High Net-Worth Divorce

Understanding Community and Separate Property

Texas uses a community property system, meaning assets acquired during marriage are generally owned jointly by both spouses. This includes homes, vehicles, bank accounts, investments, and retirement plans. Separate property—assets owned before marriage, inherited, or received as gifts—is usually not divided, but commingling or appreciation during the marriage can blur this distinction. Establishing whether an asset is community or separate is the first step in a complex divorce.

Valuing High‑Value Assets

Accurate valuation is critical. High‑asset divorces often involve businesses, investment portfolios, and real estate holdings. A business must be valued not only for its present worth but also for future earnings potential, goodwill, and liabilities. Real estate requires appraisal that considers market conditions, encumbrances, and potential appreciation. Professional appraisers, financial analysts, and forensic accountants may be needed to provide reliable figures, ensuring both parties understand what is at stake. Separate property claims must be supported by clear and convincing evidence, such as records showing ownership before marriage or documents proving that property was a gift or inheritance.

Business Ownership and Professional Practices

In Texas, the value of a business started or grown during marriage is typically community property. For owners, divorce can threaten business continuity. Our attorneys work with clients to evaluate options: negotiating a settlement that allows one spouse to retain the business in exchange for other assets, or using a prenuptial or postnuptial agreement to clarify ownership. When classifying a business as separate or community property, courts consider factors like the date of formation, the increase in value during the marriage, and contributions of marital funds or effort. Valuation specialists help determine current worth and future earning potential.

Stock Options, Deferred Compensation, and Corporate Benefits

Executives often receive compensation packages that include stock options, restricted stock units (RSUs), deferred compensation, bonuses, and various retirement plans. These benefits are marital assets if earned during the marriage. Stock options may be vested or unvested; unvested options can still be community property if tied to work performed during the marriage. Valuing such options requires understanding vesting schedules and company policies. Deferred compensation plans and executive bonuses introduce additional complexity because payments may not be received for years. Determining whether to divide or offset future income involves analyzing tax rules, vesting conditions, and corporate policies. Retirement plans—such as pensions, 401(k)s, and profit‑sharing plans—are significant assets; dividing them often requires a Qualified Domestic Relations Order to prevent penalties and tax issues. Health and life insurance benefits may also need adjustment after divorce.

Investment Portfolios and Real Estate

Investment portfolios may include stocks, bonds, mutual funds, and other securities. Each asset carries unique tax implications and growth potential. Dividing portfolios equitably requires a nuanced understanding of current value and future appreciation. When appropriate, we coordinate with financial advisors to structure divisions that minimize taxes and preserve long‑term returns.

Real estate is often among the most valuable marital assets. Property acquired during the marriage is usually community property. Options for division include selling the property and splitting the proceeds, allowing one spouse to buy out the other, or awarding the home to one party in exchange for other assets. Decisions should account for market conditions, outstanding mortgages or liens, potential appreciation, and tax consequences.

Retirement Accounts and QDROs

Retirement accounts are central to many high‑asset divorces. Courts often issue Qualified Domestic Relations Orders to divide 401(k)s and pensions without early withdrawal penalties. Both parties must understand the type of account, vesting schedule, and tax implications. Working with a retirement specialist ensures that divisions comply with federal guidelines and maintain the intended long‑term benefits.

Identifying and Addressing Hidden Assets

In some cases, one spouse may attempt to hide assets or underreport income. Financial misconduct can include transferring funds to third parties, underestimating business revenues, or concealing valuables. Uncovering hidden assets often requires forensic accountants who track financial transactions and reveal discrepancies. Courts may punish misconduct by awarding the innocent spouse a larger share of the marital estate. Maintaining transparency and insisting on full disclosure are critical to a fair settlement.

Steps in a High‑Asset Divorce

A complex asset divorce demands careful planning. Key steps include:

1. Hire Experienced Counsel – Engage a lawyer experienced in high‑asset divorces who understands Texas law and can coordinate with financial experts to value and divide assets.
   
   
2. Inventory and Value Assets – Create a detailed inventory of marital property—including real estate, businesses, investment accounts, retirement plans, corporate benefits, vehicles, and luxury items—and obtain accurate valuations.
   
   
3. Decide Which Assets to Keep – Consider income potential, tax implications, sentimental value, and ease of division when determining which assets to retain.
   
   
4. Prepare Financial Records – Expect thorough scrutiny of tax returns, property purchase documents, business financial statements, and credit card and bank records.
   
   
5. Anticipate Negotiations – High‑value divorces often involve protracted negotiations over valuations, support, and division of physical assets.
   
   
6. Collaborate with Financial Experts – Work with accountants and investment advisors to manage tax liabilities, retirement planning, and investing settlement proceeds.
   
   
7. Manage Liquid Assets Wisely – Plan how to handle cash from property sales or account distributions to ensure financial security.
   
   

Negotiation, Mediation, and Litigation

Mediation and negotiation often provide more control, lower costs, and reduced conflict compared with trial. However, litigation may be necessary if one spouse refuses to cooperate or hides assets. Our firm helps clients evaluate which approach best aligns with their goals. We are prepared to advocate aggressively in court when required but also excel at crafting settlements through negotiation or mediation. Collaborative divorce can offer privacy and efficiency for executives and professionals, especially when corporate benefits are involved.

Debt Allocation and Tax Considerations

Community property rules also apply to debts. Obligations incurred during the marriage—such as mortgages, car loans, and credit card balances—are typically divided equitably. Courts consider the nature and purpose of each debt, who incurred it, and how it relates to community property. High‑asset divorces also involve significant tax considerations. Dividing assets like investment portfolios, real estate, and retirement accounts can trigger capital gains or penalties. Our attorneys work with tax professionals to structure divisions that minimize negative tax consequences and preserve wealth.

Protecting Children and Future Financial Stability

While property division is central, high‑asset divorces often coincide with child custody and support issues. Maintaining stability for children requires thoughtful coordination of parenting plans and financial resources. Spousal maintenance may be an issue if one spouse sacrificed a career to support the family. We ensure that financial settlements address future needs and enable each spouse to move forward with confidence.

Taking the Next Step

Divorcing with substantial assets demands careful planning, detailed financial analysis, and seasoned legal counsel. At Hennan Culp, PLLC, we guide Austin clients through complex property division, business valuation, corporate benefits, and investment portfolios. Our team provides clear guidance, strategic advocacy, and collaboration with financial experts to protect your interests and secure a fair outcome. If you are facing a high‑net‑worth divorce, contact our firm to discuss your options and plan your next steps.

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