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Hidden Assets in a Texas Divorce

Whenever a person is going through a divorce, it is often their main goal to obtain the best property division possible. This can help the healing process and set that person up for success in the next chapter of their life. Unfortunately, many people find that while going through a Texas divorce, their spouse may have been hiding assets throughout their marriage or are attempting to hide assets now that a divorce is pending.

It is vital to find an experienced family law attorney licensed in Texas who has a background in successfully finding hidden assets and getting the best property award for their client. The Ramos Law Group and its team of legal specialists are skilled at knowing what to look for and identifying hidden assets. What considerations are there when thinking about hidden assets in a Texas divorce?

First, a quick refresher on community property. As Texas is a community property state, any and all assets that were earned during the duration of the marriage are subject to a just and right division in a divorce. This does not include any items that are separate property, such as items owned prior to marriage or items received through a gift or inheritance. This article is assuming any “hidden assets” are community property and should be divided by a divorce court.

Discovery and Disclosures

There are a couple ways the parties are required to disclose assets in a divorce proceeding:

  1. Local Disclosures – For example, the Harris County family court system requires that parties disclose paychecks, tax returns, bank statements, and a sworn inventory and appraisement by a certain date. A sworn inventory and appraisement is a notarized/verified document that is supposed to contain an accounting of ALL property, including all assets and debts, with supporting documents showing current statements. Should the divorce matter go to trial, the trial judge will rely on the parties’ inventories when making a final property division.
  1. Written Discovery – The discovery process is where a party sends the other party written requests for tangible documents. These requests can go back to the date of marriage (which is when the community property would begin accruing) and can cover paychecks, bank statements, retirement statements, PayPal/Venmo histories, credit card statements, HSA accounts, stocks, bonds, etc. Any type of property or account history may be requested.

Using the documents received from either disclosures or discovery, a competent family law attorney is able to pinpoint any discrepancies or suspicious transactions that may point to hidden assets. For example, if a party is getting cash advance on a credit card that can be detected by looking at credit card statements. Or if paychecks show automatic deposits being made to multiple bank accounts. In this technological world where everything is traced, it is becoming exceedingly difficult to hide property and the tools discussed above are often used to find any hidden or undisclosed assets.

Forensic Accounting

But what if your spouse is smarter than the average spouse and it appears they have successfully hidden community assets? If that is the case, then your legal team can hire a forensic accountant. This is a CPA or accountant who specializes in reviewing accounts and financial documents to pinpoint suspicious activity or trace the whereabouts of missing funds. Forensic accounts are well-versed in tracing items like offshore accounts or cryptocurrency.

A forensic accountant is also helpful in determining a spouse’s actual income. Often a spouse will attempt to deflate their actual income to help reduce their child support or spousal support obligations. A forensic account will review their paychecks, tax returns, bonus structures, compensation packages, and any other documents evidencing income and actually compare to see if their stated income is accurate. This method is especially helpful when dealing with self-employed spouses who can commingle their personal and business expenditures to show a reduced income.

What if Hidden Assets Are Discovered?

The Court has several methods of dividing community property and if a spouse is determined to have hidden assets or attempted to defraud the community by hiding assets, the Court may do any of the following:

  • Awarding a spouse all of the previously hidden assets (or awarding the innocent spouse any nondisclosed assets not specifically awarded in the decree);
  • Finding the sneaky spouse in contempt of court and awarding attorney fees to the innocent spouse.

There is a statute of limitation of two years on any assets discovered after the divorce has been finalized. So if your divorce was recent and you discover that assets existed your spouse did not disclose and were not divided in the divorce, it is imperative you contact a family law attorney to assist you in pursuing claim to those assets even if the divorce has already been finalized.

Time is of the Essence

While there are several helpful tools in tracking undisclosed or hidden assets, it is still important to contact an experienced family law attorney if you become aware that your spouse (or soon to be ex-spouse) is hiding assets. Cash and valuables can disappear and be difficult to recover, even if the existence can be proven). If you are considering a divorce and believe assets may disappear or be hidden, it’s best to begin the search and tracing process sooner rather than later.

The Ramos Law Group, PLLC and its legal team have handled many cases that dealt with hidden assets and have the resources available to help you if you believe your spouse has hidden community property.

