When a couple with a high net worth files for divorce in Texas it often involves a number of unique issues and concerns. This articles highlights some of the issues and concerns that frequently arise in a divorce involving high net worth couples.
Existence of Martial Property Agreements
A divorce involving a high net worth couple in Texas will often involve a marital property agreement.
This may be a prenuptial agreement entered into before the marriage or a marital property agreement entered into after the spouses were married.
The marital property agreement may divide the couples property and identify which property is treated as separate property and which is treated as community property.
This is important because only community property is subject to division in a divorce and a court will enforce the terms of a properly executed marital property agreement.
The agreement may also provide for a specific division of property in the case of divorce as well as additional terms specifying each spouse’s obligations following divorce.
Child Support Guidelines Do Not Apply in High Net Worth Divorces
The child support guidelines used in most divorce cases in Texas only apply to the first $8,550 of net resources of the spouse obligated to pay child support.
Net resources are different from gross income. Gross income in child support calculation includes all sources of income. Gross income is not limited to a spouse’s salary, but also distributions and dividends from business income.
Usually, if the spouse obligated to pay child support has monthly gross income in excess of $11,000 then his or her net resources will exceed the $8,550 limit to the child support guidelines.
A high net worth couple will usually have at least one spouse that exceeds this level of income.
Unique Lifestyle of the Children
Invariably, as a family’s income increases so does the amount of money spent on their children. This leads to unique needs for the children of the divorcing couple that are not present in most divorces.
Private school tuition is a common example. Child support paid under the statutory guidelines is likely not sufficient to pay for the usual care of the children as well as tuition at a private school. The spouses will have to reach an agreement on who will be responsible for or how they will divide these additional expenses.
The children may have become accustomed to annual family vacations, especially if the couple owns multiple real estate properties such as a vacation house or beach house. In addition to dividing those assets, the divorcing couple may need to provide a schedule for access to the properties by the other spouse.
Another issue that may arise is the use of in-home child care in the form of a Nannie or other assistance. The spouses will have to coordinate issues such as payment of salary and use of the Nannie’s services during the divorce.
High net worth couples frequently have one spouse who owns a business or provides all of the income for the family.
This means spousal maintenance is a much more important issue for the non-income earning spouse so that he or she can maintain some semblance of the lifestyle that he or she was used to prior to the divorce.
Lack of Information
In situations where one spouse is the primary income earner, you will often find that the other spouse is at a disadvantage when it comes to knowledge of the family’s assets and income sources during the divorce.
This inequality in information often requires more effort be put forth during discovery to properly identify all assets of the marriage before entering into any agreement regarding property division.
In these cases some of the best sources of information will be third parties and the use of financial investigators.
There are other unique issues that arise in a high net worth divorce when it comes to dividing the couple’s property.
Often times there are unique items of personal property that may have sentimental value or be difficult to value. This can lead to contentious negotiations when trying to arrive at an overall property division which is just and equitable.
When there are multiple real estate properties in multiple jurisdictions, characterizing those assets can be difficult as can be dividing the assets up.
It is common in a high net worth divorce for one or both spouses to own a business. Texas is a community property state which means that even if that business is titled int he name of one spouse, if the interest was acquired during marriage then it is community property and subject to division during the divorce.
Dividing a business can be tricky and you can read more about those issues by reading this article.
A couple with high net worth will rightly have concerns about privacy concerning the value and nature of their marital estate – even after divorce.
In most cases, the property division is described in detail in the final decree of divorce filed with the court. However, that is a public document.
It is possible, if the spouses agree, to keep the details of any property settlement out of the public record. This is often in the interest of both spouses.