6034 West Courtyard Drive, Suite 100, Austin, TX 78730
Call Us Today
512-610-6199
Recent Blog Posts
Divorce over Fifty: Financial Ramifications of Gray Divorce
Unmarried women over 50 are nearly five times more likely to live in poverty as married women in that age group, according to a recent divorce study.
Researchers from Bowling Green University also found a number of other "wide ranging financial consequences" to divorce in this age group. There are several reasons for this reality. First, according to the study, unmarried women receive significantly lower Social Security payments than married ones, mostly because when the system was designed, later-in-life divorce was essentially unheard of. Secondly, women who divorce earlier in life have more time to recoup lost wealth through employment and investment income.
Curiously, the age/income disparity was not present among men of a similar age.
Divorce Over 50
Marriage dissolution in this age group has doubled over the past two decades, even as the overall divorce rate has declined. Marriage dissolution in this age group creates a much different set of issues. Among younger couples, child custody and child support loom large; oftentimes, the only property to distribute is a rather small retirement nest egg and property that has little or no equity.
The Science and Art of Spousal Support Determination
The amount of duration of spousal support payments in a high asset divorce is a matter of both science and art because the relevant provisions in the Texas Family Code contain both a mechanical formula based on the length of the marriage and a guide for the evaluation of case-specific financial and familial data.
This combination is a response to a wave of alimony reform that is still going on in many jurisdictions. On the one side, obligor ex-spouses, who are nearly all men, want spousal support to be determined mechanically and sharply limited; obligee ex-spouses, the majority of which are women, insist that flexibility is necessary to bring about a just and right division of the marital estate.
Formula
The statute caps the duration of payments at five years (if the marriage lasted 20 years or less), seven years (20 to 30 year marriage), or 10 years (marriage of longer than 30 years). The duration of payments must be the "shortest reasonable period that allows the spouse seeking maintenance to earn sufficient income to provide for the spouse's minimum reasonable needs." Some obligee spouses may elect a lump-sum amount as opposed to periodic payments. In these circumstances, the amount due is pre-calculated and a discount is applied to account for inflation.
Common Issues of Retirement Accounts in Divorce Division
In many high net worth divorces, assets have an emotional value that is equal to, or even greater than, the monetary value. For example, a house is not just a residence; it is the place where the children grew up. The same principle applies to many personal property items, like grandfather clocks and sets of dishes.
Retirement accounts often fall into this category as well. In addition to their significant dollar value (a 410k, IRA, or other long-term savings account is often the largest asset in a divorce), the account represents years or even decades of financial sacrifice and the promise of long-term security. So, it is little wonder that there are many issues stemming from retirement accounts in a high-asset divorce.
Pre-Division
As a brief primer, most retirement accounts are divided 50-50 between the spouses, based on the length of the marriage and the amount of money accumulated during that relationship, even if the non-owner spouse made no financial contributions.
High Asset Divorce and the Family Business
Although there is nearly always some overlap, most assets in a high net worth divorce fall into one of two general categories. Some property items, primarily things like securities brokerage accounts and retirement nest eggs, are prized mostly for their economic value. Others, such as a primary residence or vacation property, have a greater emotional value.
A family business is one of the rarer items that is very much a mixture of both these elements. In many cases, a business is a couple's primary source of income, or even the only such resource, so it has tremendous economic value for both the husband and wife. At the same time, especially if it was founded during the marriage, both parties have a great deal of "sweat equity" in the endeavor.
What Happens to the Business?
This question must always be answered, and there are several options in terms of the business' disposition.
Texas Family Law and the Changing American Family
Could informal marriage be the next big transition in family law? Such relationships are already becoming the norm in many parts of Latin America, and the cultural shift could well follow these immigrants to the Lone Star State. For example, in Columbia, 84 percent of babies are born to unmarried mothers. There are similar statistics in a number of other countries, including Mexico.
The trend could most likely affect Texas because it is one of only a handful of states that recognizes informal marriage for all purposes. While it is relatively easy to enter into a common-law marriage, such a relationship can be difficult to dissolve, even in a high-asset divorce.
Formation
An informal marriage must be established by a preponderance of the evidence. To meet this burden, a party can either introduce a signed declaration of informal marriage or, more commonly, establish the three elements required by the Family Code:
Dealing with Parental Alienation Syndrome
In a development that placed the spotlight back on parental alienation syndrome in complex child custody cases, two missing teenage siblings were recently reunited with their divorced father whom they claimed was physically abusive.
The saga began when a Minnesota court granted the girls' father sole custody in a divorce proceeding. Shortly thereafter, the 16- and 17-year-old girls ran away from home and were sheltered by a woman who is a vocal supporter of the "Protective Parent" movement. Members of this group shelter children who claim to be fleeing from abusive parents when a court has ordered them to remain in the home. The girls' mother, who accused her husband of physical abuse and whom authorities suspect of aiding in her daughters' disappearance, was arrested and charged with two counts of felony interference with child custody and one count of involvement in a kidnapping.
High Asset Divorce Fraud
In many respects, a stick of dynamite and a high-asset divorce have a great deal in common. Prior to the inevitable explosion, there is a burning fuse. Sometimes the fuse is very short; for example, there may have been an extramarital affair or an outburst of physical violence. Other times, the fuse is considerably longer, as differences simmer and eventually escalate into conflict. This process often takes place over the course of years or even decades.
Especially in the latter scenario, some level of fraud, or attempted fraud, is nearly inevitable. Since a spouse anticipates a high net worth divorce, there is ample opportunity to conceal assets. Fortunately, there are affirmative steps that an attorney can take to mitigate or erase the damage.
Preventative
To continue the above analogy, there are a number of telltale property fraud indicators to look for as the fuse burns down, including:
Child Support Guideline Deviation: Not Enough or Too Much?
The child support guideline amounts in Section 154 are presumed to be reasonable. But consider the following situations:
- The obligor parent is a server at a local restaurant; the obligee parent is an engineer at a large technology company;
- Father is now financially responsible for three stepchildren after a subsequent remarriage;
- Mother must travel to another state to see the children because Father relocated with the children;
- The family includes two preschool children that are in daycare and two school-age children that require after school care; or
- Because of a child's pre-existing medical condition, insurance is expensive and refuses to cover certain treatments.
The cookie-cutter guidelines might be considered "unjust or inappropriate" under Section 154.123 in any of these situations.
Have You Overlooked These Issues in Your Texas High Asset Divorce?
The more assets you and your spouse have, the more complicated your divorce will be. Trying to manage the emotions as well as the future financial impact of the breakup of your marriage is a big job. Before you get too far into discussion about how to split up the property or how support should be paid, make sure you don't overlook these common issues in high-asset divorces.
IRS and Asset Transfer
In a typical divorce, the transfer of ownership of property or assets from one spouse to the other does not create a taxable event. The IRS is not going to charge you income taxes for giving your spouse title to the car in the divorce.
However, in many high-asset cases, some property is not held in the name of either spouse. Instead, a closely held company or some other form of holding company may hold title. When assets are transferred out of corporate ownership the transfer may create a tax obligation. Make sure you understand the possible tax ramifications of any transfers.
Anchors Aweigh: Paternity Leave for New Fathers
It appears that the United States Navy may be the latest organization to jump on the bandwagon of extended paternity leave for new fathers.
During a recent visit to Pearl Harbor, Hawaii, Admiral John Richardson presided over an impromptu meeting that included himself, Master Chief Petty Officer of the Navy Mike Stevens, and ten sailors who had become new fathers within the past year. Currently, the Navy provides ten days of paid paternity leave, and Admiral Richardson asked the sailors what they believed a reasonable leave policy would be. After a brief conference, they proposed 30 days of paid leave. Admiral Richardson told the group that "it's great to get a sense for what your input will be," and he promised to pass the recommendation along to his superiors in Washington.
The meeting comes shortly after the Navy tripled paid maternity leave to 18 weeks. In the last several months, Amazon, Netflix, Microsoft, and other large companies have all expanded their paternity leave plans, or at least are considering such action.
Contact Us Today
Set up a consultation by filling out the form below:
The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.
I have read and understand the Disclaimer and Privacy Policy.
