Going through a divorce is already a difficult experience. If you and your spouse already own businesses or have a lot of assets and financial arrangements together, things become more complicated.
If you or your spouse owns $1 million or more in assets, you’re already in a high net worth divorce. Things can get very confusing, from dividing marital properties to alimony to issues concerning ownership. Therefore, it’s better to hire a lawyer and form a team to discuss these issues.
Business owners must know about a few things in a high net worth divorce. Let’s have a look at what they are!
1. Issues With Division Of Marital Property
High net worth individuals can own assets and businesses together after marriage. In a high net worth divorce, dividing these properties can become an issue if you don’t consult attorneys.
If you are a resident in big cities like New York, Los Angeles, Dallas, or Atlanta, and you are heading towards a high net worth divorce, you can hire attorneys such as Atlanta high networth divorce attorneys to carry out the procedures smoothly. The division also depends on state law. Three major issues are discussed below.
Real estate is an attractive investment option, hence you both may have acquired shared real estate properties during the marriage besides your home. You need to appraise these real estate properties during a high net worth divorce to know the actual value. You also need to evaluate them to understand how to divide them amongst yourselves.
Financial Accounts And Investments
You may have bought bonds, stocks, funds, retirement plans, and other financial instruments during your marriage. Dividing them in a divorce can be a daunting task in a high net worth divorce. Therefore, both of you need to have a clear picture of all the financial accounts you own to divide them in a way that benefits you.
In a divorce, one of the spouses must move out and make their separate living arrangements. If you have children, then one of you is the primary caregiver. In a high net worth divorce, the high earning spouse ideally should make a living arrangement for the primary caregiver spouse, including child support, as the children will be under their care.
2. Addressing Hidden Assets
Some couples keep divorce as a consideration from the get-go. Sometimes, spouses can have hidden assets in the form of businesses and valuables, such as yachts, designer items, vintage valuables, etc to retain their assets in a divorce. In a high net worth divorce, you should fully disclose all your assets to avoid any possible dispute in the future.
3. Identifying Marital and Non-marital Assets
Any asset acquired after marriage is considered a marital asset unless mentioned in a prenuptial agreement. Exceptions can be any inheritance that doesn’t involve spouses. In a high net worth divorce, the spouse with a high net worth can face a huge loss against the other partner if these assets are not differentiated.
Any divorce will have alimony, which is taxable by default, after evaluating equitable distribution unless a prenuptial agreement waivered the alimony. In a high net worth divorce, the spouse with a high net worth is supposed to provide alimony to the other spouse. It must be supported with substantial evidence and must cover all the needs and necessities of the former spouse. If you live in big cities such as Dallas, New York, or Atlanta, you have to follow the state laws there while giving alimony to your spouse.
5. Business Ownership Concern
Suppose both of you found a business together during your marriage. In that case, you need to determine how you should divide it by doing a business valuation so that both parties can benefit. One spouse may have the entire business while the other can have other marital assets. Or, if you both wish to remain in the business, you can co-own it after divorce. If none of you want to be partners, you can sell the business and divide the proceeds among yourselves.
6. Protecting Inheritance and Family Wealth
You may be concerned about how you will divide family wealth and inheritances after the divorce. If one of you receives an inheritance after marriage, it will not be divided in divorce unless you made it into a marital asset. It’s essential to keep your inheritance separate while appraising your assets.
You may own a significant amount of assets before getting married. To protect those assets, you can put them in a trust so that the trust protects them rather than you and your spouse.
7. Retirement Benefits
You may have invested in retirement funds together, such as the 401(k). You need to withdraw these funds during the divorce, divide them, and allocate them to individual accounts. Depending on the nature of the funds, you can even transfer them to your spouse.
8. Tax Issues
During your divorce, you need to decide whether you want to pay joint tax returns or not. Paying joint tax returns has advantages, but it will also hold both spouses liable for taxes and penalties in an audit. You also need to keep in mind that any decision you take in the divorce can have tax repercussions.
While divorce is complex, a high net worth divorce is a daunting experience with many consequences. Keeping these things in mind will help business owners smoothly go through this lengthy and expensive procedure. Both spouses will benefit from a proper appraisal of assets. If you appoint an attorney to help you with the procedures, you will also face fewer complications in the future.