The Smith Family Law attorneys represent Austin residents during divorces involving high-asset property division and allocation. Divorcing can quickly become complicated, especially when substantial property and assets are to be divided. Properly valuing all assets and correctly identifying them as separate or community property takes skill and diligence.
Although Texas is considered a community property state for the purposes of dividing marital assets, when one or both spouses retain separate property after getting married, the division of assets becomes more complex. An experienced high-asset divorce lawyer in Austin can retain the services of financial professionals or expert appraisers to help you achieve a fair and appropriate outcome of property distribution in a divorce. Contact Smith Family Law today to learn how we can use our knowledge and skill to protect your assets and your future.
What is a High Net Worth Divorce?
“High net worth” means the personal wealth of one or both spouses and the total marital assets. Although no law in Texas sets a dollar figure on “high net worth,” the general rule of thumb is that a high-asset divorce is one in which the combined marital property and assets (including investments and retirement accounts) totals over $1 million.
A high-asset divorce can involve spouses co-owning or having financial stakes in a shared business.
Dividing Property in a Texas Divorce
Property division, or dividing the marital estate, is often contentious, especially for individuals with a high net worth. It begins with identifying whether the property is separate or community under the law. Community property may be divided by the spouses in negotiations or, if negotiations are unsuccessful, by the court. On the other hand, in Texas, the divorce court doesn’t split personal property; it remains with the owner.
Once the property has been characterized, it must then be valued appropriately. Valuing investment, retirement, and other bank accounts is straightforward. Other items, like real estate, art, jewelry, and vehicles, can be trickier to appraise.
Sometimes, an expert is needed to track money in accounts or find out how much each spouse owns.
The default division of community property in Texas is a 50/50 share. However, factors related to the marriage’s end can impact the property division. For instance, the court might consider:
- Drug or alcohol abuse by one spouse
- Wasting community assets (gambling or spending money on an affair partner)
Your Austin divorce lawyer can identify specific situations in your marriage that could affect your share of community property.
How Assets Are Allocated Between Divorcing Spouses
Often, to classify property as separate or community, one starts by examining the inception of its title or ownership documents. If you wish to show a particular asset is separate property, then you may have to prove that you acquired the title before your marriage and that the asset in question wasn’t comingled with marital funds or assets.
The default presumption in Texas is that all property is community property. To exclude an item or funds from joint property, you and your divorce attorney must show strong proof of its origin.
Property one spouse acquires during the marriage through gift, descent, or devise is often considered separate property. Furthermore, if one spouse receives a settlement or compensatory damages for injuries suffered in a personal injury case, the money is considered separate property (except the amount awarded for lost wages).
Community property covers a wide range of assets in a high net-worth divorce, including:
- Marital home and vacation properties
- Savings and retirement accounts
- Stock options and other investments
- Royalties
- Investment properties
Sometimes one asset may start as separate property but may become community property over the course of the marriage. However, there may be circumstances surrounding the break-up of the marriage or other issues that can affect the division of property.
What If I Have a Pre-Nuptial or Post-Nuptial Agreement?
A well-drafted pre- or post-marital agreement can protect assets one or both spouses owned before the marriage and minimize conflict over those assets’ ownership in the event of divorce.
In the absence of this agreement, you may overcome the presumption that a particular asset is a community asset through tracing. An expert examines the ownership documentation to classify it as separate or community property.
Dividing Trust Funds and Trusts in a Divorce
Characterizing trusts can quickly become complicated. A separate trust created before marriage is a legitimate way of sheltering separate assets so they aren’t subject to division. Additionally, if the beneficiary doesn’t control trust assets, income from the trust is seen as separate property. Or, if the spouse’s parents or other relative established the trust as a form of inheritance for that individual, then the principal would be separate property, but any income from the trust becomes community property.
If the trust beneficiary does have access to the assets in the trust, called present possessory right of the property, then any income from the trust would be considered community property.
Creating a trust to siphon shared income or assets during a marriage could be considered defrauding or depleting the community estate. If your spouse does have a trust, you may benefit from consulting with a lawyer experienced in accurately characterizing property and one with the resources to investigate the extent of your spouse’s assets.
Child Support and Alimony in High Asset Divorce Cases
Spousal support, or alimony, is assigned depending on the financial state of each spouse at the divorce’s conclusion. It’s not unusual in many high-asset divorces for one spouse to have been financially dependent on the other. In such situations, the financially reliant spouse might need support to maintain their lifestyle or to become self-sufficient. If one spouse’s actions, such as infidelity or abuse, led to the marriage’s failure, they might owe alimony.
Child support is a separate award from alimony. It’s calculated based on the number of children the couple shares as a percentage of the payer’s monthly net income, per the guidelines set forth by the Texas Office of the Attorney General (OAG). However, if the paying spouse earns over $7,500 monthly, they might pay more than the calculator suggests. Ultimately, if the couple doesn’t mediate a child support agreement, a Texas family law judge determines the award.
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Complications in High Asset Divorce Cases
Expect a high net-worth divorce to take longer to settle than one in which neither party has substantial assets. Part of this is because your attorney might recommend forensic accounting for community and separate property to ensure fairness.
Other considerations that can make a high-asset divorce more complicated and time-consuming include the following:
- How complex the property and assets are
- Whether a trust or other legal entity was used to shelter property or assets
- Whether there are off-shore assets or property
- If non-standard child support or alimony applies
When looking for high-asset divorce lawyer in Austin to represent you, it’s crucial to find one with the experience and resources settling a financially complicated divorce requires. Some family lawyers specialize in complex divorces, using forensic accountants and investigators to detail marital property.
A high net-worth divorce may be more contentious than another divorce where there isn’t much to divide. The high-earning spouse might believe they deserve the fruits of their labor, while the economically dependent spouse might argue for compensation for staying at home or sacrificing their career for the other’s success.
Sorting the property ownership documentation may take time and require expert review. That’s why hiring an experienced high-asset divorce lawyer is crucial. Your attorney prioritizes your interests and might seek second opinions on asset appraisals, for example.
Do You Need Help Protecting Your Assets in a High Net Worth Divorce?
If you have a high net worth and are contemplating divorce or are financially dependent on a high-earning spouse, an experienced high-asset divorce lawyer in Austin can guide you through the process and fight for your interests.
The family law attorneys at Smith Family Law have the experience and resources to examine the extent of your marital estate and the tenacity to negotiate a favorable outcome for your divorce. If you are concerned about any issues regarding property division in a divorce or wish to pursue spousal support, contact our firm for a free, confidential consultation with a skilled Texas divorce lawyer. Our award-winning team can help you obtain the results that you deserve.