The Top 5 Financial Considerations in High Net Worth Divorces
May 09, 2023
Why is Proper Financial Planning Critical in a High Net Worth Divorce?
All divorces can present both legal and emotional challenges. However, high net worth divorces can have their own unique issues that require special attention during the marriage dissolution process. A high net worth divorce has traditionally been defined as a split in which one or both individuals have at least a million dollars worth of assets.
When substantial assets are part of a divorce, the legal considerations can become increasingly complex, even if the divorce is amicable. High net worth individuals may have property or funds in multiple countries, international businesses, trust funds, investments, and other assets that can require a thorough understanding of all areas of divorce law. Our experienced Nashville divorce lawyers can explain some of the most important factors you need to think about as you are heading into a high net worth divorce, so you can avoid common issues that can prolong the legal process.
What Are the Five Most Crucial Topics to Consider in a High Net Worth Divorce?
Having realistic expectations of the timeline is essential when beginning a high net worth divorce. It can take time and careful negotiation by your legal team to work out the details of a complicated split.
However, if you and your ex-spouse are able to agree on more topics outside the courtroom rather than immediately jumping to litigation, it can decrease the length and expense of the divorce. Of course, due to the strong emotions involved, negotiation may not be possible in every situation.
Consulting with a family law attorney from the start of your divorce and creating a detailed plan is key. A skilled lawyer with experience in complex divorce cases will take the time to thoroughly understand your circumstances to help you reach your legal objectives. Discussing the answers to the following five questions can help you avoid some common pitfalls that high net worth individuals may face during a divorce.
Are There Hidden Assets?
Trying to conceal or move assets to remove them from discussion during a divorce is never a good plan for either party. This activity is considered fraudulent at worst and dishonest at best and can negatively impact the court’s view of the individual. Ensure you have a thorough accounting of all your assets before the divorce and are upfront in your dealings. If you believe that the other party is hiding assets, you will likely need the help of your lawyer or a skilled accountant to collect proof of their actions.
Are You Accounting for Both Debts and Assets?
Debts can be just as significant as assets in a divorce, and you will want to be certain that you are not taking on more than your fair share of debts following your split. Debts accrued jointly during the marriage will be divided like other property. However, if your spouse entered the relationship with heavy debts, such as student or business loans, you should not be forced to take responsibility for those amounts.
Do You Have a Clear Idea of the Tax Implications of Your Divorce Agreement?
Taxes on large distributions or transfers of money can be high. When determining the value of what you will receive following your divorce, you should consult a tax professional who can assess your tax liability.
Having a thorough understanding of the tax implications will give you a better sense of the true value and fairness of your agreement and prevent you from facing any surprises in the future.
Are You Allowing Your Emotions to Cloud Your Financial Judgment?
Emotional and sentimental considerations are always important in a divorce. For example, you may have a piece of property that is incredibly meaningful to you, and retaining it may be a primary goal in your divorce negotiations. However, during a high net worth divorce, it is vital not to allow your emotions to negatively impact the outcome of your agreement. You may think it is best to end the divorce quickly by agreeing to whatever the other party wants so you can both move on with your lives, but this can directly harm your future financial and emotional well-being. By stepping back and allowing your lawyer to handle the process in a calm and logical manner, you can avoid making rash decisions you could regret later.
How Will Child Support Be Determined?
Child support for high net worth individuals can be complicated. The typical formulas used by the court may not apply to the financial situations involved in a high net worth divorce, so there can be much more variation in the amounts awarded.
There may also be college savings, trust funds, school tuition, and other factors to consider. Consulting with a knowledgeable Tennessee child support lawyer can help you better understand how the court will calculate payments in your specific case.
Why is It Vital to Have a Trusted Divorce Attorney on Your Side?
A high net worth divorce may involve every area of the divorce code and can rapidly become incredibly complex. Without proper legal guidance, you risk losing the lifestyle and wealth you’ve worked so hard to attain. A knowledgeable divorce attorney is a strong advocate who can help you navigate the unique challenges of dissolving your marriage and dividing assets.
Our helpful family law attorneys at Brighter Day Law have the skills necessary to assist you every step of the way. We listen carefully to your needs and craft a tailored plan to seek a resolution that fits your situation. For a consultation with an experienced Tennessee high net worth divorce lawyer, contact our law firm today at 615-437-8808.