Going through a divorce is never easy, but navigating a high asset divorce can be even more challenging. Divorce is an emotionally draining experience that requires careful consideration and strategy, especially when valuable property is on the line. When a couple has substantial assets and/or income, the complexities of divorce increase significantly.
In this blog post, we discuss key considerations and strategies to help you navigate a high asset divorce.
Identify All Assets
The first step in preparing for a high asset divorce is cataloging your assets. You should have a comprehensive understanding of your financial situation to ensure a fair division of property. In high asset divorce, assets can include valuable property, investments, retirement accounts, and business interests.
Assets to identify include:
- Personal property, including cars, boats, artwork, and jewelry
- Retirement accounts, including 401(k)s, IRAs, and pension plans
- Intellectual property, such as patents, trademarks, and copyrights
- Bank accounts, including checking, savings, and investment accounts
- Stock options, executive compensation packages, and deferred compensation plans
- Real estate, including primary residences, vacation homes, and investment properties
- Business interests, including ownership stakes in companies, partnerships, or sole proprietorships
Marital Assets vs. Separate Assets
In any divorce, it's crucial to distinguish between marital assets and separate assets.
Marital assets are acquired during a marriage and are subject to division between the spouses.
Separate assets are acquired by one spouse before the marriage, through inheritance, or as a gift from someone outside the marriage. They are not subject to division.
Here are some factors that can help distinguish between marital assets and separate assets.
Timing of Acquisition
Assets acquired before marriage are usually considered separate. Those acquired during the marriage are typically considered marital assets.
Source of Funds
If an asset was purchased with funds that were acquired before the marriage, through inheritance, through a gift from someone outside the marriage, it may be considered a separate asset.
Intention of the Parties
If the parties intended for an asset to be shared, such as a joint bank account, it may be considered a marital asset.
Commingling of Assets
If separate assets are co-mingled with marital assets, they may become marital assets. This can happen when a spouse contributes to the value or upkeep of a separate asset. Unless clear documentation or evidentiary support shows that they should remain separate, almost any asset can become co-mingled.
Secure Legal Counsel
A high asset divorce requires careful legal guidance to navigate complex financial statements and contractual obligations. During a high net worth divorce, you must work with an experienced attorney who can help you negotiate a fair settlement. Ford & Friedman has experience in this regard, and we are ready to work with you and your spouse.
Consider The Tax Implications
Divorce often comes with tax implications. In a high net worth divorce, these implications can be an advantage or a consequence. For example, if one spouse earns significantly more than the other, you can structure settlement agreements to minimize the tax burden overall.
Protect Business Interests
Business owners must be aware of the impact of divorce on their company. Divorce can impact ownership and control of a business, depending on your spouse’s involvement within that business. You must determine your business's market value and understand all legal agreements in place. Gaining control of a business as part of the divorce settlement can have lasting effects on both parties' finances.
Consider Child Support and Alimony
Child support and alimony are a significant part of any high asset divorce. The ordered support ordered will consider both parties' income, and in high net worth divorce, that amount is substantial. Consider all the factors that affect child support and alimony, such as the standard of living and the ability to maintain that standard.
Our team is ready to help with your divorce. We know the ins and outs of creating a fair balance in high net worth families. You should start working on separating your assets as early as possible, so call us today at (702) 904-9898 or contact us online.