The divorce process can already be complicated enough for a couple that has chosen to take this path, and high-net worth divorce cases can up the ante tenfold. Even if couples agree on most of the issues in their divorce, they can still encounter difficulties related to income, finances, and division of property.
With high-net worth cases, spouses will have to contend with unique financial concerns that many other couples will never encounter. That is why it is critical for a high-net worth individual to ensure they are being represented by an experienced attorney that has a background in high-net worth divorce cases. The right lawyer on your side can be the difference between strategically succeeding or failing catastrophically.
Division of Property
Divorcing couples must decide how to divide all assets and debts they acquired during their marriage. This can be an especially complex process as high-net worth couples are likely to own multiple types of physical property and financial assets. Some of these may include:
- Real estate – Couples may own vacation homes or other real estate in addition to their main place of residence. These properties will need to be appraised. Some properties may need to be sold to make it possible to split the assets evenly.
- Valuables – Vehicles, art, jewelry, boats, designer clothes, memorabilia (sports and/or other collectibles), custom furnishings, and more. Just like with real estate, appraising these items to determine their full value will need to take place so that the values can be split fairly between spouses.
- Investments/Accounts – It’s highly likely that a couple in this scenario has a large investment portfolio that includes stock, bonds, and other financial instruments. Multiple types of financial accounts are also common. A full picture of all financial assets they own will be critical to the division of property in a high-net worth case.
For Business Owners and Entrepreneurs
If one or both spouses are business owners, they must determine how ownership of their business interests will be handled during and after their divorce. A business which was founded or acquired while the couple was married is considered part of the marital estate and will need to be divided between spouses. Some business assets may be considered marital property even if a business was owned by a spouse before getting married.
It’s critical that a business valuation is performed to determine the actual value of the business assets. Use a valuation specialist if necessary. Beginning a settlement negotiation for divorce without first knowing the actual value of assets like a business or other professional practice is asking for calamity.
This is why hiring an experienced, high-net worth divorce lawyer in St. Petersburg will go a long way to ensure your case is handled properly or correctly, from the beginning.
With high-net worth cases, spouses will have to contend with unique financial concerns that many other couples will never encounter. That is why it is critical for a high-net worth individual to ensure they are being represented by an experienced attorney that has a background in high-net worth divorce cases. The right lawyer on your side can be the difference between strategically succeeding or failing catastrophically.
Protecting Inheritances
If a spouse receives an inheritance during their marriage, this will be considered separate property that will not be divided between spouses during divorce. However, spouses should be sure to avoid commingling any inheritances they receive with other property, since doing so may cause these assets to be converted into marital property.
Prenuptial agreements (prenups) are another way of protecting assets from being divided during divorce. An agreement such as this may state that all assets owned by one spouse will remain their property should they get divorced. It may also set aside specific assets to be given to children or other members of the family if the couple’s marriage ends in divorce. A prenuptial agreement is only valid given that it has been executed properly under the law. Each spouse must either receive a full disclosure of the other spouse’s property and assets or waive their right to financial disclosure. No can nor should attempt to pressure or coerce the other spouse into signing a prenuptial agreement.
Beware of Hidden Assets
Due to the possibility that full extent of the property and assets owned by one or both spouses may be sprawling in nature, spouses often attempt to conceal these types of assets with the hope that they will not have to divide them in the divorce. There is a myriad of ways that spouses attempt to hide assets, such as buying expensive valuables and misreporting their value or transferring funds to friends and family members. Assets can also be concealed within a business if a spouse is a business owner.
Consider a forensic accountant. Spouses attempting to hide assets can get very creative and it may be necessary to hire a forensic account to trace funds and assets.
Spousal Support (Alimony)
In a high-net worth divorce where one spouse earns a much larger income than the other, spousal support will likely be necessary, and will be a consideration during a divorce. Alimony is designed to ensure that both spouses can maintain the standard of living they have become accustomed to while married. If one spouse is the primary breadwinner, the other spouse will likely need spousal support to be able to meet these needs.
If the divorcing couple have minor children, then child support also comes into play. Child support will be based on the couple’s income, and the timesharing schedule.
As noted in the last section, it’s not out of the realm of possibility to need a forensic accountant when it comes to support payments. Contentious divorces with unscrupulous spouses can take on dark turns where the main earner doesn’t want to share in their earnings post-divorce and will go to great lengths to try and obfuscate their real income to pay out less in support once the divorce has been finalized.
Tax Issues and Implications
Spouses will need to decide if they will continue to file joint tax returns during the divorce process. Both spouses would still be liable for any taxes, penalties, or interest that may be owed if they are audited. Capital gains taxes on the sale or properties during a divorce must also be understood, as well as taxes if one or both spouses own a business. It’s critical that a spouse works with a good accountant to gain a full understanding of their family’s finances. By making sure the information on their tax returns is correct, they can avoid potential tax liabilities in the future.
These are just some of the things a high-net individual must consider for protecting themselves when going through a divorce. A divorce law firm like ours at Plotnick Law can help you begin to get your ducks in a row when going down the path of a high-net worth divorce.
