Property division can always be complicated. However, property division can be especially tricky for couples who are very wealthy. Though prenuptial agreements often help, in some cases they can serve as yet another point of contention between couples facing divorce. In one Texas divorce, a CEO has claimed a negative net worth of some $50 million, while his wife is claiming that he has violated the terms of their prenuptial agreement.
Prior to their marriage, the parties signed a prenuptial agreement, which provided that the wife would receive half of the couple’s community property upon a divorce, with a cap of $5 million. According to the wife, the CEO still owes her $104,000. They have been married for six years and share two children, ages 3 and 6. Furthermore, the court has been asked to decide whether the husband should be ordered pay $20,000 a month in spousal support, as well as undisclosed interim attorney fees.
However, the CEO disagrees, arguing instead that he is insolvent. He claims that because of ongoing business litigation, his net worth has suffered drastically, according to common business accounting practices.
The ex-wife contests these statements. During a trial, a senior portfolio manager for the husband’s company testified. He claimed that, during a conversation with the husband, the CEO said that he was trying to reduce his net worth deliberately to avoid paying his wife large sums of money.
As this case shows, property division can be very trying for Texas couples confronting divorce, and there can be much bitterness as a couple begins to separate. However, when arrangements have already been determined, whether through a prenuptial agreement or other document, it’s important that both parties understand their rights to see that such agreements are upheld or altered based on current circumstances.
Source: Bloomberg Business Week, “Highland Capital Chief Tells Divorce Judge He’s Insolvent,” Tom Korosec, March 29, 2012