Critical Steps to Protecting Assets in a High Net Worth Divorce
A high asset divorce in Texas can be extremely complex when significant marital assets are involved. For high-net-worth couples with substantial marital property, following the proper steps to protect those assets during a divorce is critical. An experienced high asset divorce lawyer can provide invaluable guidance, but there are key considerations for anyone navigating this process.
Understand Community Property Laws in Texas
Texas is a community property state, which means that most assets and debts acquired during the marriage are considered joint marital property that is divided equitably in a divorce. This includes assets like real estate, businesses, investments, retirement accounts, bank accounts, vehicles, and personal property. It is important to identify all marital property and its value early in the divorce process.
Some assets may be considered separate property in Texas if they were acquired before the marriage, received as a gift or inheritance, or earned from separate property. However, commingling separate and marital property can make classification more difficult. Thorough documentation is essential to prove the separate property claim.
Obtain Expert Valuations of All Major Assets
Valuing major assets like real estate, businesses, investments, retirement accounts and collectibles requires professional expertise. Work with qualified appraisers, accountants and financial analysts to value these assets as early as possible. Be sure to use skilled divorce attorneys with experience in divorce cases, as standard valuations may not hold up.
Full transparency in disclosing all marital assets and debts is also critical. Attempting to hide assets will only create bigger problems down the road when the courts uncover the deceit. Honesty and professional valuations give the strongest foundation.
Analyze Cash Flow of All Income Sources
In addition to asset division, spousal and child support are also determined in a high asset divorce. This requires careful analysis of all available income sources and expectations for future earnings. Work closely with financial experts to project incomes from salaries, businesses, investments, stock options and bonuses over the next several years.
Provide as much documentation as possible to realistically demonstrate both current and anticipated cash flow. This will impact support determinations as well as asset division.
Create a Financial Game Plan with Experienced Counsel
With valuations and cash flow projections in hand, work with an attorney experienced in high net worth divorces to map out a financial game plan. The goal is to achieve the most favorable overall settlement regarding both asset division and ongoing support.
Be prepared for intense negotiations and compromise. There are rarely “winner take all” outcomes in Texas divorces given community property laws. A skilled divorce lawyer can offer creative solutions and strategies to protect key assets and income sources in the final settlement.
Refrain from Risky Financial Moves During Divorce
It is absolutely vital to refrain from any risky financial moves during the divorce process without first consulting your attorney. Liquidating assets, making major purchases, accumulating debt, hiding money and even excessive spending can all jeopardize negotiations.
Maintain detailed records of every transaction. Follow your divorce lawyer’s guidance for managing finances during divorce to avoid missteps that could harm your settlement. Even innocent mistakes can have serious consequences in a high asset divorce.
By understanding Texas divorce laws, obtaining professional valuations, fully disclosing all assets and income, developing a smart negotiating strategy, and avoiding financial missteps, individuals can better protect their interests in a high net worth divorce. An experienced high asset divorce lawyer is invaluable for navigating the complexities to achieve the best possible outcome.
Common Questions in High Asset Divorce Cases
Individuals navigating a high net worth divorce often have additional questions beyond the key steps to protecting assets. Here are answers to some frequently asked questions:
1. What factors determine if a divorce is considered “high asset”?
There is no set dollar threshold in Texas, but high asset divorces typically involve couples with a marital net worth over $1 million. The main factors are the total value of marital property and complexity of assets like businesses, real estate portfolios, executive compensation, and collectibles.
2. How long does a high asset divorce usually take?
These cases often take 1-2 years given the intricacies of property valuations and settlement negotiations. Temporary orders may provide support in the interim. Proactive preparation can help streamline the process.
3. What happens if my spouse tries to hide assets?
The courts take asset concealment very seriously. A forensic accountant can investigate suspicions and "freeze" assets. Judges can award 100% of hidden assets to the innocent spouse as punishment.
4. Should I change estate plans during a high asset divorce?
It is advisable to modify wills, trusts, beneficiary designations and powers of attorney to protect your interests in case of incapacity or death before divorce proceedings.
5. How can I reduce spousal support payments in a high income divorce?
Arguments to minimize support include maximizing tax deductions, demonstrating fixed-term income sources, and showing intent of the supported spouse to gain employment and self-sufficiency.
Choosing a Texas Divorce Attorney
Going through a high net worth divorce in Texas requires strategic planning and execution. Following the proper steps with experienced legal guidance gives individuals the greatest chance of protecting their hard-earned assets and achieving the most favorable outcome during this challenging transition.