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:

There 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:

For couples who are going through a high asset divorce and who also own unique or particularly valuable assets, property division negotiations can be one of the most complex parts of the entire divorce process. Whether an asset falls under the category of a personal possession, a business asset, real property, or another type of asset, its purchase date will have an extremely important impact on how it is divided upon divorce. For this reason, most couples who are going through a high asset divorce are strongly encouraged to carefully evaluate and separate marital property from assets that were accrued prior to marriage.

To ensure that this task is manageable for both parties, couples in this position may want to consider creating a marital property checklist, a tool that often proves invaluable to divorcing parties who are concerned about coming up with a fair and equitable property division settlement. Unfortunately, creating this type of list can be difficult, so if you and your spouse have decided to file for divorce, it is important to contact an experienced high asset divorce attorney who can help protect your interests.

What to Include on a Marital Property Checklist

In an effort to keep the property division process as organized as possible, many divorcing couples choose to create a list of all the marital property that must be divided. Most marital property checklists contain at least four categories of assets, including:

Many couples who decide to file for divorce are willing to communicate openly and honestly about their assets in an effort to ensure that their divorce is resolved as smoothly and as amicably as possible. Unfortunately, this is not always the case, especially in high asset divorces when valuable property is at stake. In these cases, it is not uncommon for one spouse to try and hide assets from the other in an effort to avoid reaching a fair property settlement. If you believe that your spouse is hiding assets in order to avoid dividing them equitably upon divorce, you should speak with an experienced high asset divorce attorney who can help you determine your next steps.

Why Hiding Assets Is Problematic

Texas is a community property state, which means that most family law courts divide marital assets owned by a divorcing couple fairly and equally upon dissolution of the marriage. Hiding assets makes this endeavor nearly impossible and could leave one spouse struggling financially after the divorce is finalized. Unfortunately, this type of conduct is particularly common in high asset divorce cases, where one spouse wants to keep a unique or valuable asset to him or herself.

What Are the Penalties for Hiding Assets in Texas?

Because hiding assets is so detrimental to the process of creating a fair property settlement, Texas courts impose severe penalties on those who attempt to defraud their spouses in this way. For instance, a divorce judge who is confronted with evidence of concealed assets could order the at-fault party to give up the asset to the other spouse or could award a greater share of the community assets to the innocent party. Parties who choose to hide assets during divorce could even face charges from the IRS if those actions had tax implications.