Divorce is never easy, but a high-net-worth divorce is especially complicated. In addition to extensive lists of assets, high-net-worth couples often have complex business ties, valuation concerns, and other issues that can cause great stress and overprotection of their finances. This article discusses divorce advice for high net worth individuals and entrepreneurs. Listed here are the dos and don’ts of a high-net-worth divorce.
If you and your spouse have a high net worth, you must be extremely careful and deliberate with your finances during your divorce. Depending on the number of assets and income, you may want to avoid a contentious and prolonged trial. Even though many married couples avoid prolonged litigation, this may change the calculus in your favor if you are the party with more assets.
If you have a substantial amount of assets, disclosing them fully during the divorce process is essential. Not doing so may result in legal consequences and a loss of credibility with the court. Furthermore, failing to disclose your assets properly may cause the judge to award your ex-spouse more assets than they possess. Divorce is stressful enough without the added uncertainty of dividing your assets. Avoid these mistakes and hire experienced divorce lawyers.
Consult with a forensic accountant
When a couple is divorced, it is beneficial to consult a forensic accountant to help them evaluate their assets and determine whether alimony or child support should be included in the settlement agreement. Often, a forensic accountant can also uncover hidden or otherwise unaccounted-for assets. If your divorce involves complex property, you should seek the assistance of a Chicago divorce lawyer specializing in high-net-worth divorces.
Having a forensic accountant present the proper documentation for an individual’s assets in a divorce can significantly affect the outcome of the case. For example, suppose you are attempting to divide the assets of a high-net-worth couple. In that case, forensic accountants can assist in unraveling the spouses’ finances and calculating the value of their assets. Ensuring these assets are properly valued can increase the likelihood of the case going to court.
Compile a list of all marital assets
The first step in a high-net-worth divorce is determining what marital property each spouse owns. These assets must be valued and equally divided. It can be difficult to identify whether a certain asset is marital or separate, especially if both parties are well-off. Therefore, the assets are generally divided based on their values on the date of the dissolution.
Many divorcing couples tend to think only of big-ticket items when evaluating their assets. However, it is equally important to consider other assets and possessions that are not necessarily valuable. For example, clothing and jewelry are not generally viewed as marital assets unless the items were a gift. However, jewelry and designer handbags are a great way to divide the proceeds of a sale.
Avoid outspending your spouse.
Divorces involving high-net-worth individuals are generally complex and involve many million-dollar assets. Therefore, the parties must factor in unique risks and plan for the future. In high-asset cases, one spouse is typically responsible for a home and household’s finances, so they have a better idea of the expenses and income needed to support a marital lifestyle. They may also know where to cut back on their spending. Divorce costs increase when there are two households involved.
Expensive purchases rarely result in positive results. Instead, they often get the person involved in trouble. The court will try to increase spousal support or alimony payments or require the spouse to repay their extravagant purchases. It is, therefore, critical to educate yourself about the financial aspects of divorce before the divorce. Moreover, an informed spouse is less likely to make unrealistic demands for a settlement. In this way, you can maximize the chance of a negotiated settlement.
Avoid making emotional decisions
If you are facing a divorce, you should appraise the value of your home before deciding what to do. A professional appraisal will give you an idea of the value of your house, your ex-spouse’s financial situation, and your finances. You can save a lot of money by shopping around online for an appraiser. You may even find that the two of you get conflicting appraisals.
Before making an emotional decision about whether to sell or keep your home in a high-net-worth divorce, consider these options. A seller should never be pressured to sell their home, but it can be a valuable asset. It may have been the source of lasting friendships and family ties. If your ex-spouse is very selective about accepting offers and negotiating prices, it may be wise to pass on a sale. If unsure, you may consult with a professional divorce lawyer or a family law attorney.
Avoid outspending your spouse on legal fees.
It would be best if you did not outspend your spouse on legal fees in a high-net-worth divorce. The reason is simple, outspending your spouse will lead to more issues down the line, and it can also be perceived as bullying. If you are the household’s main breadwinner, paying your fair share of your spouse’s attorney’s fees is important. However, you should be aware that you will be forced to pay for your spouse’s legal fees if you outspend your spouse’s.
Another reason to avoid outspending your spouse on legal fees in a high-net-worth divorce is that you should have full financial disclosure before the divorce. This way, you can minimize your tax liability. It would help if you also were sure to keep track of the cash that your spouse had withdrawn before the divorce. This money may count towards the final settlement. Therefore, you should disclose all relevant financial information to your attorney.