Have you worked hard all your life to create a comfortable asset picture, and now you’re going through a divorce without a prenup?
Hi. I’m Marie Drake of The Drake Law Firm, and today, I’m going to talk to you about some of the considerations that go into a high-asset divorce because it’s a little more complex than a lot of people think. The first consideration that everybody should take into account is that when high-asset couples divorce, the tax considerations can be substantial. What we always recommend is to bring in the party’s CPA and have the CPA be part of the discussion going forward in terms of settlement.
The second consideration in the high-asset divorce is alimony.
Now alimony is called maintenance in Colorado, and there are a number of factors that go into the calculation. First of all, it’s needs-based. So, does the dependent spouse, if he or she really is dependent, have enough assets in the divorce settlement that are going to take care of his or her needs.
So, that’s the first part. The second part does the other spouse have the ability to pay?
So most of the high-asset divorces that we do, the dependent spouse, has enough in assets to take care of his or her needs. And maintenance is not necessarily a big consideration, but it does have to be discussed. And I do recommend that you have a lawyer to discuss it with.
The third issue in a high-asset divorce that should be considered is someone hiding assets.
So, for example, in a closely-held family business, if that’s in the mix, we need to look carefully at those profit and loss statements and the balance sheets. It’s very important, in my opinion, to have a lawyer who understands how to read those and to make sure someone’s not withholding income, making it look like they need this in the business, when in fact, they don’t and they just don’t want to pay it out to the other side. So, we often bring in a forensic accountant to really look at those numbers and really look at what is reasonable and also what is truly marital.
A fourth issue in a high-asset divorce is valuation.
So not just, for example, houses and often second homes or vacation homes, but also things like antique collections, vintage furniture collections, coin collections, or art collections. These need to be valued as well because if these things were purchased during the marriage, it is often that they are marital property. If they were purchased before the marriage, but have increased in value over time, that increase in value is marital property.
All of these things need to be taken into consideration in a high-asset divorce.
Is there a way to avoid issues like this in a high-asset divorce? We are asked that all the time, and there is. It’s called a prenuptial agreement. And a prenuptial agreement will hold up in court if it’s properly drafted, if it’s executed by both parties, if there’s been full disclosure of assets and debts at the time of the execution of the document. And if both parties had lawyers. Generally, those hold up. I mean, if the terms aren’t draconian, but and by the way, draconian is a $20 lawyer word that just means severe or unconscionable. That’s probably a $15 lawyer word, but we’ll move on. But if you have a prenup, be sure to bring up that prenup in your meeting with your lawyer when you have a high-asset divorce pending because that is going to be a very important piece of it.
If you’re considering a divorce and you have a high net worth, there are a lot of complex legal issues that can arise. And we recommend contacting an attorney to go through with this process. We here at The Drake Law Firm have a lot of experience in high net worth individuals going through divorce, and we’re happy to help you.
We’re standing by and please give us a call.