For better or worse,
For richer or poorer,
Until . . . a divorce is filed.
When there are several zeros at the end of your bank balance, as in $500,000.00; $5,000,000.00 or more, the financial aspects of divorce can be high risk.
Texas divorce laws are the same regarding the division of property whether the money and assets in a marital estate are a lot or a little; however, the courts will inevitably encounter and address more complex issues regarding the property division in a divorce case with substantial financial and business assets.
Texas is a community property state. What does that mean, as a practical matter, when divorce occurs?
1. The law presumes that all property owned by either spouse is community property, meaning that both spouses own an undivided one-half interest.
2. The court cannot divest a spouse of his or her separate property in divorce.
In a very simple explanation: Texas community property is everything earned or acquired during the marriage other than inheritances or gifts. Your paycheck is community property, your rental income is community property, the cars you purchase are community property, retirement funds accumulated during marriage are community property.
At the time of the divorce, the court will make a just and right division of the community property. “Just and right” does not mean 50/50. Often the courts will split the community property equally, but many factors may affect this division including:
1. The spouses’ earning abilities and education.
2. The spouses’ actual earnings.
3. Who has care and primary custody of the children.
4. The value of separate property owned by the spouses. If the wife inherited $3,000,000.00, should the husband be awarded more of the community property?
5. Fault in the break up of the marriage, especially if a cheating spouse spent substantial assets dating or cavorting with others.
6. The debts of the spouses.
7. Tax consequences.
The bigger the marital pocketbook, the bigger the risk to assets in play.
Texas Child Support and High Asset Divorces:
The court also has discretion in setting child support when the parents are wealthy. The Texas Family Code provides guidelines and the guidelines are presumably in the best interest of the child.
The law caps the Texas child support amount guidelines to a percentage of the first $9,200.00 of the paying parent’s earnings. However, the cap is not made of steel. The law is a guideline.
The court has the discretion to order child support in excess of the guidelines based on the children’s best interest which includes an examination of the proven needs of the children. In the case of children growing up in a high-income household, do not expect the court to necessarily limit its consideration to basic food and shelter. The court may consider many factors in setting child support, including the children’s current living standards, such as private education, nannies, medical issues, emotional issues, sports and other extracurricular activities and, in the rare case, a body guard.
When setting child support within a wealthy family undergoing divorce, the court has discretion, based on the evidence, to set order child support above the presumptive amount in the guidelines. The court’s determination is subjective and is reversed by higher courts only if the trial court “abused its discretion,” a high threshold indeed.
With so much at stake, you should hire an experienced family law attorney who can present your case clearly, and persuasively.
Modern High Asset marriages commonly involve Pre-Nuptial agreements to preserve and protect each spouses‘ property. If one spouse takes advantage of the other and the Pre-Nuptial is unconscionable, it may be attacked as invalid as a matter of law. There are a few considerations you should make sure of before determining if a Pre-Nuptial is valid:
- Did you sign the Pre-Nuptial voluntarily?
- Were you given fair disclosure of the property or obligations of the other spouse?
- Did you waive the right of disclosure in writing?
- Did you have adequate knowledge of the property or financial obligations of the other spouse?
If you answered “NO” to either (1) or all of (2)-(4) then you may be in a position to contest the Pre-Nuptial agreement. It is difficult to show that a Pre-Nuptial agreement is unconscionable. The Courts have made it clear that “unfairness” which is short of unconscionability does not make a Pre-Nuptial unenforceable. Determining whether a Pre-Nuptial agreement is valid or not is in large measure a question for the judge and not for the jury. This means that a judge will make the determination if your spouse has forced you to sign a Pre-Nuptial in an unconscionable way.
For high asset divorces, Pre-Nuptial agreements are more common. If you are a spouse that was pushed into signing a Pre-Nuptial without fair disclosure or without adequate knowledge of the property or obligations enforced in the agreement you may have a claim. Depending on the circumstances, invalidating a Pre-Nuptial agreement may be time consuming and costly, so an experienced attorney must be consulted.
Assess your situation at the time you signed your Pre-Nuptial. Did your spouse muscle you into signing the Pre-Nuptial, thus possibly invalidating the Pre-Nuptial? Once you have answered these questions find an experienced attorney that is familiar with contesting or setting aside unconscionable or unenforceable Pre-Nuptial Agreements.
Julian Nacol, Attorney
Nacol Law Firm P.C.
One the most complicate and transparent ways an individual may defraud a spouse during a marriage is with the use of a trust. A trust is an entity that separates equitable and legal title of all property or money placed within it. Prior to, during, or after marriage, a spouse may create a trust and name the children of the marriage or others, as the beneficiaries. The spouse then may start siphoning community property and separate property into the trust removing the property from the community. This is a tactic commonly practiced when a spouse has failed to sign a pre-nuptial agreement.
Circumstances like this happen in High Asset Divorces because a trust may be used to protect properties from the other spouse. Attack the trust as a party of the case and request an accounting. It takes an experienced lawyer to understand which trusts can be attacked and which trusts are impenetrable.
Trust busting consists of complex and arduous litigation depending on the circumstances. The circumstances of a trust are important in divorce cases. Here are a few questions you should ponder when assessing any trusts during a divorce:
- Determine when the trust was created;
- Determine if the trust is revocable trust or irrevocable trust ;
- Determine who the beneficiary of the trust is;
- Determine who the trustee of the trust is;
- Determine who the settlor of the trust is;
- Determine the type of property or money that is placed within the trust; and
- Determine when the property or money was placed in the trust.
These are just a few inquiries you should make prior to meeting with your lawyer. It will save you time and money. Depending on the answers to the seven inquires stated above, an experienced lawyer may be able to bust the trust opening the property and monies for the final hearing in a divorce case. There are many defenses and unsettled law in connection with trust busting and an experienced attorney must be sought.
Julian Nacol, Attorney
Nacol Law Firm P.C.