What Not to Do in a High-Asset Divorce
Among other things, high-asset divorce shares one particular aspect with all other types of divorce: it is rarely, if ever, easy. In fact, because so much is being put on the line — marital assets, business assets, trusts, etc., — the stakes are often raised for those with high-value assets.
Unfortunately, higher stakes often mean higher odds that someone will act impulsively or rashly during the divorce proceedings. That’s why the high-net-worth divorce lawyers at Grimes & Fertitta have compiled this overview of common mistakes we see made, and that you should avoid, during a high-asset divorce.
What is considered a high asset divorce?
A high-net-worth divorce typically occurs when at least one of the spouses has over $1 million in high-value assets. These types of divorces can get complicated especially when only one of the spouses is in higher financial standing than the other.
High-asset divorces, however, refer to divorces containing marital property (outside of liquid cashflow) that contains a high valuation. The two typically walk hand-in-hand and will require the counsel of a lawyer who has experience handling similar cases to secure a divorce settlement that is fair to you.
5 mistakes to avoid in a high-net-worth divorce
1. Speeding up your divorce by accepting a settlement offer
Whether it’s because they’re battle-weary or just want to move on with their lives, one of the most frequent issues we see clients struggle with is the desire to wrap up high-net-worth divorce proceedings with haste. Take it from us, dividing the assets of your life in a hurry is never a good idea.
If you settle too quickly, you may wind up paying too much or receive too little. Additionally, the amount of support you receive or give may be too much or too little. And finally, not looking into tax repercussions can have consequences that last for years. Long term, it is worth the extra time to ensure that your assets and liabilities are being separated in a way that is most beneficial to you.
2. Forgetting about taxes
There are several important things to keep in mind when considering tax implications during your high asset divorce. For example, after your divorce is settled, you will be required to pay taxes on the assets you have been awarded.
If the court awards you marital property or any other type of property, you (and not your spouse) will also be required to pay property taxes. And finally, if you have filed joint returns, both you and your ex-spouse are liable for audits.
All in all, if you neglect to keep track of who will be paying taxes and how much, you may be saddled with a worse deal than you originally thought you were getting.
3. Hiding assets from your spouse/assuming your spouse has not hidden assets
When facing the potential loss of a beloved possession or significant asset, many people are tempted to try and hide that asset to protect it. Others may simply believe that an asset belongs solely to them as separate property instead of community property. But in neglecting to allow the court to classify that asset, they leave themselves vulnerable to being accused of hiding assets.
Is it illegal to hide assets during a divorce?
The consequences of hiding assets can be severe and can include jail time. On the other side of this coin is being too trusting of your ex and assuming that they have fully disclosed their assets. Even if someone “hides” an asset unintentionally, doing so can have significant ramifications in the equitable distribution of assets, and leave you with less than you deserve.
Although it may be hard to predict what assets you may come into throughout your marriage, hiring a Houston prenup lawyer or a prenup lawyer in The Woodlands can help protect the assets important to you before entering into any future marriages.
4. Attempting to dissipate or increase assets by making lavish purchases
There are many reasons why someone entering a high-asset divorce might think making extravagant purchases is a good idea. However, these actions rarely bear fruit and typically get the person who commits them into trouble.
For example, some spouses may try to increase the amount of alimony or spousal support they receive by trying to demonstrate that they lead a more expensive lifestyle. If the court discovers that these were your intentions, they may require you to repay your spouse for the amount you spent.
Others may think that by buying expensive items, they are reducing the amount of money their spouse may receive or they may wish to place their ex into (or further into) debt, thinking that they will not bear the burden of that debt once the divorce is finalized.
In the end, a divorce property division agreement in Texas includes all property (and not just money) and is meant to be distributed equally. Any new purchases will be included in these calculations and the debt you acquire(d) during your legal marriage will also be split 50/50.
5. Trying to handle the divorce without a high-asset divorce lawyer
Unfortunately, these mistakes are just the tip of the iceberg regarding what can go awry during high-net-worth divorce proceedings. Hiring a high-asset divorce attorney who has experience handling similar cases can help you avoid these pitfalls and provide guidance and support along the way.
In addition, most quality high-asset divorce lawyers have access to skilled appraisers and forensic accountants whose expert contributions can help ensure a more equitable division of assets.
Keep in mind that not all divorce attorneys are created equal. You will want to look for lawyers that have experience handling high-net-worth divorces specifically. In some cases, you may wish to look for a high net worth divorce attorney who has additional experience with other types of divorce issues, such as a property division or a Houston fathers’ rights attorney.
Fortunately, Grimes & Fertitta is home to skilled divorce attorneys who have handled a wide variety of divorce cases, and who can take on multifaceted high-net-worth divorces.
Continue reading: How to fight for custody
How are assets divided in a divorce in Texas?
The state of Texas is a community property state as it views all assets that are acquired during your marriage to belong to the marital estate. This means that whatever assets you and your spouse collected throughout your marriage, and that is not protected by your prenuptial agreement, are subject to “equal” division. Although this does not necessarily mean that the assets will be split exactly 50/50.
Marital assets that are considered when determining property division include:
- Real estate properties (family homes, vacation homes, investment properties, etc.)
- Debts incurred during the marriage
- Family businesses
- Investment portfolios
- Retirement funds
- Inheritance and estate issues
- Intellectual property
- Offshore accounts
Protect your future by hiring a high-asset divorce lawyer at Grimes & Fertitta
At Grimes & Fertitta, our high-asset divorce lawyers have years of experience handling the particular issues that arise during high-net-worth divorces. From negotiating for a successful split of business assets to using our skills to navigate litigation during an emotional time, we provide our clients with the support and knowledge they need.
For hands-on, personable, and experienced representation during your high-net-worth divorce, put your future in the capable and trustworthy hands of Grimes & Fertitta’s high-net-worth divorce attorneys in Houston.
Call Grimes & Fertitta at 713-804-7881 or contact us online to set up a consultation today.
More Helpful Articles by Grimes & Fertitta: