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How Is the Value of a Business Determined During a High-Asset Divorce?
Business interests are often an important consideration in a high net worth divorce. A family business can represent a significant source of income, and it is likely to be one of the most valuable assets owned by a married couple. Since business interests must be included along with other assets when dividing marital property between spouses, determining the value of a business is crucial for making sure all assets can be allocated fairly. In these cases, spouses should be sure to understand the methods that may be used when performing a business valuation.
Three Methods of Business Valuation
There are multiple different approaches that can be taken when determining a business’s value. Typically, they fall into the following categories:
- Asset-based valuation - The simplest method of business valuation involves a calculation of the total value of the assets owned by a business. The business’s debts or liabilities are then subtracted from this total to determine the value of the company. While this approach can determine the cash value of the tangible assets owned by a business, it may not take other factors into account, such as the business’s goodwill in the community, its relationship with its customer base, and the value that an owner brings to the organization.
How Are Life Insurance Policies Handled in a Divorce?
divided in divorce are usually homes and vehicles, but there is one other asset that can arguably be more important: insurance policies of any kind, most specifically life insurance. Insurance policies can have significant payouts and can tip the balance in terms of property and asset division.
Child Support and Life Insurance
In Texas, if you have children, it is not uncommon that a court may ask you and your spouse to maintain life insurance policies on yourselves as both a way to provide for the children in an emergency and a way to secure child support obligations. The reasoning is not to give the former spouse a payday in the event of your death, but to ensure that your children are adequately provided for. Some former spouses hesitate to do this, but it is almost always the quickest and easiest way to ensure that your children are protected. Also, it is very often the case that the obligation to maintain life insurance results in a slight reduction in child support expenses for the paying parent.
How Do Protective Orders Affect Child Custody in a Divorce Case?
When parents choose to end their marriage through divorce, they may need to address a variety of complex child custody issues. While parents may be able to work together to reach agreements regarding how they will share custody, disagreements over these or other issues can sometimes spiral out of control and turn threatening or violent. In situations involving family violence or where a parent fears for the safety of themselves or their children, a protective order can address these concerns. However, protective orders can also be based on false accusations, or they may be used in an attempt to gain an unfair advantage during divorce. Those who wish to obtain or defend against a protective order should be sure to work with an experienced family law attorney.
What Can a Protective Order Do?
If a person has allegedly committed acts of family violence (including physical abuse, sexual abuse, verbal abuse, threats to harm a person, or kidnapping) against their spouse, ex-spouse, dating partner, or children in their household, their current or former partner can file a petition for an emergency protective order in family court. This type of restraining order is known as a temporary ex parte protective order. An emergency protective order will be in effect for 14 days, and a hearing will be held to determine whether a permanent protective order will be necessary.
How to Protect Your Credit in the Midst of Your Texas Divorce
A divorce can often have a large impact on your finances. With attorney’s fees, filing fees, court costs, and the asset division process, costs can add up quickly. This is why it is so important to protect your finances during and after your divorce. Many people who are considering ending their marriage may wonder how their divorce will affect their credit score. This is especially concerning for those with high net-worth, who might be facing financial uncertainty for the first time in their lives.
Helping Your Post-Divorce Credit Rating
Having decent credit is extremely important, particularly when you are starting your new life as a single person. While getting a divorce will not automatically affect your credit score, there are ways a divorce can be detrimental to it.
Here are a few tips on protecting your credit score during and after your divorce:
Could Your Spouse Be Hiding Assets in Your Texas Divorce?
When you are in the midst of divorce, it is necessary to protect your rights from all angles, especially when it comes to finances. The lengths you go to in order to secure your financial well being and how you handle those proceedings will determine a great deal in terms of your quality of life and your overall lifestyle once the marriage has officially ended.
Why You Should be Concerned About Marital Assets
There are multiple reasons you should be aware of the possibility of hidden assets within your marriage as you undergo divorce. While it is obvious that every spouse should naturally be concerned about finances during a split, if you are not vigilant, hidden assets, in particular, can significantly affect your bank account, investments, and other financial resources after the divorce is final.
When your spouse conceals assets, it places you at risk for losing large chunks of marital property that you would otherwise be eligible to claim. This loss of property can affect everything from your day-to-day bills to your general financial stability. It can also trigger more long-lasting consequences, such as creating obstacles to your future financial plans, as retirement funds, savings accounts, and more can be affected.
Protecting a Business or Professional Practice During Your Divorce
There are multiple financial issues that will need to be addressed during a high asset divorce. Couples who have a high net worth may need to complete complex property litigation as they determine how to divide the assets they own. These concerns can be especially important for spouses who are business owners, including those who are doctors, accountants, chiropractors, or operators of other types of professional practices. In many cases, a business will represent a primary source of income for a spouse, and they will want to ensure a company or practice can continue operating successfully after their divorce is complete.
Division of Business Interests
A business will be considered part of a couple’s community property if it was founded or acquired during their marriage. If one spouse owned a business before getting married, it will usually be considered separate property. While separate property will remain under the ownership of one spouse, the other spouse may ask to be reimbursed for contributions made toward the business, including time and effort put toward building the business or marital funds that were used to pay off business debts.
What to Do if You Suspect Your Spouse Is Hiding Assets from You
It is not uncommon in marriages for one spouse to handle a majority or all of the couple’s finances while the other spouse has little to no input on these matters. Family law attorneys and psychologists have a specific term to refer to the spouse who has little say in financial matters: the “out-spouse.” When you are the out-spouse, it can be fairly easy for your partner to hide assets or other property in an attempt to keep more than his or her fair share of the marital estate during divorce. Part of the divorce process is dividing your marital assets so that you and your spouse each get your fair share. To ensure your property is divided fairly, you have to have at least some idea of what your financial situation looks like, which is rarely the case if you are an out-spouse.
The Discovery Process
If you suspect your spouse is hiding assets from you, chances are he or she will not be willing to come forward and reveal those assets and financial records willingly. During your divorce, your attorney will attempt to obtain this information through what is known as the discovery process. This process is a way that your attorney can formally ask your spouse for financial records. The court can take further action in pressuring your spouse to provide the required information if he or she remains uncooperative.
How Is Real Estate Property Divided in a High Asset Divorce?
During a high net worth divorce, couples will need to address multiple different types of assets, including financial accounts, vehicles, jewelry, furniture, valuable artwork or collectibles, and family businesses. Real estate, including the marital home, vacation homes, or commercial properties, are often among the most valuable assets owned by a couple, and complex property litigation may be needed to determine how the division of this property will be handled. During the divorce process, spouses should be sure to understand their rights regarding real estate property and the legal and financial issues that they may need to address.
Community Property Vs. Separate Property
The first thing to consider when addressing real estate is determining whether it is considered community property or separate property. Community property includes any assets acquired by either spouse during their marriage, and Texas law requires these assets to be divided equally during a divorce.
Will a Child Custody Evaluation Be Needed in My Divorce?
If you are planning to end your marriage, you will need to address a wide variety of legal issues. In a contested divorce, disputes with your spouse can become highly contentious, and if you have children together, you will likely disagree about how you will share in parenting duties and divide the time that your children spend in each of your homes. If you are struggling to reach agreements about complex child custody issues, the judge in your case may decide that a child custody evaluation is needed. Depending on the circumstances of your case, either a guardian ad litem or another type of child custody evaluator may be appointed.
What Is a Guardian ad Litem?
The court may appoint a person who will represent the best interests of the child in a divorce or child custody case. In many cases, a guardian ad litem will be an attorney, but they may also be another person who has the training and experience necessary to determine what is in a child’s best interests.
Will Spousal Support Be a Factor in a Texas High Net Worth Divorce?
Financial issues are likely to be a concern for anyone who is splitting up with their partner. In many high asset divorce cases, one spouse earns the majority of the family’s income, and the other spouse may be unable to make enough money to provide for their needs on their own. A spouse may ask for spousal support, which is also known as spousal maintenance or alimony, to be paid, giving them the means to pay for their ongoing expenses. However, spousal support is not awarded in every case, and spouses should be sure to understand how Texas’ divorce laws will apply in their situation.
When Is Spousal Maintenance Awarded?
The purpose of spousal support is to provide for the needs of a spouse who is unable to provide for their own minimum reasonable needs. Typically, a spouse will be eligible to receive spousal maintenance if the parties have been married for at least 10 years, and the spouse who is seeking spousal support does not currently have the means to support themselves. This will allow a spouse to receive ongoing support payments if they did not work during their marriage or relied primarily on their partner’s income to meet the family’s needs.
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