If You are Planning to Divorce – The Time To Financially Prepare is NOW!
Are you to the point of no return in your marriage? Nothing left of feelings, just apathy or indifference. Do you feel you must leave this place now or die trying? What about your financial security after the divorce? Divorce is an emotional roller-coaster. How will you take care of your debt, bills, and your children’s needs?
Time to grab your laptop or pad of paper and start thinking smart about “the first day of the rest of your life. If your “I need a divorce” decision is now made, start work on learning your current family financial situation and what needs to be done to secure your financial security for Post-Divorce life!
Here is a list of some of your most important Financial Information that you need to address before the Start of the Divorce
- What are the Community and Separate Property Laws in Texas?
Under the Texas Family Code, a spouses separate property consists of 1) the property owned or claimed by the spouse before marriage; 2) the property acquired by the spouse during marriage by gift, devise, or descent, and 3) the recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage.
The terms “owned and claimed” as used in the Texas Family Code mean that where the right to the property accrued before marriage, the property would be separate. Inception of title occurs when a party first has a right of claim to the property by virtue of which title is finally vested. The existence or nonexistence of the marriage at the time of incipiency of the right of which title finally vests determines whether property is community or separate. Inception of title occurs when a party first has a right of claim to the property.
Everything you and your spouse have earned in your marriage except for personal gifts or property from devise or descent will now, absent fault, be divided equally in the divorce. This could make a big difference in your post-divorce financial life! Gather all financial statements: income tax returns, insurance policies, bank statements, Investment Accounts summaries, Retirement Account balances, Bills, anything in your marriage that can show who owns separate assets or what constitutes the community property in this marriage.
2. DEBT: Deal With it NOW!
Are you and your spouse in a bad financial situation? Do you both have to work to pay the bills or just barely make ends meet? Now you want to get a divorce and HOW IS THAT GOING TO WORK? How can you be Post Divorce Happily EVER AFTER when you may not even be able to afford a down payment on an apartment? ORDER A COPY OF YOUR CREDIT REPORT now to see where the damage may exist. You will be able to see what credit cards, loans, and other debt you all have created. If you and your spouse have be leading “separate lives” for a while, you may be surprised when there is more debt incurred for entertainment you never knew about. Review this CREDIT REPORT carefully. Find out whether you are a joint owner or just an authorized user. Except for your home, usually the DEBT will be in existing credit card accounts, personal loans, and car loans. If possible, try to get as much debt as possible paid off before finalizing the divorce. Remember that joint debts remain both spouses’ legal obligation to the lenders, even when the divorce settlement states that only one spouse is responsible for the debt. If the responsible ex-spouse defaults on the payments, it will show up on both ex-spouse’s credit history. Some good advice? Get your own credit card in your name only. If you keep other credit cards take your spouse’s name off the credit card Now! Get your name off any credit card that your spouse uses NOW! Divorce causes financial upheaval to a family’s budget so protect yourself, so you don’t have to pay or be legally responsible for your soon to be EX’s Bills!
3. Bank Accounts
Most married couples have at least one joint bank account. Many will have joint checking and savings accounts. You need to get a record of every family bank account in existence. Make sure you have copies of all monthly bank statement for 3 years.
Review these carefully and see if there has been a constant drainage of money from the accounts.
Now open a new account in your name. It is critical to establish your own financial identity when you divorce.
If your spouse does business with the bank in a business capacity or you have car/personal loans with the bank, you need to open a personal account with another bank of your choosing.
4. What About Our Home?
One of the hardest assets to deal with in a divorce. This is where the couple lived as a family, with or without children. If there are children involved, their little lives have centered around their schools, churches, sports teams and friends. It is heartbreaking to the entire family, but this decision is usually the final family break.
If the decision is for one spouse to take over the homestead and debt, the ideal situation is for such spouse to refinance the home in only their name. The single spouse will be responsible for the debt on the house and full title on the house. Otherwise if the spouse can’t afford to refinance the house, both spouses will have to work out a co-owner agreement and continue to have both names on the title and share the large financial burden. In such event, frequently, sale of the home is the best option.
This is one of the most serious real estate problems we encounter in a post-divorce situation. Times get tough and the ex- spouse, who took over the house debt, cannot afford to pay the mortgage and the property falls into foreclosure, affecting both ex- spouses’ credit. Sometimes it is better, if one spouse cannot refinance the house loan, to sell the house and divide the proceeds.
