If you’re a Texas business owner, oil baron or doctor, etc., you’re no doubt used to dealing with financial issues. You might have a team of accountants and financial advisers who provide support in all matters concerning your financial portfolio. Filing for a divorce has an immediate and long-term effect on finances, especially if you have children.
In this state, property division proceedings operate under community property guidelines, meaning that the court typically splits all marital assets and liabilities 50/50 in a divorce. An issue you’ll want to be especially aware of, however, is taxes. Numerous factors, such as when you file for divorce, as well as cash versus stocks in connection with capital gains, may directly affect how much tax you must pay.
Marital status influences tax obligations
Whatever your marital status is on the last day in December is the status that will be relevant on your tax returns for the year. When you have a high net worth, you’ll want to minimize the taxes you owe as much as possible. Whether you file jointly or as an individual may have significant implications on the amount of taxes you pay or the return you receive.
When you sell your house (if you’re selling your house) affects gains taxes
After working for years to amass wealth as a Texas business owner, oil baron or career professional, your house is likely one of your largest assets. If you and your spouse plan to sell it when you divorce, you might want to consider doing so before you file your petition. The reason behind this way of thinking has to do with the gains taxes you will pay on the sale of your home.
If you’re single and filing an individual tax return, the federal government will exempt $250,000 on the sale of your home. However, if you and your spouse sell it while still married and filing a joint tax return, the exemption bumps up to half a million dollars.
Providing for your children after a high-net worth divorce
Tax issues often intersect with other issues in a high-net-worth divorce. For instance, the amount of taxes you owe may have an impact on the amount of child support that may be feasible in your case, if the court were to order you to make payments.
Like all good parents in Texas and beyond, you want what’s best for your children and want to provide for their financial needs. You might also have plans to transfer ownership of your business to your children someday or to leave them an inheritance as part of your estate plan.
It’s important to have a strong support network in place who can make recommendations as to what might be a best course of action in a particular instance so that you can protect your assets, provide for your children and receive a fair settlement in a Texas divorce.