Why Is High-Net Worth Divorce Different from Traditional Divorce?

High-net worth, high asset, or complex divorce are the formal terms used when a divorce entails couples in higher income brackets. Such couples often need more legal assistance because property division is lengthy and challenging.

A family law lawyer in San Antonio explains that high-net-worth couples tend to have the following in common:

  • In their mid-thirties or older
  • Married for ten years or more
  • One or both spouses own a business
  • There may be a family trust involved
  • One or both spouses work outside of the home
  • They have children who are close to 18 or over
  • There is a substantial amount of community or marital property involved

The main issues around the divorce process in high-net-worth cases are property division, child custody and support, and spousal maintenance. Most couples often have difficulty reaching an agreement, and that is where experienced San Antonio high-asset divorce lawyers come in to help.

How Can I Prepare for a High-Net-Worth Divorce?

While you may have similar issues as couples going through any other type of divorce, you must pay attention to specific legal issues surrounding a high-asset divorce:

Business Ownership

You want to engage the skills and knowledge of a reputable San Antonio family law law firm when creating a divorce settlement if you own a business. The lawyers can help you perform proper business evaluation and create a comprehensive inventory of the business assets and debts.

They can help you determine whether it is separate or community property and how ownership can be divided if both spouses are directly involved in the business.

What Happens to an LLC in Divorce?

In a high-net-worth divorce involving an LLC, experienced high-asset divorce lawyers will tell you that the settlement will often revolve around five crucial questions:

  1.  The value of the LLC interest and how it was acquired
  2.  Whether all the original capital has been contributed or there is a chance that additional funds will have to be paid to the LLC
  3.  Any restrictions on the transfer of ownership interest by the Company Agreement or state law
  4.  Whether the interest was acquired during or before marriage
  5.  Whether it was acquired as separate or community property if acquired during the marriage.
  6.  Whether there are other members of the LLC in addition to the divorcing couple.

You must collect the LLC’s copies of K-1s, tax returns, and the company agreement at the beginning of the divorce proceeding. Your high-asset divorce lawyers in San Antonio may also advise you to agree to a confidentiality order to protect the privacy rights of other members and those allocated to you.

Property and Ownership Division

Many factors come into play in property division during a high asset division. It’s crucial first to understand the differences between community property and separate property. That will minimize disputes and grievances while dividing your and your spouse’s property.

Community Property

In Texas, community property includes all the assets that either spouse acquired during the marriage, excluding separate property. It includes, but is not limited to, the following:

  • Businesses
  • Real estate
  • Savings accounts
  • Retirement accounts
  • Vacation house
  • Vehicles
  • Jewelry
  • House
  • Royalties
  • Patents
  • Securities
  • Anything else acquired or purchased by either spouse during the marriage, including boats, and luxury items

The law disregards whoever’s income was used to purchase these items as long as the couple was married at the time. Besides, any debt the couple accumulated during the marriage is an obligation of the community and is subject to division between both parties in a justified manner. The amount of debt assigned to you in the divorce may affect your credit rating, and your ability to get future loans.

Separate Property

Separate property may comprise the following and more, depending on the specific circumstances:

  • Property a spouse inherited while married
  • Property a spouse received as a gift
  • Damages recovered in a personal injury lawsuit by one spouse

The law assumes that all property is community property unless proven otherwise. The process can become complicated or even frustrating. Assets that were once considered separate may have become marital assets over the years due to co-mingling or title changes, but sometimes tracing is a possibility.

If you’re afraid that some property you consider separate could be subject to division as part of community property, consult skilled high-asset divorce lawyers in San Antonio for legal counsel. They can help you prove your case and prepare for the divorce to protect your rights and future.

Spousal Maintenance

Under Texas Family Code, a spouse is eligible for spousal maintenance or alimony if they will lack sufficient property to provide for their minimum reasonable needs upon dissolution of the marriage. The court may consider awarding spousal maintenance if it determines that a spouse will need financial support upon divorce.

The court awards spousal maintenance at its discretion, including the amount and length it deems appropriate. Some of the factors it considers are the length of the marriage and each spouse’s:

  • Financial resources and assets post-divorce
  • Age and physical health
  • Current income, earning capacity, and living standard
  • Educational and professional background and access to training to become financially independent
  • Any marital misconduct
  • Wasting of assets or fraudulent transfers

Child Support

Texas has a percentage of income model for determining child support obligations, which is as follows:

  • 20% of the obligator’s monthly net income for 1 child
  • 25% for 2 children
  • 30% for 3 children
  • 35% for 4 children
  • 40% for 5 children
  • Not less than the amount of 5 children for 6 children or more

However, there are different percentages for factors such as another child outside of the marriage for whom the parent is obligated to support. The court may also consider the child’s normal standard of living, and for special needs children, the court may take into consideration the needs of the child.

For high-net-worth earners, the percentage of net resources could run into tens of thousands of dollars. That’s why there’s a child support cap, and the court can determine the amount it can award in child support. Although the courts usually stick to the child support guidelines in the statute, they can vary from the guidelines if there is sufficient evidence. Consult skilled high-asset divorce attorneys in San Antonio for more information.

What About Mediation and Collaborative Divorce?”

When the divorcing couple can part ways in a professional and reasonable manner, they often still need help to divide assets and debts fairly. In those cases where the parties are able to communicate peacefully, a collaborative divorce may help untangle the complicated financial issues so that the parties can make informed decisions. A mediation or a series of mediated settlement agreements may also help to settle matters without litigation even in a high asset or complicated estate.

An Experienced High-Asset Divorce Attorney Protecting Your Rights During Divorce

Divorce is never easy, but it can get more complicated with a high-asset kind of divorce. Whether you’re the high or low earner in the union, you’re concerned about protecting your rights to get a fair settlement. Discussing your concerns with lawyers from a reputable family law legal firm in San Antonio can be the first step toward a favorable outcome.

At Laura D. Heard Law Firm Inc., we work hard to protect the rights of clients going through a divorce. If you need help during the process, we are here to walk the journey with you. Call us at (210) 655-9090 to schedule an initial consultation.