Other “To Do” Items to Address Before the Start of the Divorce
- Make sure your assets are protected. Check that your car, health, and homeowner’s insurance is up to date and enough for your and your children’s needs. Also start the process of changing beneficiaries on all life insurance policies/annuities and retirement accounts (IRA / 401k at work) you own from your ex-spouse to your heirs or other designees.
- Change all passwords on your online accounts and all banking and credit card accounts. Time for some personal privacy!
- Time to start thinking about your digital assets that you as a couple developed and shared? This is a community state and how will this affect this type of asset?
- Think about reviewing your will and other estate planning documents. We suggest that when the divorce is final, you need to have a new will in place that will be only your heirs minus your Ex.
- Very important! Establish your own credit in your single name
This list will give you a start on the financial items that you must be addressed immediately in an upcoming divorce. Be prepared before the divorce and know where you stand financially. This will hopefully give you time to talk with financial and legal experts so you can make wise decisions on addressing the financial aspects of the divorce for you and your other family members.
The Nacol Law Firm P.C.
High Asset Divorces: Business Evaluations
A High Asset Divorce in Texas can be a complex process, especially when high-value assets like Corporations, Limited Liability Companies, Partnerships or other Business Entity are involved. In Texas, which follows community property laws, determining the value of a business is a crucial step in ensuring a fair division of assets. This process, known as business valuation, helps establish the worth of a business for equitable distribution between spouses.
What Is a Business Valuation?
A business valuation is a financial analysis that determines the economic value of a business. This is especially important in a divorce when one or both spouses own a business, and its worth must be assessed to divide assets fairly. Valuation experts use financial records, market trends, and various methodologies to establish a business’s value.
When Is Business Valuation Necessary?
Business valuation is necessary in a Texas divorce when:
- The business is classified as community property (owned by both spouses, even if one spouse primarily operates it).
- One spouse seeks to retain ownership and must compensate the other for their share.
- The business needs to be sold, and its value must be determined for proper distribution.
- There are disputes over the true worth of the business.
Who Is Qualified to Conduct a Business Evaluation?
In a high asset divorce, a business valuation should be conducted by a qualified financial expert with experience in divorce-related valuations. The following professionals are typically qualified:
- Forensic Accountants
- Specializes in tracing assets and analyzing financial records.
- Can identify hidden assets or income.
- Certified Public Accountants (CPAs) with a Business Valuation Credential
- Look for CPAs with additional credentials such as:
- Accredited in Business Valuation (ABV) – issued by the AICPA
- Certified Valuation Analyst (CVA) – issued by NACVA
- Certified Business Appraiser (CBA) – issued by the IBA
- Business Appraisers
- Specialize in evaluating privately held businesses.
- May hold designations such as ASA (Accredited Senior Appraiser) from the American Society of Appraisers.
- Economists or Financial Analysts
In cases involving complex financial structures, economists with experience in valuation can assess the long-term economic impact.
- Industry-Specific Experts
If the business is in a specialized industry (e.g., medical practice, law firm, tech startup), an industry expert may be necessary to assess market value.
The cost of a business valuation in a high-asset divorce in Texas can vary significantly based on factors like business complexity, expert credentials, and whether litigation support is required. Here’s a general breakdown of what you can expect:
Basic Business Valuation (Small, Simple Business)
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- $5,000.00 – $15,000.00
- Typically used for small businesses with straightforward financials, such as a sole proprietorship or single-member LLC.
Standard Business Valuation (Medium-Sized Business)
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- $15,000.00 – $30,000.00
- Includes businesses with multiple revenue streams, moderate assets, or industry-specific complexities.
Comprehensive Business Valuation (High-Asset, Complex Businesses)
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- $30,000.00 – $100,000.00+
- Necessary for businesses with complex financial structures, partnerships, intellectual property, or hidden assets.
- Includes forensic accounting, expert witness testimony, and detailed reports for court.
Additional Costs to Consider:
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- Forensic Accounting: $250.00 – $600.00 per hour
- Expert Testimony: $400.00 – $1,000.00 per hour (if the case goes to trial)
- Document Review & Discovery: Additional $5,000.00 – $20,000.00+ depending on the volume of records
If the divorce is contested and involves disputes over business valuation, costs can escalate due to prolonged litigation and expert testimony requirements.