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Maintaining Your Standard of Living After Divorce

Divorce is a financial strain on even the most budget-minded person. Typically, a divorce results in a two-income household becoming a one-household. Even more jarring, sometimes a household that relied on one breadwinner becomes two households on one income. Financial woes or stress are to be expected when going through a divorce, but how can a person really prepare for a divorce financially and maintain their current standard of living? The Ramos Law Group has a few tips for you if you are contemplating going through a divorce.

1. Review Your Existing Financial Needs

Under the Texas Family Code, the family law court system takes a critical view of financial needs. The Court considers costs in the mindset of “are they reasonable and necessary expenses?” Rent, legal fees, business operating costs, utilities, food, clothing, vehicle expenses and even items like tithing and entertainment expenses are all under the umbrella of “reasonable and necessary.”

Should you have a hearing or trial on the issue of temporary support or post-divorce maintenance, the Court is going to want to see a Financial Information Statement that lays out exactly what each party’s monthly expenses are, or as close to possible for each month as things fluctuate.

It is important to have this information at the outset of your case as it will help guide your legal team through the litigation process in terms of goals for support or a final property division. It is helpful to have documentation (bills, credit card receipts, tuition documents) to evidence the needed expenses.

2. Cut Extra Costs

Divorce takes an emotional toll on all involved and it can be difficult for parties to cut items they are accustomed to; it can feel like additional punishment. But a monthly tanning membership or big game hunting trips do not fall under the umbrella of “reasonable and necessary expenses.” If your income allows for it then by all means go ahead, but if parties are litigating over support in Court it can be almost guaranteed the Court is not going to consider those types of expenses as reasonable and order another party to foot the bill. It makes the pill a bit easier to swallow the review the previous six months to a year of expenses and flag expenses that just aren’t all that necessary in the grand scheme of things before the divorce process even gets started. 

3. Plan for the Future

Many parties going through a divorce are desperate to cut the cord and just want out. They are not thinking about the long-term implications of the divorce settlement. But it’s important to do so as what you agree to in a divorce settlement today can hurt you when you file taxes next year. Be mindful of the tax implications of any retirement fund transfers. It’s always better to roll any 401k money you receive from a spouse into an IRA or other fund than take the cash option as there are tax consequences. But some parties need the cash option for a down payment on a home. Talk to your legal team and a financial planner to really think about the long-term results from any divorce settlement. It may feel like you won the lottery with a cash out option on your ex-spouse’s retirement fund but it is going to hurt the next time you file taxes.

It’s common for a person going through a divorce to want to jump into the next chapter of their life – new house, new car, new job – but sometimes it is better to let things settle before trying to start a brand-new life. It can be beneficial to see how you function within the structure of a one-income household with a new budget before jumping in to any new financial obligations.

4. Accept That Certain Things Will Change

Divorce is going to have an undeniable impact on the majority of parties’ standard of living. The Courts do their best to try to mitigate this and make a just and right division of community property, but there is almost always still a void or some sort of effect. It can be helpful to remember these changes may be painful but just a small stepping stone to the next chapter. Things like operating within a restructured budget take an adjustment period.

5. Be Responsible

Divorce can be difficult for even high-worth individuals. For those on the lower end of the income scale, it can be devastating. Accruing some debt during the divorce process is normal and expected. If there are any other avenues, avoid incurring high credit card fees during the divorce process. The Courts typically award debt to the party whose name the debt was incurred in so any credit card debt is likely going with you in the divorce. For certain things like car repairs or attorney fees it can be a necessary evil, but review your budget or try to cut expenses rather than incur frivolous debt.

The same goes for cashing out any small retirement accounts, stocks, bonds, etc. You may feel like you absolutely need the cash (and you might, so this is fact specific) but make sure you are thinking about the tax implications as well.

Each case is different and no couple has the exact same income and expenses. If you are going through a divorce or believe a divorce is on the horizon, gather your financial documents and consult with a licensed Texas divorce attorney like the Ramos Law Group. We can help review your expenses, review your property portfolio and strategize a plan to get you out of your marriage and onto the next chapter of your life with as minimal upset as possible.

If you are seeking a divorce in Texas and either you or your spouse owns a business that was started during the time of the marriage, it is likely this is going to become a contested issue in your divorce.

Determining the value of a business is much more complicated than determining the value of real property. While looking at comparable sales in the same area is an excellent place to start, no two businesses are exactly alike. Several approaches to determining a business’ value in divorce must be employed in order to arrive at a final determination.

Options for Business Valuation

Your attorney will discuss options if you’re divorcing with a business involved at the outset of your case, but it is likely that you will want to employ a business valuator to examine the business and provide a professional estimate. You and your spouse might agree to start the process by hiring a joint business valuator and then seeing what their report says before hiring your own expert.

While this may be somewhat costly, the expertise that a business valuator brings to the table cannot be underestimated. Business valuation concepts are incredibly complex, so if your case goes to trial, you will need someone who is an expert in the field to provide testimony to the Judge that explains in clear and precise terms how they determined the value of the business in your divorce.

The business valuator is going to look at the factors outlined in Revenue Ruling 59-60 to start the valuation.

Factors for Business Valuation in Revenue Ruling 59-60

  • Nature and history of the business
  • Economic and industry conditions
  • Book value and financial condition
  • Earning capacity
  • Dividend paying capacity
  • Goodwill or other intangible value
  • Prior sales of the stock and percentage of the business being valued
  • Market price for corporations in the same, or similar, line of business

Relevant Business Documents:

  • Business Tax Returns
  • Income Statements
  • Balance Sheets
  • Sales or Operating Budgets
  • Payroll Data
  • Summary of Inventory
  • Summary of Assets
  • Employment Contracts
  • Intellectual Property
  • Incorporation Documents
  • Financial Forecasts
  • Business Organizational Chart
  • Bank Statements
  • Accounts Receivable Report
  • Depreciation Schedules
  • Summary of Dividends and Distributions
  • Any other pertinent contractual documents (i.e. licensing agreements, nondisclosure agreements, etc.)

Once the business valuator has gathered and reviewed all of the necessary financial documents, they will schedule interviews with the owner spouse and other key executives. After compiling all of the necessary data, and conducting the necessary interviews and onsite inspections, the business valuator will compile a report that will be reviewed by the attorneys for use in court. It will take some time to receive the written report, but the findings contained within will be crucial to arriving at a fair and equitable distribution of the community estate.

Hire a Specialist Attorney

Divorcing with a business involved can be a lot more complicated, and determining the value of a business in a divorce is one of the most complex issues involved in your divorce. Make sure to discuss these matters with your attorney in your initial consultation to make the most use of your time.

For more information on Divorce for Business Owners or C-Suite Executives see these guides:

Divorce For Business Owners
Divorce For CEO & C-Suite Executives

If you’re ready to hire expert representation, give us a call or email today!


Video Transcription:

Things not to do during your divorce process. Don’t date. Don’t do drugs. Don’t drink and drive. Don’t use your children as pawns or put them in the middle. Don’t dredge on the past of your divorce process. Let the past be the past. We’re trying to move forward. It’s not gonna be beneficial emotionally or financially for you to focus on the past when we’re trying to get you moving forward. If you need counseling to deal with issues in the past, that’s probably a good idea to seek counseling or a support group in some form or fashion. Let us guide you in the divorce process and make sure you don’t step in any of those land mines in moving forward. We wanna make sure you get through the divorce process in the least financially impacting way and the most beneficial for you family and your situation.

Ramos Law Group, PLLC, your family law team of experts.

Video Transcription by Speechpad.com.

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Divorces involving significant amounts of money, property, and other assets are almost always more complicated than standard divorces. High net worth divorces are rarely uncontested, which is why it is critical to have a good divorce attorney in Houston if you want to retain what property is rightfully yours. It is essential that you hire a reputable attorney to give you legal advice specific to your personal situation,, as every single divorce is completely different. When it comes to your livelihood, there is no room for risk or error. For the best possible results, hire an exceptional attorney at Ramos law Firm.

Issues that Arise from a High Net Worth Divorces

There are endless complications that can stem from a high net worth divorce. One common issue is the allocation of an inheritance. When someone is given a significant amount of money by a family member, they naturally assume that it is theirs alone. However, a spouse with a good divorce attorney in Houston may be able to recover a portion of that income, regardless of who the intended beneficiary was. It is up to you and your lawyer to take steps to protect your assets and keep what is rightfully yours.

