Any divorce has the potential to be stressful, both emotionally and financially. Between deciding on issues like child custody and figuring out how to divide assets, getting through the process can be a challenge. When a divorcing couple has a high net worth, the process can be even more difficult.

A high-asset divorce typically involves unique considerations. The couple may have assets that can’t be easily valued or sold – and there may even be an issue of unusual compensation agreements and hidden assets. By working with a team of excerpts, our Austin high net-worth divorce attorneys can help you protect your financial interests in a divorce.

The Law Office of Jason Wright advocates for clients who are dealing with divorce and other family law matters in the greater Austin area. We have particular skills and experience in high-asset divorce cases and maintain a network of experts who can provide the necessary input to protect our clients’ rights. Reach out to our law firm today to schedule a consultation with an Austin divorce lawyer.

Division of Property in Texas Divorce Cases

Texas is a community property state. This means that all property acquired during marriage is presumed to be community property to be divided unless a spouse can demonstrate that the asset or debt is separate property. All community property in a divorce must be divided in a way that is “just and right” – which does not necessarily mean a 50-50 split.

In a Texas divorce case, the first step in property division is determining what assets and debts are marital property and which are separate property after a full and fair disclosure by both spouses. Separate property includes anything that was:

• Owned by a spouse prior to marriage;
• Acquired by a spouse through a gift;
• Acquired by a spouse through an inheritance; and/or
• The result of a personal injury award.

Because Texas courts must presume that any property that either spouse possessed during the marriage is community property, a spouse must prove that something is separate property by “clear and convincing” evidence. For example, if one spouse inherited a valuable piece of art from their grandmother during the marriage, they could introduce the will to prove that the art was left to them.

Once all assets in a marriage have been designed as community or separate property, the next step is to determine the value of each asset (or debt). This step can be particularly tricky in high-asset divorce cases, as it isn’t unusual for one spouse to have property that may be difficult to value. This could include anything from a closely held business to a professional practice to art and jewelry.

The final step in property division is for a court to divide the parties’ community property in a way that is equitable. This does not necessarily mean that the property division will be equal. Instead, courts will look to a number of factors to determine what is “just and right.” Some of the factors a court might consider include:

• The difference in the spouses’ respective earning power;
• Each spouse’s health;
• Whether there was fault in the dissolution of the marriage (such as cheating, substance abuse, or waste of community assets);
• Tax implications;
• Each spouse’s education; and
• Each spouse’s future employability. 

Based on these and other factors, a court will divide the property in a way that it believes is just and right. For high net-worth divorces, the difference between the spouse’s earning power is often a key factor in property division. This reality may lead to a different division of assets in order to protect the spouse with less income, assets, and earning potential.

It is also always possible for divorcing couples to come to their own settlement agreement with regard to property division. This agreement must ultimately be reviewed by the court. If a judge finds that the division contemplated by the parties is “just and right,” then the court will incorporate it into the final divorce decree.

In many cases, a settlement agreement is preferable to the uncertainties of the litigation process. It may allow you to protect certain assets and take a more strategic approach to property division. Our seasoned Austin high-asset divorce attorneys can help you negotiate a favorable settlement agreement that will be considered equitable by the court.

Unique Considerations in High-Asset Divorce Cases

In a typical divorce, a couple may have limited assets – or property that is fairly simple to value. This may include a family home, some personal property like cars and furnishings, and retirement accounts. While these divorces may still be contentious, the financial issues involved are often far less complex.

High-asset divorces often involve far more complicated legal and financial matters; understanding these issues from the outset is critical to protecting yourself in this type of divorce.

The Potential for Hidden Assets

In a high-asset divorce, there is a greater possibility of hidden assets such as offshore accounts, trusts, or unreported income. Property division requires a full and fair disclosure of each party’s assets and liabilities. If one party does not disclose all of their assets, it can skew the process. It can also lead to legal consequences for the party who is concealing property.

In a high-asset divorce, our law firm often utilizes a forensic accountant and other experts to uncover hidden assets.  These financial experts will review financial records to uncover issues such as skimming money, creative accounting, or offshore accounts. The goal of this process is to ensure that all assets are disclosed – and that the property division is equitable.

