High Asset Divorce

Divorce that Involves High Net Worth

For divorces that involve high net worth, there are a number of considerations that need to be made beyond High-Earner Child Support, salary, alimony, and business ownership.

Retirement Assets and Texas Family Law

401(k)s and other retirement accounts or investments are significant assets.  Because Texas is a community property state, some assets are considered to belong to both spouses.  If a retirement account is created before the marriage, contributions and interest before the marriage could be considered “separate” property and thus be exempt from division.  However, contributions and interest earned after the date of marriage could be considered “community property,” and will thus need to be divided.  These issues will need to be determined as the divorce proceeds.

When a 401(k) or other assets are divided during a divorce, the  problem of diminished value may not be taken into account.  Because taxes are not withheld before contributions are made, they will be due after, which diminishes the value of the account.  If money is withdrawn from a 401(k), the after-tax value is worth about 65% of the value reflected on the statement.  Your attorney can help you negotiate larger shares of other assets to make up the difference.

Lifetime Asset Protection Trusts

It is possible to plan for future contingencies involving property and asset division by creating a Lifetime Asset Protection Trust.  Such a trust provides an avenue to pass assets directly to children so that your ex-wife or husband cannot lay claim to your money.  This move can also protect your assets from your child’s spouse in the event that your child gets a divorce.