Historically speaking, most divorce lawyers and courts have defined a high net worth divorce as one involving a couple whose combined assets total over a million dollars. While much larger sums tend to make headlines when celebrities or powerful couples part ways, your situation is just as important, regardless of how much money is involved. Nevertheless, high net worth separations tend to be difficult to navigate. When there’s more at stake, there’s often more conflict.
You might think that having a prenuptial agreement, also known as a prenup, would make things easier for everyone. In practice, however, these documents are frequently challenged in court and can actually cause proceedings to drag out further. In either case, you’re going to want strong legal representation to help guide you through the process and ensure the best outcome for all parties involved.
How to Navigate a High Net Worth Divorce When You Don’t Have a Prenup
What Happens When a Couple Divorces Without a Prenup?
A prenup establishes a framework for how assets ought to be divided in the event of a divorce. Most prenuptial agreements aim to isolate each of the partner’s earnings throughout the life of the marriage. That is, if you earned twice what your partner did, then a 2:1 ratio would logically apply to how assets are divided. Assets acquired before marriage would remain property of their original owner, and new acquisitions could be divided based on how much each party invested.
In Texas, property acquired during the marriage becomes “community property.” Property you owned before your marriage, or property that was passed down via inheritance or gift (unless it was specifically given to both of you as a couple) is excluded from community ownership. When there is no prenup, the Texas standard of a “just and fair” division of community property will apply. This is not legally defined as a 50-50 split, so be prepared to build a case.
What Changes in a High Net Worth Divorce?
Just about everything changes. Even in the friendliest, most amicable divorce you can imagine, the process of reviewing all of your assets and determining how they will be divided becomes increasingly difficult. High net worth couples regularly have assets in other states or overseas. You likely have more investments and high-value assets that can be difficult to divvy up. Business interests further complicate matters.
Overall, high net worth divorces tend to take longer to resolve and are much more expensive to settle due to the sheer amount of time it takes to go over everything and come to an agreement. Sadly, as the stakes are higher, these divorces also have a tendency to become bitter. We hope to help you avoid the worst and reach a mutually agreeable resolution to your divorce. So, what do you have to do to make that happen?
Steps to Ensure a Smooth Separation
If you want to have the smoothest separation possible and reach the fairest outcome for both parties, then there are several steps you are going to have to take. Bear in mind that two people are attempting to follow the same path towards a successful divorce. Wherever possible, aim to cooperate with your spouse, as that will speed up proceedings and likely improve the end result.
1. Hire a Divorce Lawyer
No step is more important than this one, so we’ve placed it firmly in the first place. You may think you have a clear case in your favor won’t need legal representation. However, a divorce ruling can be thrown out later on if it were found to be granted on faulty grounds. You don’t want to go back to square one down the road. Furthermore, you have almost certainly underestimated the time it will take to properly build your case.
If you don’t have help from a divorce lawyer, but your partner does, you’ll be at a serious disadvantage. We strongly recommend against representing yourself. A good divorce lawyer will do much more for you than just represent you at hearings. They’ll be with you every step of the way. Consider asking Skillern Firm for our help.
2. Take Accurate Stock of Your Assets
This is the most arduous part of a high-net-worth divorce. There are two distinct phases here: discovery and valuation. Discovery is where we itemize all of your assets and determine which ones are community property and which will be left out of the divorce proceedings. As mentioned earlier, high net worth couples regularly have assets that are located in other jurisdictions. It’s also not uncommon for wealthy couples to have some hidden assets which need to be declared.
Valuation is even more challenging. Cash can be counted, but other assets often have subjective values. For example, would you use your city’s valuation of your house for tax purposes or its current market value? Either choice can be called into question. Other assets can be much harder to quantify. For instance, works of art or jewelry may need a professional appraisal. Expect a lot of back and forth as both parties’ lawyers debate the final numbers.
3. Reaching an Agreement
When all of your assets have been tallied up and valued, your legal team can then begin to propose a “just and fair” division of assets. Your partner’s team will do the same and attempt to meet in the middle. Do not expect this phase to be easy. Even if everyone agrees on the value of an item, what to do with it is another matter entirely.
Selling all your assets and splitting the final monetary amount is impractical and can trigger tax consequences, so you will need to carefully evaluate your options. Some concessions will need to be made. If you are able to reach an agreement, you can file for an uncontested divorce hearing. If no agreement can be reached, you’ll need to present your case in court as part of a contested divorce.
4. Present Your Case in Court
Although most divorce cases in Texas are settled without having to resort to a trial, there is always the possibility that you will need to present your case to court. Here is where your divorce lawyer will be your most valuable asset. Each side will present their proposal for property division, child custody and support, and alimony, where applicable.
In the end, the judge will issue a divorce decree. This is a legally binding decision that obliges both parties to accept the terms the judge approved.
5. Accept or Appeal
If you are satisfied with the outcome, you may accept the terms of the divorce decree and proceed to execute it faithfully. On the other hand, if you do not agree with the terms, you may consider filing an appeal. Do note that appeals must be filed with a valid justification, which is limited to misapplication of the law, erroneous proceedings during the trial, or when the other party concealed assets or information relevant to the decision.
With proper legal representation, you will hopefully be able to reach a satisfying mutual agreement without going to court. When everything is at stake, the best investment you can make is in a quality legal team. Contact the Skillern Firm in Houston today to learn more about how we can guide you through the turbulent waters of divorce and lead you to a smooth separation.