Five Common Mistakes in High Asset Divorces
High net worth couples typically have more financial assets, more property and business interests, which is why a high asset divorce can be especially difficult to navigate. A high asset divorce can lead to tricky business and tax situations, and can create a lot of friction in the process.
Fortunately, high net worth couples can avoid financial pitfalls. With cooperation and transparency, couples can structure divorce settlements in a way that ensures financial stability for them and their children. But it is not uncommon for mistakes to be made. If you are going through a high asset divorce, here are five common mistakes you should avoid.
- Hiding Assets
It may be tempting to set aside a little money for yourself during a divorce (especially when you stand to lose a lot of money), but you should never hide assets from your spouse during a divorce.
Courts require full disclosure of financial assets during divorce proceedings. Regardless, some high net worth individuals attempt to hide money by transferring assets to a business partner, friend or relatives. Such conduct is fraudulent and can badly damage your credibility in court. It is possible that the judge may punish your dishonesty by granting you a smaller share of marital property. Even if you succeed in hiding your assets during the divorce, it is possible that a court may compensate your partner in giving them a higher portion of another asset once your deception comes to light.
- Failing to look for hidden assets
In high asset divorces, it is not uncommon for one spouse to know more about the nature and extent of marital assets than the other. A higher-earning spouse, for example, may wield the most control over investments, property, income and business interests.
Courts can only divide identified assets, which is why it is critical from the outset of a high asset divorce to investigate all assets and income that has been brought into your marriage. Failing to look into marital assets may result in the loss of a considerable amount of money.
To ensure nothing is left off the table during divorce, make sure you have copies of the following:
- Bank Statements
- Tax Returns
- Credit Card Statements
- Financial Records
- Business Records
- Investment Information
If you think there is missing information after searching these documents, you can enlist the help of a forensic accountant to analyze your finances.
- Rushing To Settle
Couples going through divorce are eager to move on with their lives, but rushing into a divorce settlement is a mistake than can lead to years of regret.
Rushing to finalize a divorce settlement, especially for high asset couples, can come with devastating financial consequences. Agreeing to unfavorable terms just to “get the divorce over with” could mean years of unfair alimony payments and child support, and an inequitable distribution of marital assets and liabilities.
Take the time needed to investigate the all of the marital assets. Meet with divorce lawyers to discuss your options. Negotiate to get the money you need to start your life anew. You have limited opportunities to make your case during a divorce, and failing to do so for the sake of convenience can jeopardize your financial future.
- Failing To Cooperate
High asset divorces do not need to be high in drama. Couples that work together during divorce can keep their business out of the courtroom and out of the public eye. Moreover, they can save thousands upon thousands of dollars in court costs and attorneys fees.
When both spouses actively take part in the divorce settlement, they are able to lay the best financial foundation for themselves and for their children. By working together, spouses and their lawyers can come up with innovative solutions that may not be available in court.
Working together can also dramatically cut the costs of divorce. When one spouse drags their feet or fails to compromise, more attorneys fees are incurred. If the matter is taken to court, the divorce could go on for months, even years, and the costs can skyrocket.
Cooperation is the best way to ensure high asset couples receive the financial support they need while keeping the most money within the family unit.
- Failing To Consider Tax Consequences
Financial decisions made during a divorce can have huge tax implications, especially for high net worth couples. When determining how marital assets will be split, it is crucial that high asset couples meet with an experienced divorce attorney or tax professional to learn how the divorce will affect their respective tax bills.
There are countless transactions associated with high asset divorces. The sale of a marital home. The liquidation of a brokerage account. An early withdrawal of retirement funds. While these transactions may be necessary for the division of marital property, they can lead to a huge tax bill.
In addition, your tax filing status will change. Some of tax deductions that your family benefited from in the past may no longer be an option for you. Charitable contributions, home payments, education costs and business expenses may also be deducted differently following a divorce.
Contact Us Today for Assistance
If you want to avoid these mistakes commonly made during high asset divorces, contact our family law attorneys at Arwani Law Firm, PLLC. We have handled complicated high asset divorces, and we are confident that our team can provide you with the legal assistance and attention that your case requires.
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