Divorces are all complex. No matter your age, level of wealth, or number of children your divorce will require you to think outside the box and plan. The attorneys with the Law Office of Bryan Fagan can tell firsthand that no divorce is so simple that you can afford to coast. Rather, the divorce process is complex enough that everyone reading this case who anticipates a divorce will need to prepare thoroughly for your case. Those of you who fail to do so will wind up with results that are not desirable.
With that said, planning for a divorce does not need to be painful. You can prepare for your divorce with goals in mind that can direct the planning. This will allow you to not expend energy or time that is unnecessary. The most important resource in our lives that we cannot get back is our time. Since time is limited, you need to use what time is available to you and take full advantage of it. Having a plan that is aimed at certain goals is an efficient way to use your time.
In today’s blog post from the Law Office of Bryan Fagan, we are going to discuss how to work through the various issues involved in a high-net-worth divorce. There are certain aspects to high net worth divorces which are unique. In today’s blog post, we will walk through how to prepare for a high-net-worth divorce.
Identify and Value all Marital Assets
A high net worth divorce necessarily contains a great deal of property or at least property that is valuable. The only way to be sure that you can account for this property would be to identify and value all of your marital property. Martial property in Texas is determined by community property laws. Community property theories revolve around the presumption that all property owned by you and your spouse at the time of your divorce is subject to division. If you or your spouse owned separate property, largely property owned before your marriage, you would need evidence to back up that assertion.
Start by walking around your home and taking photos of what you see. Go into each room of the house and document that property. Desk drawers, closets, file cabinets, and the garage need to be examined. You may find property that you forgot about long ago that needs to be accounted for. Once you have inventoried all that physical property it is time to go through your digital property. Stocks, other investments, retirement accounts, and cryptocurrency are just a few of the types of property that we have in mind.
An inventory is step one of this process. Step two involves valuing or appraising the property. Sometimes this is simple. A bank account’s value is reflected in the amount of money in the account currently. However, other assets like your home or certain types of retirement accounts may be more difficult to appraise. You may need to perform research yourself or even hire an appraiser to assist with this step. Coming up with an approximate value of your community property estate helps when it comes to planning out the next steps of your case.
Valuing a business in your divorce
Are you or your spouse the owner/proprietor of a business? If so, then you need to be able to effectively value that business. Just as we saw a moment ago, valuing a business can be complicated depending upon the circumstances. Let’s say that you own a lawn maintenance business. You have no employees. The tools that you use to run the business include a small mover, an edger, and replacement parts for the tools. You own a trailer and a truck to haul the equipment.
When you started the business matters. If the business predated the marriage then there is a chance that the business is not community property. However, if community property funds were used to invest in the business your spouse may be due reimbursement. The business would not be eligible for division absent other facts that are not in place here.
Business division in a community property state
If you do own a business that is eligible for division as community property then you have some work to do. In this example, your spouse does not work within the business or provide an essential service. Her ability to work inside the business is not important and she would likely not be interested in taking on any ownership of the business. That brings us to your options here. She would be entitled to a division of the value of the business by virtue of it being community property. How can you go about paying her out a portion of that business value?
Working with an experienced business evaluator and appraiser is a good start. Landscaping businesses are plentiful in Texas. There should be no issue estimating an approximate value for a business of this sort.
Are you in a more complex situation involving a small business? Contact the Law Office of Bryan Fagan to learn more about how we can help.
A spouse’s contributions to the business may not be strictly monetary
Let’s walk through a hypothetical situation. You can determine whether it sounds relevant to the situation that you facing in your divorce. You and your spouse married twenty years ago. In that time your spouse has built a major tech company here in the Houston area. What started as an idea hatched at your kitchen table has been built up into a large company. The success of the business has directly led to the success of your family.
However, you and your spouse are now going through a divorce. The subject of your husband’s business has been brought up by your attorney. You told him that your husband had a business and that it was in the tech field. However, otherwise, you had little to no knowledge of the business itself. This leaves you with the impression that the business is off-limits to you in the divorce. You don’t know anything about it, didn’t work within it, and have no knowledge of how to operate the business. What good could come out of you having anything to do with the business?
One thing to be mindful of is the circumstances surrounding the creation of the small business. You don’t work now but did twenty years ago when you first got married. You worked as a secretary for an insurance agency. That income was all you and your spouse had to live off of. Your husband was creating the business and finishing up a degree. Without your income, you all would not have survived that time. Certainly, your husband would not have had the ability or time to create the small business that has flourished.
Be mindful of your nonmonetary contributions
Without a doubt, there are many ways for a spouse to contribute to the financial success of your family. You don’t have to be the primary income earner to take part in the division of your community property. As we just saw in the prior hypothetical scenario it is probable that without your contributions your husband’s tech company would not exist. Take that into consideration as you plan for how to divide your community estate in the divorce.
Spousal maintenance in a high net-worth divorce
One of the most contentious topics in a high-net-worth divorce is spousal maintenance. Spousal maintenance is Texas’ version of alimony. This is an amount of money that the court may order one spouse to pay the other after a divorce. Spousal maintenance is ordered when one spouse proves an inability to provide for their minimum, basic needs after a divorce comes to an end. It is a fairly recent change to the Texas Family Code that spousal maintenance can even be ordered by a judge.
