The complexity of a high-asset divorce is evident in the type, value and number of a couple’s assets. Whereas a middle-class couple may only need to ask themselves who gets the car, house, debt, and perhaps the balance of retirement or savings accounts, a higher-assets couple will often have additional assets – such as stocks, businesses, vacation houses, etc.
Many of those additional asset classes require complex legal solutions in order to preserve both their value and their utility.
In a high-net-worth divorce, rarely is it possible or desirable to agree to just “cut the cake in half.” Dividing up a couple’s assets between them when they are high in value, number or both involves complex negotiations and a complex understanding of Texas’ property laws in order to achieve a fair division. Evans Family Law Group (with divorce lawyers located in Bastrop and Austin) 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 property in a divorce
Any division of real property begins with the formal valuation of each property the couple owns.
Many high-asset couples have two pieces of real property: the marital home and the vacation home. Division of these homes is relatively easy if they are roughly equal in worth and each spouse is willing to take a specific home. Otherwise, couple’s often have to sell one or both homes and split the proceeds to equalize the division.
The matter grows more complicated if the couple owns any income-bearing rental properties. In some cases, selling the property and splitting the proceeds 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 payment to the spouse who does not.
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 because you’ll incur tax penalties and devalue the account.
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 (meaning, it won’t be divided in the divorce). If you created the business prior to your marriage and your spouse did not ever work in the business, the business will likely be 100% yours after the divorce.
If your spouse did work in the business or the company was created after you got married, you will be facing an up-hill battle. First, you’ll need a business valuation and then you’ll need to evaluate existing contracts.
If both spouses own the business, 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 are valued and usually given to one spouse or the other. 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 or something other with sentimental value. 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 minuscule 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 into 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 Austin attorneys experienced in high-asset divorce cases today to discuss your situation and goals.