High Asset Divorce and Potential Legal Issues
It goes without saying that divorce is difficult. But if you have a high net worth, it can complicate matters even more. Divorces involving greater assets are burdened with greater legal issues. Knowing what to expect will hopefully prevent you from being caught off guard during the divorce process. Here are some of the most common legal issues that could arise in your high asset divorce.
Taxes: When couples divorce, the division of property can alter each party’s tax obligations. Tax considerations must be made when transferring ownership of real or personal property, including a marital home, other residential properties, vehicles, bank accounts, rental property, stocks, a family business, pension funds, 401K, IRA, and life insurance.
Alimony Negotiations: In these kinds of divorces, spouses often want to maintain the same standard of living, specifically the dependent spouse. Negotiations can be drawn-out. So, that is yet another tax consideration that could make divorces with high assets even more problematic, and may be the reason why, if you are thinking about a divorce, you should commit to it before the year ends.
Hidden Assets: If you have or if you suspect your spouse has hidden assets, then you can anticipate an investigation. A forensic accountant or other professional may be hired to evaluate income tax returns, closely analyzing them to uncover any hidden assets. If it is discovered that you or your spouse hid assets, the court may issue consequences for it.
Valuing Assets: Most of the time, assets are already disclosed. The issue is more about valuing the property or assets. There may be a business with limited liquid assets but how is that valued properly? There may be unique works of art and how is that valued properly? There may be stock, bonds, or trust accounts the like that need to be valued. Proper valuation allows the parties to know exactly what is at stake, but the process can be complex.
Is there a Way to Avoid These Legal Issues in High Asset Divorces?
Preventing extensive legal issues in high assets divorces is difficult unless you already have a pre-marital or post-marital agreement in place. When drafted properly, these contracts can make this process smoother because property and assets are already divided. But even then, these agreements can be a source of great contention in a high asset divorce. A spouse may contest it, and there are valid reasons a spouse can do so. Examples of valid reasons include:
- Improper execution
- Coercion to sign the contract
- Invalid provisions
- False or incomplete information
- Unconscionable provisions
Contact the Drake Law Firm for More Information
If you are considering a divorce and have a high net worth, it is important to be aware of the legal issues that could complicate the divorce and prepare accordingly. To learn more, reach out to and speak to one of our experienced attorneys by calling 303-261-8111