Divorce is almost always complicated, even when the spouses pursue an amicable divorce. These challenges can be even more complex when couples with large estates divorce. Whether you and your spouse have obtained significant assets throughout a lengthy marriage or one or both of you had a high net worth before marriage, dividing and preserving your assets can be a challenge. Understanding the nuances and challenges of high-net-worth divorce can help you achieve the best possible outcome.
There is no standard legal definition for a high-net-worth divorce. However, the term usually applies to couples with more than $1 million in assets when divorced. The following types of assets may need to be divided during a high-net-worth divorce:
- Real estate
- Retirement accounts, such as 401ks
- Business investments
- Shared businesses
What You Need to Know About Divorce With a Large Estate
Because of the amount of assets and the nature of assets that will be divided in a high-net-worth divorce, these cases tend to involve more conflict and complexity. Working with a skilled attorney who understands the intricacies of large estate divorces can help you through this complicated process by providing sound and strategic legal advice from years of experience.
You should know that many high-net-worth divorces take longer to finalize than simpler divorces. Every divorce is unique, so there is no way to accurately estimate how long your divorce will take. Generally, divorces take six months to two years to finalize. However, high-net-worth divorce cases may take longer because of the types of assets and number of assets that need to be appraised and divided between the couples.
Spouses May Try to Hide Assets
When one or both spouses own significant assets, they may be tempted to try to hide some of their assets so they do not have to divide the assets with their soon-to-be-ex-spouse. Hiding assets is never an advisable course of action, no matter the asset’s value. When courts discover that a person has attempted to hide assets, they will look negatively at the party for the rest of the case. The party trying to hide assets could also face other penalties and may experience a less favorable division of assets once the court has discovered their activities.
Dividing Debt-Ridden Estates in a Divorce
When considering divorce, many people think about how the court will divide their assets, including the properties they own and the money they have in their financial accounts. However, the court will also divide debts in a divorce. Texas is a community property state. Marital assets and debts will be justly divided. Any assets and debts a couple acquires after marriage are usually considered marital property and subject to division by the court.
A couple may own significant real estate assets, such as multiple homes or commercial properties. If these properties are debt-written and the couple is underwater on one or more of them, the court will need to decide how to distribute the debt fairly. The court may order an appraisal of the property to determine the fair market value of the real estate. If one party receives the debt-ridden real estate, the other party may receive less in liquid assets.
The court will attempt to divide the debt fairly, and it is crucial that you work with an attorney who can understand complex financial matters and represent your best interests during the division of property. An attorney may be able to negotiate a more favorable outcome so you are not stuck with an unfair debt burden at the end of the divorce.
Child Support is Determined Differently in High-Net-Worth Divorces
As with most other states, Texas has a child support formula that calculates how much child support a parent must pay. The formula is based on both parent’s income and several other critical financial factors. Texas’s standard child support guidelines only consider income up to a certain amount.
Courts will use separate high-net-worth divorce guidelines for child support calculations if your income exceeds that level. You will almost certainly be required to pay more in child support than is usually required. The parent with primary custody must prove that a higher amount of child support is necessary to meet the child or children’s needs.
Dividing Estates Accumulated During a Long Marriage
Research has shown that the number of gray divorces has increased significantly. A gray divorce is defined as a divorce between individuals approaching their retirement years or already retired. Generally, the longer a couple has been married, the more assets they have acquired.
As a result, couples getting divorced after a long-term marriage often have accumulated a significant amount of marital property. Some divorcing spouses may be nearing retirement and dependent on marital assets to support or supplement their retirement. Without these assets, they may not have the financial means to retire.
When dividing significant assets and real estate, properly understanding both spouses’ financial situations is crucial. The discovery period of the divorce, in which the spouses exchange information about property and financial assets, will help them get a clear picture of the estate.
One spouse may try to downplay the debt on a real estate property or hide assets. Working with an attorney can help you protect yourself and ensure all of the assets and debts accumulated during a long marriage are accounted for and properly appraised so you can work toward a fair and equitable divorce settlement.
Contact an Experienced High-Net-Worth Divorce Attorney
Working with an attorney while getting a divorce is always important, especially when you own significant assets. Attorney Vonda Covington of Covington Law Firm, PLLC, has extensive experience representing clients in large estate divorces. We will work diligently to ensure you carefully evaluate your assets and debts while pursuing a fair settlement out of court. Do not hesitate to contact Covington Law Firm, PLLC, to schedule a complimentary case evaluation and learn more about how we can fight for your rights.