Divorce is a complicated and difficult process no matter what kind of case yours is. Many people have somewhat “typical” divorces that involve a husband and wife who each work and earn an income that is considered middle class. Maybe there is some retirement savings to consider but for the most part there are not a lot of moving pieces to be overly concerned with.
On the other hand, you may be considering a divorce from your spouse where your case will be much different from the one described in the previous paragraph. If you and your spouse earn a high income and have accumulated significant amounts of property and assets it is not a good assumption to make that what works for most divorcing spouses in terms of property division will work for you in your divorce.
Leaving a division of assets to the judge in your case is a risk because the standard that courts use “a just and right division” may turn out to be anything but for your particular situation. The Law Office of Bryan Fagan, PLLC would like to walk you through some of the more pertinent issues in high net worth divorces in this blog post.
Potential issues in high net worth divorces
As we’ve already touched on, high net worth divorces are different than other divorce cases. One issue that I have seen occur much more frequently in high net worth divorces than in other sorts of divorce cases is that one party or the other will attempt to conceal assets in hopes that their spouse will not be able to discover them.
As Texas is a community property state any asset that originated during the course of your marriage is subject to being divided up between you and your spouse during the divorce. Therefore, there is incentive for your spouse to either attempt to hide something from you in order to keep it from being divided during the divorce or to attempt to mischaracterize an asset as your spouse’s separate property. Your spouse’s separate property is not subject to being divided up with the community estate and would keep you from being awarded a percentage of the asset.
Forward thinking and advanced planning can offer advantages to litigants
If the above scenarios concern you then it is essential that you plan with your family law attorney early and often for outcomes inside and outside of the courtroom. The most critical analysis that you and your attorney can do is to help determine if an asset is part of the community estate or is your separate property. Your attorney can help you “trace” the funds that were used to pay for an asset, as in where the source of the purchasing funds came from in order to determine if an item is truly community or separate.
In addition, your lawyer will provide you with a more objective opinion as to whether or not something actually is your separate property. I have seen clients vehemently argue their position as to why one asset or another is actually their separate property. Sometimes your emotions as a party to the divorce will not allow you to see a situation objectively as a judge would. Your attorney’s advice and counsel on this sort of subject is essential.
Concerns for Business owners
If you or your spouse own a business then determining first and foremost whether or not part or all of the business is community property is the first decision that must be made. If the business is part of the community estate an accurate assessment of the value of the business is necessary if you want to be able to make settlement offers that are actually in line with the reality of the situation. In the event that your business needs to be divided it may make sense to share the costs of an appraisement of the business with your spouse to even out the costs of doing so.
Once you have a valuation to consider, it is time for you and your spouse to negotiate on a solution to dividing it up. Do you want the business to remain yours to earn income from? If so you will need to be ready to pay your spouse for their share in the “equity” of the business or be prepared to hand to her another asset from the community estate that has a similar value.
If neither of you want any future part of the business (other than the value of it) then finding a suitable buyer for the company is important to allowing your divorce to proceed without needless delays.
Retirement and Investment Asset Protection
If you or your spouse have been saving substantial amounts of money for retirement then those retirement accounts are likely to be part of the community estate. In many cases these savings are held in Individual Retirement Accounts (IRAs) or 401(K)’s through one of your places of employment. If this is the case then it is not simply a matter of dividing the money in half in your Final Decree of Divorce and then calling it a day.
Rather, a Qualified Domestic Relations Order (QDRO) will need to be drafted along with your Decree of Divorce that is signed by the judge and instructs the plan administrator for your retirement plan to follow through with the terms of the division agreed to in the divorce. When hundreds of thousands (or more) of dollars are at stake an eye for detail and experience in negotiations is essential.
High Asset divorce attorneys for Southeast Texas: The Law Office of Bryan Fagan, PLLC
If you are considering filing for divorce and have found that the factors above apply to you then you will need an experienced divorce attorney in the field of high net worth divorces. The attorneys with the Law Office of Bryan Fagan, PLLC work to ensure that our clients with high incomes and complex estates are handled with respect and care. To learn more about our office and the services we provide clients please do not hesitate to contact us for a free of charge consultation.
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