Factors such as the length of your marriage, the paying spouse’s ability to pay maintenance as well as the needs of the receiving spouse all impact whether spousal maintenance can be ordered. If you are the spouse who anticipates asking for spousal maintenance you can first attempt to negotiate for contractual alimony before a trial. However, if your spouse is not receptive to negotiation then going to trial is the only way to have spousal maintenance ordered in your divorce. Being able to present evidence displaying your need for maintenance in addition to your spouse’s ability to afford to pay are both key issues, as well.
When you face tough financial circumstances after a divorce you need to develop a strategy to meet those challenges head-on. Spousal maintenance will be ordered to last for a specific period. Even if you are awarded spousal maintenance you should not expect to receive it indefinitely. Working with an experienced family law attorney can help you to win spousal maintenance but also to develop a long-term plan geared towards financial viability moving forward.
Child support issues in high net-worth divorces
If you have minor children then issues related to the kids are relevant in your divorce. First, child support is directly influenced by the net monthly resources of the parent who pays child support. Under the guidelines as laid out in the Texas Family Code, child support is determined by multiplying the noncustodial parent’s net monthly resources against a percentage. That percentage is determined by accounting for the number of children before the court.
Typically, there are income limits for child support determinations. Under Texas law, only the first $9,200 of a parent’s net monthly income can be considered for child support calculations. However, a court can order child support that goes over and above the $9,200 cap. Any medical or educational needs your child has in addition to other expenses may all be considered by a court.
Therefore, do not lose hope that your spouse will have their income capped at well below what is fair or equitable. What you can do to help your child is to begin to organize your case. What needs does your child have that require the court to look again at your situation? Discovering all of your spouse’s income sources may require you to submit discovery requests to your spouse. In other words- develop a plan for your case and focus on the details.
Child custody in high net worth divorce cases
Going through a divorce with minor children means dealing with subjects related to child custody. Child custody deals with subjects ranging from possession to visitation to access. In short, custody is a catch-all term having to do with many issues surrounding your minor children. The better you can identify the particular needs of your children the better off they will be. However, we are here to talk about child custody from the perspective of high-net-worth individuals.
If you work a substantial amount then your ability to care for your child may be lessened. A hectic work schedule does not make you a bad or neglectful parent. However, it does put you in a position where you may not be able to act as the primary caretaker of your child. This is an issue that is determined within child custody cases. Believing that you are capable of acting as your child’s primary caretaker is one thing. It is another to have a schedule that allows you to do so.
Child custody cases extend into the rights and duties that you possess as a parent. Decisions are made within a child custody case based on the best interests of your child. The best interests of your child standard attempts to consider a range of circumstances in the life of your child. This includes your child’s mental and physical health as well as your abilities as a parent. High-net-worth individuals should not expect that their wealth will impact them positively in this regard.
Preparing for a high net worth divorce
Preparation is key in any kind of divorce. Particularly in a high net worth divorce, you must begin early to develop a game plan geared towards achieving your goals in a case. If you plan on filing for divorce, then this gives you additional time to plan for and seek out advice in your case. Importantly, high net-worth families have typically more issues to walk through and negotiate. Since you cannot create more time than it’s already allotted to you it is best to prepare for your divorce as soon as possible.
Start to collect financial documents and organize the documents you already have. This can save you time later in the case. Bear in mind that work performed during the divorce costs more money due to it being completed by your attorney. Work performed before the case can be much less expensive. This goes for collecting documents, organizing them to even negotiating with your spouse. Once you hire your attorney work can be done to “double-check” any work performed during your pre-divorce planning.
While it is possible to live the life you have become accustomed to after the divorce this is less likely than you may think. As a result, prepare for the divorce to think more about life after the case is completed. What are your plans for income? What do you need to do now to prepare yourself for that future? Are you going to need spousal maintenance or are you going to be ok with your separate property and community property? Answer these questions now before you run into issues regarding these subjects during a divorce.
Addressing questions to the Law Office of Bryan Fagan
It is normal to have questions about subjects that are of critical importance like that of a high net worth divorce. People like yourself who are going through divorces oftentimes have questions that range from the simple to the complex. This makes a great deal of sense given that divorce cases involve subject matter that touches on every area of your life. When you have questions like this you can address them to the attorneys with the Law Office of Bryan Fagan.
The experienced attorneys with the Law Office of Bryan Fagan appreciate you choosing to spend part of your day with us here on our blog. Our attorneys post unique and informative content on our blog seven days a week. This information is intended to help our community learn more about the family law process. If you have questions or seek clarification on anything you have read in today’s blog post, please do not hesitate to contact us. The Law Office of Bryan Fagan is on your side.
Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan
The attorneys with the Law Office of Bryan Fagan offer free of charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas family law. Before signing a document or negotiating on a subject you do not know well, contact our office. We look forward to the opportunity of serving you during an important part of your life. The Law Office of Bryan Fagan is on your side.
Evan Hochschild was raised in Houston, TX and graduated from Cypress Creek High School. He went on to graduate from Southwestern University in Georgetown, TX with an undergraduate degree in Political Science. While in college, Evan was a four-year letterman on the Cross Country team.
Following in the footsteps of his grandfather and uncle before him, Evan attended law school after he completed in his undergraduate studies. He graduated from St. Mary’s University School of Law and has practiced in a variety of areas in the law- including family law.
Mr. Hochschild is guided by principles which place the interests of clients first. Additionally, Evan seeks to provide information and support for his clients with the heart of a teacher.
Evan and his wife have four small children together. He enjoys afternoons out and about with his family, teaching Sunday school at his church and exercising. A veteran attorney of fourteen years, Mr. Hochschild excels in communicating complex ideas in family law simply and directly.