Key Methods of Business Valuation
Experts use different approaches to assess a business’s value, including:
- Asset-Based Approach
This method calculates the value of a business by assessing its total assets minus liabilities. It is particularly useful for companies with significant tangible assets, such as manufacturing or real estate businesses.
- Income-Based Approach
This approach evaluates the business’s earning potential by analyzing past income, projected future earnings, and financial statements. Two common methods within this approach are:
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- Capitalization of Earnings: Used when a business has stable, predictable income.
- Discounted Cash Flow (DCF): Estimates future cash flows and discounts them to their present value.
- Market-Based Approach
This method determines the business’s value by comparing it to similar businesses that have recently been sold. It is often used when industry sales data is available and reliable.
Factors That Impact Business Valuation
Several factors can influence a business’s valuation, including:
- Revenue and profitability: A highly profitable business is usually valued higher.
- Market trends: Economic conditions and industry growth affect valuation.
- Debt and liabilities: More liabilities reduce the overall value.
- Ownership structure: Whether the business is solely or jointly owned impacts valuation.
- Goodwill and brand reputation: The business’s reputation and customer loyalty contribute to its worth.
The Role of a Business Valuation Expert
A certified business appraiser or forensic accountant is typically hired to conduct the valuation. Their role includes:
- Reviewing financial documents (tax returns, profit and loss statements, balance sheets, etc.).
- Investigating potential hidden assets or underreported income.
- Applying appropriate valuation methods.
- Providing a detailed report and potentially testifying in court.
How Business Valuation Affects Property Division
Once the valuation is complete, the business can be handled in a few ways:
- One spouse buys out the other: The spouse who keeps the business compensates the other for their share.
- Selling the business: The proceeds are divided between both spouses.
- Co-ownership: In rare cases, ex-spouses may agree to continue running the business together.
Challenges in Business Valuation
Divorces involving business assets often face complications such as:
- Disagreements on valuation methods.
- Hidden income or financial manipulation.
- Business debts impacting valuation.
- Determining community vs. separate property (whether the business was started before or during the marriage)
In a Texas divorce, business valuation is essential for an equitable division of assets. Hiring an experienced valuation expert ensures that the process is fair and transparent, protecting the financial interests of both parties. Whether you’re a business owner or a spouse seeking your fair share, understanding how business valuation works can help you navigate the divorce process more effectively.
If you’re going through a divorce involving a business, consulting with a Texas divorce attorney and valuation expert is crucial for ensuring a just outcome.
Dallas High Asset Divorce Attorneys
Nacol Law Firm P.C.
(972) 690-3333
Getting a Texas Divorce : Moving Out of the Marital Home
This is a complicated question to answer depending upon the facts of each case. If you have experienced domestic violence you need to immediately do whatever is necessary to secure you and your child’s safety. Many times a victim will go to court for a protective order and ask the judge to move the abusive or violent spouse out. In this situation contact an experienced family law attorney now!
In most cases, absent of violence or risk of abuse, we would not suggest that a spouse move out of the marital residence.
Why is this? One reason is once you have vacated the residence it may be very difficult to get back in! You have no legal obligation to leave the residence if your name is on the lease or mortgage personally and exclusivity.
Our suggestion to a client might be, to remain in the residence since the person who vacates may still have financial obligations and expenses of the family residence, while paying all expenses on a new residence for themselves. Double expenses are not a desirable result during the divorce process.
The higher wage earning spouse who moves out of the marital home must expect to continue to pay most of the household expenses, including the insurance and mortgage! What about the personal property and furnishings in the residence?
If an agreement has not been made between the divorcing couple, the moving spouse will generally only be able to leave with personal belongings (clothing & jewelry) until a court rules fairly as to temporary possession.
Secure a court order ASAP to equalize property and household expenses.
Family Conflicts and the High Conflict Spouse
Divorce Courts are full of “High Conflict People” (HCP’s).
HCP’s seem very caring and sincere and it may take months or years before a legal professional can identify this personality disorder. HCPs may cause enormous emotional pain and excessive financial costs to their spouse and children before this disorder is brought to light.
