The complexity of high-net-worth divorces is evident in the number and types of assets that most couples meed to think about. Whereas a middle-class couple may only need to ask themselves who gets the car, house, debt, and perhaps the content of retirement or savings accounts, a higher-assets couple often will have several additional asset classes to worry about.
Many of those asset classes require complex legal solutions in order to preserve both their value and their utility. Rarely is it possible just to “cut the cake in half,” or desirable to do so. Instead, only a complex contract negotiation will allow the property to be divided up as equitably as possible.
Evans Family Law Group (in Austin and Bastrop) helps Texas couples get a fair division of assets when the stakes are high. Contact us to discuss your needs and goals, or read on to find out more about the kinds of property that a high-asset divorce deals with.
Division of real estate assets in a divorce
Any division of real estate assets begins with the formal valuation of each piece of property the couple owns.
For many high-asset couples that will consist of two pieces of property: the marital home and the vacation home. Division of assets may be relatively easy if the homes are roughly equal in worth and each spouse is willing to take a home.
The matter grows more complex if the couple owns any income-bearing rental property. In some cases selling the property makes the most sense. In others, it will make sense for the spouse who wants to continue running a rental property business to offer an equivalent asset or a buy-out to the spouse who does not.
Some spouses may remain in business together, but that is a risky proposition: if you couldn’t communicate well during your marriage there’s no guarantee you’ll be able to communicate as business partners.
Of course, in any sale the mortgage servicer will be paid before the spouses will. At that point the spouses are free to split the remaining proceeds from the sale according to the terms of their divorce agreement.
Division of stocks in a divorce
In many ways stocks are some of the easiest assets to divide in a divorce: You can split the shares in half without devaluing them. The cost basis (the original purchase price of the stock) and the holding period (how long you hold on to the stocks) remain the same. The value of those individual stocks does not change.
That also means that stocks can provide a valuable negotiable asset, in that you can give up a greater share of the stocks to hold on to a business or a piece of land without offering up more cash. There’s always the risk that the stocks will shoot up in value, meaning you’ll give your spouse more in the long run. But because your stocks weren’t a liquid asset you used on a day-to-day basis, giving them up has less of an effect on your lifestyle.
Division of IRAs and other retirement accounts in a divorce
Retirement account assets can quickly become devalued if they’re handled incorrectly.
A qualified divorce attorney will need to set up this division in a way that does not hit you with undue tax consequences and that helps you preserve as much of the value of the account as possible.
In general, the one thing you don’t want to do is take a distribution from the account to pay the spouse. You’ll incur tax penalties and you’ll devalue the account, and you may still need to hand over more assets later.
Pensions are different, because you can put in a Qualified Domestic Relations Order (QDRO) to have the pension plan make payments directly to the spouse when it begins making payments.
It takes an experienced legal team to determine how best to handle retirement accounts. We recommend high-asset divorce clients work with a CPA to help determine the best potential settlement offers.
Division of business assets in a divorce
If you are very lucky, your business won’t be considered part of the community estate. If you created the business prior to your marriage and your spouse never worked in the business, you may be able to keep control of the business without incident.
If your spouse did work in the business or the company was created after you got married, you may have more challenges. You will need a business valuation, and you will need to evaluate existing contracts.
If both spouses own the business, then the business will often need to be sold, unless you and your spouse are on good enough terms to continue to run the business as partners.
Division of vehicles in a divorce
Vehicles, RVs, boats, ATVs, and other assets usually can be valued and given to one spouse or the other, and then sold. If there are significant debts on any of these assets, the debts will need to be taken into account, too.
Division of furniture in a divorce
Furniture is rarely worth fighting over unless you own unique family heirloom pieces. In general, heirloom furniture stays with the spouse who owned it prior to the marriage.
In many cases the value of the furniture is so miniscule as to make it a non-issue, even in high-asset households. If one spouse keeps the house he or she generally will keep most of the furniture, too, and the spouse who leaves will generally purchase new furniture.
Nevertheless, furniture should be taken account in a valuation, so as to ensure that neither party gains an unfair advantage.
Division of cash assets
The content of your checking and savings accounts at the time of the divorce often will be divided 50/50 unless you have given up a greater share of cash to keep an asset that you wanted more of.
Contact Texas attorneys experienced in high-asset divorce cases
Contact Evans Family Law Group (offices in Austin and Bastrop) today to discuss your situation and goals.