Special Considerations When Divorcing High Asset Individuals
A Texas divorce can encompass complicated legal issues and extreme emotions, but the complexities are elevated to another level when the matter involves high net worth assets. In such a case, the marital estate can be significant and often includes a combination of real estate, personal property, separate property, and marital assets. Plus, some high net worth divorces may include ownership interests in a business entity, further compounding the challenges.
Given these circumstances, you probably would not be surprised to learn that there are unique factors that could impact your objectives, expectations, and outcomes. You can rely on a Texas high net worth divorce attorney to handle the specifics, but it’s important to understand the special considerations with these cases.
Texas Asset Division Laws Apply to High Net Worth Spouses: It may come as some relief to know that there are no special rules in a divorce based upon your wealth. Texas divorce laws apply to all cases, regardless of the value of the assets. The starting point is that Texas is a community property state, which means that all assets you acquire during the marriage are considered a part of the community estate and gifts, inheritance, property acquired before the wedding, and other specific items would be considered separate.
The difference between community and separate property is important in a divorce because of Texas’ asset division statute. All community property is to be equitably split between the parties, and separate property cannot be divided between the spouses. Equitable doesn’t necessarily mean equal, however. Instead, the point is to establish a fair distribution of property, taking into account the needs of the spouses, the type of asset, custody of children, post-divorce spousal support, and many other factors.
Unique Factors in High Asset Divorces: Beyond the default rule on equitable distribution of community property, the proceedings have distinct characteristics when the couple has high net worth holdings. There is no specific definition of what counts as a “high asset” divorce case, but the parties may have unique concerns when the assets include:
- Significant retirement and pension benefits;
- High-value financial assets, such as bank accounts, investments, stocks and bonds, interests in a trust, and others;
- Considerable real estate holdings, especially properties held for investment purposes; and/or,
- Rare or exceptional personal property, such as art, jewelry, or other collections.
In addition, ownership interest in a business can be an issue in a high asset divorce for a number of reasons. The first complication arises in the valuation of the business, which encompasses more than just the assets, accounts receivable, and debts on the books. Intangible assets, goodwill, customer lists, and other items have value, which must be considered when attempting an equitable distribution. In addition, other complexities include:
- Determinations on whether one party should buy out the other or they sell to a third party;
- Issues regarding the interests of other stakeholders who could be affected by divorce proceedings;
- Debts and other financial obligations of the business;
- Any contracts that affect the company, including profit-sharing with employees, vendor contracts, and other agreements; and,
- Ownership in a medical practice, which can be difficult to divide based upon the prohibition of these businesses being owned by a non-licensed individual.
Strategies for Resolving Conflicts in High Asset Divorces: The most effective approach to handling disagreements is a premarital agreement, which addresses the distribution of assets and spousal support before marriage. Still, even if you didn’t execute a prenup, it’s still possible to reach an agreement in a high asset divorce. Texas law encourages parties to compromise on asset division and spousal support, and the court will usually enter the agreement as an order if it’s not outrageously unfair. At times, some couples may benefit from going through the mediation process. During this proceeding, the parties sit down with a trained mediation professional and attempt to resolve their differences.
If you cannot reach a compromise, it may be necessary to go to court. At a final divorce trial, the parties present evidence and testimony to convince the judge regarding spousal support and division of property and debts. After deliberating over the facts and testimony, a judge will make a just and right division of the community estate.
Reach Out to a Texas High Net Worth Divorce Lawyer Today
If you’re considering divorce and have substantial assets to address in the process, retaining experienced legal representation is essential. Even when parties can agree on certain aspects of the case, you’ll need a knowledgeable attorney to assist in navigating the complex nature and ownership of the marital estate. To learn more about how we can assist, please contact The Ramos Law Group, PLLC to schedule a consultation with a member of our team. We’re happy to advise you once we review the details of your case.