sure to update your tax withholding information to make sure the correct amount of taxes is being withheld from the income you earn.
• Taxes on alimony - In the past, spousal support was tax-deductible for the payor, and it was considered taxable income for the recipient. However, this changed in 2019. A payor can no longer deduct alimony payments, and a recipient will no longer need to pay taxes on spousal support. This can result in more overall taxes being paid and lower alimony payments. However, spouses may be able to find other arrangements that are more financially beneficial for both parties, such as allowing a spouse to receive a larger portion of the marital estate instead of alimony or creating a trust that will provide ongoing payments to the recipient.
• Property taxes - Spouses will need to consider the taxes associated with any assets they will own after the divorce, including property taxes on the marital home, vacation homes, or any other real estate property. A spouse should be sure they will have the financial resources to pay these taxes on an ongoing basis.
• Capital gains taxes - While taxes will not apply to any assets transferred between spouses within one year after their divorce is complete, the sale of assets such as stocks or real estate during or after divorce could result in capital gains taxes. Spouses should be sure to understand what taxes will apply in these cases and who will be responsible for paying them.
• Retirement accounts - When transferring funds in accounts such as 401(k)s or IRAs between spouses, a Qualified Domestic Relations Order (QDRO) should be used to ensure that taxes will not apply to these transfers and that a spouse will not be required to pay penalties for withdrawals made before reaching retirement age. Spouses may also need to address the tax implications of dividing pension benefits or other executive retirement benefits.
• Business taxes - If either spouse owns a business or professional practice, they will need to determine how taxes that apply to the business will affect the decisions made during the property division process and the income that they earn on an ongoing basis. As part of the business valuation process, spouses will want to consider the taxes owed by a business, whether the business is structured as a pass-through entity, and how business losses will affect taxes owed in the future.

Contact an Austin High Asset Divorce Lawyer

The attorneys of Powers and Kerr, PLLC can make sure you have fully considered the tax implications of the decisions you make during your divorce. With our extensive experience handling complex financial issues, we can help you reach a resolution that will protect your financial interests and allow you to provide for your family’s needs. Call our Austin, TX high net worth divorce attorneys at 512-610-6199.

If you earn a large income or own valuable assets, you will want to make sure you are financially protected if you or your spouse choose to pursue a divorce. In many cases, the best way to protect yourself from financial losses in a high net worth divorce is to make decisions ahead of time about how certain issues will be handled. A prenuptial agreement, which you and your partner can sign before getting married, will allow you to specify how you will handle the division of community property if your marriage ends, as well as other matters related to your finances.

To be valid and enforceable, a prenuptial agreement (also known as a “prenup”) must be in writing, and it must be signed before you get married. Both spouses must also provide each other with a fair and reasonable disclosure of their finances, including the property they own, the income they earn, and the debts they owe. A spouse can waive their right to receive a financial disclosure from the other party, but this waiver must be completed before the prenup is signed.

What Decisions Can a Prenuptial Agreement Make?

In Texas, a prenuptial agreement is also known as a “marital property agreement,” and it can include decisions related to the ownership or disposition of the couple’s property, including community property or separate property owned by either spouse. A prenup can define each party’s rights and obligations toward their property during their marriage, including the right to buy, sell, lease, transfer, or use physical property, real estate, financial instruments, or anything else owned by either or both spouses.

Preparing for an imminent divorce in Texas is difficult under any circumstances. Whether you are planning to file but want to make sure you are the one who serves your spouse with papers, or you have recently been served with a divorce petition, getting ready for a divorce can be extremely stressful. High asset divorces in Texas make preparation for a divorce even more complicated given the value and complexity of many assets that will be classified as community property under Texas law. When an Austin high net worth divorce is imminent, you should begin taking steps to ensure that you have the best chance of reaching a divorce resolution that is right for you. The following are tips for preparing for an imminent high asset divorce. If you have additional questions or need assistance, you should reach out to an experienced Texas high net worth divorce lawyer as soon as possible for legal advice.

Find an Attorney with Experience Handling High Net Worth Divorces in Texas

It is incredibly important to have a lawyer with experience representing Texas clients in high asset divorce cases. While you might think that any well-reviewed divorce attorney can handle your case, it is in your best interest to hire a high asset divorce lawyer who knows how to effectively represent clients in your position. High net worth divorces can have a variety of complex and contentious issues, and you will want to have an advocate on your side who knows what to do.

Learn About Appraisers and How They Can Help with Asset Valuation

Now is the time to begin learning about appraisers and how an appraiser can help you to obtain fair valuations for assets that will likely be classified as community property. You should not rely on your spouse to hire an appraiser. To be sure, you will want to work with an appraiser who is clearly a neutral party and will not give a biased valuation of certain tangible property.

The division of community property is a complicated process in any Texas divorce, but it is often particularly complex in high asset divorces in the state. If you are planning for a divorce or you have just begun the process of filing, you probably already know that, under Texas law, Texas is a community property state. What does this mean for your divorce and your property? In short, most property acquired after the date of the marriage will be classified as “community property,” or property of the community (the community being your marriage). Property acquired prior to the date of your marriage, as well as certain property acquired after the date of marriage, will typically be classified as separate property. In Texas, community property is divided in a divorce in a manner that is “fair and just,” according to the Texas Family Code.

What, then, is commingled property? The term commingled property refers to debts or assets that have characteristics of both separate property and community property. In a high net worth divorce, dealing with commingled property can get complicated, but an aggressive Austin high asset divorce attorney can help. In the meantime, we want to provide you with more information about commingled property and to discuss how courts handle it.

How a Court Will Handle Commingled Property in a High Asset Divorce

How will a court handle commingled property in your high asset divorce? The answer to that question depends largely on just how commingled the property has become. The level or amount of commingling will probably depend upon a few different factors, including, for instance, the type of property and the length of time for which it has been commingled. If the court can trace out, or separate, the community property from the separate property, it will likely do so. However, if the property is so commingled that it is not feasible to determine what amount of the property is community property and what amount is separate property, all of the commingled property could end up being classified as community property and divided between the spouses.