If there are children involved, a high net worth divorce can be even more complex. The judge will need to evaluate how much child support is going to be paid. However, this goes beyond simply determining who will pay for the child’s financial needs. If the child has extracurricular activities that cost money, medical needs, or any other additional expenses, the judge will need to decide who is required to pay these costs. This is why having a divorce attorney in Houston is so critical. With the help of exceptional legal assistance, you will be able to protect yourself from overpaying while also keeping the best interest of your children at the forefront.

How to Proceed

As you go through the divorce procedures, there will be certain requirements that can have severe financial penalties if neglected. Forgetting to sign one paper, overlooking deadlines, or failing to respond properly can have significant monetary ramifications. Additionally, one simple error can give the other spouse a substantial advantage, which can be impossible to recover from. An exceptional divorce attorney in Houston like Ramos Law Group, PLLC will make sure that all of your affairs are completely in order, ensuring that you never have to pay any penalties.

Hiring a Tracing Expert

Both spouses will hire a tracing expert, who will determine what the spouses’ estate is worth. This is a very important step, as undervaluing your assets can cause you to lose money in the long run. For instance, if both spouses own a business together, it is crucial that the value of the business is determined accurately, as it is highly unlikely that both spouses will retain ownership. This step is also necessary to prove private property and community property. If you entered the marriage owning something, it is important to establish that it is privately owned, and not joint property.

Hire Ramos Law Group, PLLC for the Best Results

Here at Ramos Law Group, PLLC, we take great pride in our expertise and years of first-hand experience. If you want unrivaled legal assistance, we will provide you with the best divorce attorney in Houston. Don’t gamble with your income and assets. You want to keep the property that is rightfully yours, and our skilled legal professionals will make sure that you are pleased with the end results. Call 713-225-6200 today and see why Ramos Law Group, PLLC has consistently satisfied clients and an unblemished track record.

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Different states have varying policies when it comes to divorce. There are some states that recognize all property and income earned by a married couple as belonging equally to both of them, and Texas is one of those states. This is what is known as community property state. Regardless of whose name is on the deed or ownership papers, both spouses have equal ownership of most assets acquired during the marriage, with certain exceptions. If you want to protect your assets, it is very important to talk to a divorce lawyer in Houston, Texas.

Determining Separate Property
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During divorce proceedings, the court presumes that all assets are community property. If certain property is yours and only yours, it will be necessary to prove that it is separate property – not community property. Separate property includes, but is not limited to, the following:

  • Property that was previously owned by the spouse before the marriage
  • Property that was acquired by gift or inheritance
  • Certain kinds of recoveries for personal injuries

Naturally, you are going to need to prove that your separate property is indeed yours. This can be difficult if you are not familiar or comfortable with the legal system. Having a divorce lawyer in Houston, TX on your side is going to drastically improve the chances of getting the desired results. You should never attempt to go into a legal situation without proper representation and consultation – especially when your assets are at stake.

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Tangible and Intangible Property

There are many different types of assets that will need to be divided. The most common are houses, personal property like jewelry, clothing, furniture, and other physical goods, as well as intangible property like benefits, dividends, and income. Splitting community property can also means equally splitting debt. This can be a daunting revelation for many spouses who did not realize that debt even existed. That is why it is so important to have a divorce lawyer in Houston, Texas to help you to prove ownership (or lack thereof) of community and separate property.

Spousal Support

legal advice splitting assets

In addition to splitting assets, it may be necessary for one spouse to pay spousal support to the other. Spousal support sometimes occurs when one spouse earns more income than the other, and divorce would cause the spouse seeking support to no longer be able to support their basic needs. The court will consider many different factors to determine with spousal support, often referred to as alimony, is appropriate. Again, the right divorce lawyer in Houston, Texas will be able to help you receive or keep what is rightfully yours during this trying time.

Protect Your Property with a Reputable Attorney

Divorce proceedings can be difficult, overwhelming, and quite complex. Attempting to navigate these harsh channels on your own can be quite costly. As you go through these changes in your life, it is essential that you have proper legal counsel. Ramos Law Group, PLLC has the skills and expertise to help you every step of the way. Don’t let divorce get the best of you – call Ramos Law Group, PLLC today.

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