There is no hard and fast legal definition for what constitutes a high-net-worth couple in Texas. However, generally, a couple is considered to have a high net worth if their combined assets total over one million dollars. Meanwhile, couples with over five million dollars in assets are considered very high net worth, and those with assets totaling 30 million dollars or more are regarded as ultra-high net worth.
One thing that is shared between these couples is that when they divorce, their divorce process may be more complicated than the average couple. This is for several reasons. Keep reading to learn more about common issues high-net-worth couples face when divorcing and what you should be concerned with if you fall into one of these categories.
Property Division Is a Major Concern
The primary area where high net worth divorces differ from the average divorce is in property division. Couples with significant assets are more likely to have a complex financial situation. These couples tend to have accumulated substantial wealth while married and are more likely to have come to the marriage with significant financial holdings and other assets. This means that considerable time will need to be spent disentangling their separate property from their marital property.
Examples of property that many high-net-worth couples share:
- Investment accounts
- Retirement accounts
- Business investments
- Real estate holdings
- Luxury goods
High net worth couples may also be more prone to have significant shared debts. For example, multiple home mortgages, credit accounts, and more debts associated with business investments and large purchases are all common. These debts must be itemized, categorized, and balanced against marital assets.
What About Income from an Inheritance?
Couples with a high net worth are also more likely to have inherited money and/or property. While inheritances are generally categorized as separate property and, therefore, not subject to property division, rarely is property division this cut and dry.
For example, many people use inheritance money to purchase real estate, pay off debts, or boost their retirement accounts. If you are married, this can create commingled property. Commingled property is that which is comprised of both marital and separate assets. Commingled property can be very challenging to deal with during a divorce.
How Do Prenuptial Agreements Impact Property Division?
Prenuptial agreements can help make the property division process smoother. It can also help clarify how specific property types should be dealt with, such as commingled property. For example, suppose you inherited some money from a relative shortly before your wedding and used that money to start a retirement account for yourself and your future spouse. You can denote that that entire retirement account is treated as joint property, even though it was initially funded with an inheritance that would otherwise be treated as separate property.
Conversely, prenuptial and postnuptial agreements can ensure that separate property remains separate. It can also help you trace how separate property is used during your marriage. For example, imagine that you inherited $100,000 and used that to boost a down payment on a family home with your spouse. You can use your marital agreement to outline that if you divorce or when that house is sold, that original $100,000 goes back to you, and the remainder of the house value is then split with your spouse.
Spousal Support Issues for High-Net-Worth Couples
Just as property division is not always clear-cut in a high net worth divorce, spousal maintenance is another area that is sometimes more complicated for couples with a high net worth. In your average divorce, it is not uncommon for the lower-earning spouse to be awarded alimony to help them get back on their feet after the divorce. In some cases where one party has given up their career to stay home and take care of children and the household, they may even be awarded permanent spousal support.
However, couples with a high net worth may not be awarded spousal support in the same way. For example, if both parties have significant incomes, the courts may not award spousal support at all, even if one spouse earns less than the other.
Because spousal support issues and disputes are common in high-net-worth divorce cases, it is critical that you work with an experienced attorney. Your lawyer can help you ensure that your best interests are represented.
If you are considering divorcing or are already separated and you and your spouse have a high net worth, reach out to the Law Firm of Johnson & Gaskill PLLC. Our experienced, skilled team is committed to providing every client with straightforward, honest legal representation. We can help you through all aspects of your Texas divorce.