Why Should High-Asset Divorces Be Treated Differently?
A divorce is rarely simple, it is often lengthy, and for many, the divorce process is highly emotional. If high-net-worth assets are involved, the divorce process is even more complicated. Understanding the elements involved in high-asset divorce will help mitigate your stress level, emotions, and prepare you for what to expect throughout the proceedings.
Most divorces have certain common elements, such as division of marital property and finances, child custody and visitation, alimony, and child support. High-asset divorces, which are typically categorized as those having more than $1 million in liquid assets, can be extraordinarily complex. With more assets at stake, the more there is for each spouse to gain or lose.
How Will Assets Be Divided?
In divorce, assets are considered marital or separate property and divided according to law. Marital assets are defined as those acquired during the marriage and generally consist of real estate, bank accounts, financial investments, personal property, business shares, retirement funds, and more. Separate assets are those belonging to one spouse outside of the marriage, such as:
- Inheritance received before or during the marriage.
- Property owned prior to the marriage.
- Gifts received before or during the marriage.
- Property titled in one spouse’s name, purchased with that spouse’s assets, and kept separate in written agreement.
It is rare, but there are instances where an asset typically determined to be separate has been included with marital property assets. Individuals with a high-net-worth need to research their assets to determine if assets were comingled at any point during the marriage. In a divorce, you should obtain proper documentation for all marital and separate assets before proceedings begin.
Determining the value of assets is a key component in high-asset divorces, and this often requires valuation appraisers if the estate is large and complex. Each spouse needs separate valuation appraisers to determine worth and to locate possible missing and overlooked assets. In addition, individuals with high-net-worth assets generally have assets in many forms and often located in other states or countries.
It is also important to understand how the laws of your state define property division. Community property is the division of all assets equally, regardless of whether they are marital or separate. Equitable distribution is also a division of assets, but not always equally, and it is determined and distributed by the court in a manner the court deems fair and reasonable. New Jersey applies equitable distribution.
What Should I Expect During My Divorce?
A high-asset divorce is often more expensive and emotionally exhausting. Understanding the following considerations will help you with what to expect.
High-asset divorces typically require far more time than other divorces, largely due to the number and value of assets to be researched, valuated, and divided. Dissolving a high-asset divorce is much like dissolving a company, and neither can happen overnight. Stopping negotiations and accepting settlements in order to quickly end divorce proceedings is never a good idea, no matter how grueling the process may seem. Doing so could cost you assets that are rightfully yours.
Divorces are expensive, and even more so in high-asset situations. In addition to legal counsel, you may need to hire financial and tax professionals, valuation appraisers, and others, depending on your situation. Understand that absorbing these costs is an investment in yourself to ensure a fair outcome.
Divorce will affect all aspects of your finances in one way or another during and after the marriage is dissolved. It stands to reason the more assets involved, the more impact that may have on you. Division of assets may find you responsible for certain financial responsibilities after the divorce, such as child or spousal support, and tax implications. The larger number of assets in high-net-worth divorces can affect other financial areas as well, such as the selling of real estate properties during the divorce.
Proceeds from the sale result in large capital gains, increasing the amount of taxes you will owe in the future if you do not have capital losses to counter. There will be tax implications, regardless of the division of assets.
Additionally, it is also good practice to manage your spending during the divorce proceedings. Lavish spending will not make you look more in-need in the eyes of the court, it can have the opposite effect.
Begin compiling your assets as soon as possible when starting a high-asset divorce. During the divorce, you will lose access to some records and documents at some point, and this can become incredibly stressful and hinder your ability to know the extent of assets. Make an inventory and compile documents, records and any other paperwork related to assets, including inheritance, and make copies.
There is no absolute formula to determine the cost of spousal support, and it will be based on relevant and equitable factors in the eyes of the court. Those factors will likely include each spouse’s current income and earning potential, length of the marriage, what each contributed to the marriage, and relative assets and liabilities.
It is crucial to hire a lawyer with extensive experience in high-asset divorces, and the sooner you seek legal representation, the better. When it comes to high-net-worth assets, having a lawyer on your side is critical.
Marlton Divorce Lawyers at Goldstein & Mignogna, P.A. Help Clients Navigate the Complexities of High-Asset Divorces
A high-asset divorce can be complicated and overwhelming, but our Marlton divorce lawyers at Goldstein & Mignogna, P.A. can help. Call us at 856-890-9400 or contact us online to schedule an initial consultation. Located in Marlton, New Jersey, we serve clients throughout South Jersey, including Burlington County, Camden County, and Gloucester County.