Bill Eddy, legal specialist of the High Conflict Institute, has given a list of
The High Conflict Personality Pattern of HCP Personalities
- Rigid and uncompromising, repeating failed strategies
- Unable to heal or accept a loss
- Negative emotions dominate their thinking
- Won’t reflect on their own behavior
- Can’t empathize with others
- Preoccupied with blaming others
- Won’t accept any responsibility for problems or solutions
HCP’s stay unproductively connected to people through conflict and will continue to create conflict to maintain any sort of relationship, good or bad. Since HCP’s undermine all relationships, they constantly repeat their same patterns and usually end up divorcing repeated times. 20-30% of all couples getting divorces have at least one HCP spouse.
According to the High Conflict Institute, HCPS are driven by four primary fees:
- Fear of being ignored
- Fear of being belittled or publicity exposure
- Fear of being abandoned
- Fear of being dominated, includes fear of losing control over you, the other spouse, their money/assets, or themselves
What can the spouse of an HCP do to help bring the family conflict or divorce to completion?
- Tell your attorney what your bottom line is and stay with your decision.
- Maximize any leverage you have and stay on the course.
- Choose your battles carefully.
- Everything must be in writing.
- Work on keeping total & consistent emotional detachment from the HCP.
Just remember the HCP feels that since you are no longer together, and since you know too much about him/her, you must be discredited so that no one will think that they are the problem!
You will need to learn some practical skills on communication and response to your HCP and also when & how to let your attorney deal with this situation, how to enforce your guidelines, and hopefully, your thoughtful and reserved conduct will result in the best possible outcome.
Interstate Jurisdiction : Child Custody across State Lines
During the Holiday season many Texas parents become very concerned over sending their child to the non-primary conservator parent’s home for a visit. Many Children will cross state lines to see their non-primary conservator parent and there is always a fear that the child may not be returned to his/her home state. What can you do if this does happen?
The State of Texas follows a uniform law regarding determination of appropriate state jurisdiction in custody matters known as the Uniform Child Custody Jurisdiction and Enforcement Act (UCCJEA), and related statutes which enforce or set procedures regarding proper jurisdiction such as the Parental Kidnapping Prevention Act. Texas has adopted these statutes. The Uniform Child Custody Jurisdiction Enforcement Act defines which state has or may maintain jurisdiction in a particular case and often mandates that other states recognize decisions handed down by the state determined to have jurisdiction.
The Act states, among other things, that a court may rule on custody issues if the Child:
• Has continually lived in a home state for 6 months or longer
• Was living in the state before being wrongfully taken elsewhere by a parent seeking custody in another state
• Has an established relationship with people (family, relatives or teachers), ties, and attachments in the state
• Has been abandoned: or is safe in current state, but could be in danger of neglect or abuse in the home state
How can Continuing Exclusive Jurisdiction be lost?
1. When A Texas Court determines that neither the child, or a child and one parent have a significant contact with Texas, and substantial evidence is no longer available in Texas concerning the child’s care, protection, and personal relationships
2. Texas or another state determines that the child and the child parents do not presently reside in Texas.
What about Jurisdiction to Modify an Existing Order?
In the absence of temporary emergency jurisdiction, Texas cannot modify a child custody decision made by another state’s court unless or until a court of this state has jurisdiction to make an initial custody determination and one of the following occurs:
1. Another State determines it no longer has continuing jurisdiction or finds that Texas would be a more convenient forum.
2. A court determines that the child and the child’s parents do not presently reside in the other state.
What about Temporary Emergency Jurisdiction?
Temporary emergency jurisdiction is reserved for very extraordinary circumstances. The court has and may assert jurisdiction only when a child is present in the state and has been abandoned or is in need of protection because of a threat or subjected the child to mistreatment or abuse.
When involved in an international child custody case where the child has been abducted or is wrongfully retained, the issue may be determined if the International Child Abduction Remedies Act, 12 USC Section 11.601-11610, of the Hague Convention, is applicable. If so, The US State Department Office of Citizen & Counselor Services should be contacted or any attorney may file suit for return of the child.
These interstate jurisdiction cases are very intensive. Get to a knowledgeable interstate jurisdiction attorney and assert your rights quickly. Protect you and your child’s rights to have a normal child/parent relationship without the fear of abduction!
NACOL LAW FIRM P.C.
8144 Walnut Hill Lane
Suite 1190
Dallas, Texas 75231
972-690-3333
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Attorney Mark A. Nacol is board certified in Civil Trial Law by the Texas Board of Legal Specialization