Business Valuation

Many high-asset divorces involve the ownership of a business or professional practice. This can create a challenge when it comes to property division, as the business’ ownership structure, assets, liabilities, income streams, and intangible factors like goodwill all factor into its valuation. An accurate valuation of the business is vital to ensure that one spouse does not walk away from the divorce with a disproportionate share of the business.

The Law Office of Jason Wright has deep familiarity with the valuation of closely held businesses and professional practices. We work with valuation experts and forensic accountants to make sure that the company is valued accurately. Our goal is to help our clients protect their interests – whether that means getting a fair settlement in a divorce or holding onto their interest in their business.

Complicated Financial Instruments

In many divorce cases, the couple’s financial assets may include bank and retirement accounts. In a high-asset divorce, it isn’t unusual for one spouse to have a much more complex financial compensation structure – such as stock options, executive benefits, and deferred compensation. Determining how to value and divide assets like stock that hasn’t yet vested or compensation that won’t be paid for years is critical to ensuring a fair division of assets.

Our firm consults with financial experts to ensure that these issues are thoroughly analyzed before making any decisions related to property division. By accounting for these more complicated types of compensation, we can ensure that you get what you are entitled to in a divorce.

Tax Implications

In high-asset divorce cases, taxes play a big role in decisions made regarding the division of assets. Selling off property or investments could lead to significant capital gains taxes while dividing retirement accounts could lead to penalties. These tax issues must be taken into account when deciding how property will be divided.

Our team works with tax professionals (such as CPAs) to make sure that the tax implications of your property division are considered. We will work to minimize any potential tax burden so that you can keep more of your property – and pay less in taxes.

Luxury Assets

Many couples with significant assets have real estate portfolios and luxury assets like art collections, fine jewelry, and expensive vehicles. Many unique assets – like art – can be difficult to liquidate given the limited market for such goods. Similarly, vacation homes, commercial real estate, and investment properties must have detailed appraisals to ensure that their value is appropriately accounted for in any divorce settlement.

At the Law Office of Jason Wright, we work with expert appraisers and real estate professionals to ensure that each and every asset – no matter how luxe or rare – is appropriately valued. In doing so, we can help to protect you from an unfair division of property in a Texas divorce.

Spousal Maintenance

In Texas, spousal support (commonly referred to as alimony) is fairly limited. To qualify, the spouse seeking maintenance must prove that they will not have enough property to provide for their minimum reasonable needs after the divorce. They then must prove that:

• The couple has been married for at least 10 years and the dependent spouse lacks the ability to earn enough income to meet their basic reasonable needs; 
• The dependent spouse cannot earn enough to be self-supporting because of a physical or mental disability and/or because they must provide care for a child with a physical or mental disability; or
• The other spouse was convicted of an act of domestic violence against the dependent spouse or their child while the divorce was pending or in the 2 years before the divorce action was filed.

A judge will consider the relative wealth of each spouse, among other factors, when deciding whether or not to award spousal maintenance. However, even if support is ordered, Texas law caps payments at the lesser of $5,000 per month or 20% of the supporting spouse’s average gross monthly income. 

Given these strict rules related to spousal maintenance, it is usually not a significant issue in a high-asset divorce. For this reason, a reasonable division of property is even more important to ensure that both spouses’ rights are protected.

Protecting Your Rights in a High-Asset Divorce

At the Law Office of Jason Wright, we know that the stakes are incredibly high when a couple with a high net worth decides to end their marriage. We work with a variety of experts to help our clients appropriately value their assets and liabilities to work towards a fair division of property. Whenever possible, we help our clients negotiate a settlement to protect their rights – rather than roll the dice at trial.

Our team of Austin high net-worth divorce attorneys understands the complexities of this type of divorce. We maintain professional relationships with experts across diverse disciplines to ensure that our clients’ rights are protected. To learn more or to schedule a consultation with our law firm, give us a call at 512-706-9662 or fill out our online contact form.