Getting divorced can create significant financial changes, even for high-net-worth couples. Spouses with substantial assets can take steps to get ready for life without their ex’s income or after splitting family assets. An experienced family law attorney who has a track record of working with high-net-worth families can help you prepare if your and your spouse’s marriage seems headed for an end.
Assessing and Valuing Your Financial Position
Before developing a legal strategy for the divorce proceeding, spouses in a high-net-worth divorce must understand their respective financial positions. Not appreciating the scope of the economic interests involved in your divorce may lead you to obtain less than your fair share of your marital estate. Assessing your financial position before a high-net-worth divorce will require you to identify and appraise all your and your spouse’s assets.
A high-net-worth divorce can involve complex, unique assets such as:
- Business interests
- Vacation homes
- Income-generating real estate
- Cryptocurrency holdings
- Stock options
Understanding your financial position may also involve identifying potential risks that could arise in a high-net-worth divorce, such as the possibility of your spouse attempting to conceal assets or income to avoid splitting marital assets or paying spousal support.
Building a Strong Legal and Financial Strategy
Preparing for a high-net-worth divorce will also require you to obtain experienced counsel from legal and financial experts. A seasoned divorce attorney who has an extensive background in high-net-worth divorces can walk you through the unique legal considerations in a high-asset divorce. A divorce lawyer can also connect you with financial professionals you may need to help you with various issues in your divorce case, such as:
- Forensic accountants who can track down hidden assets or income
- Tax professionals to develop strategies to avoid or minimize the tax liabilities of a property division or alimony order
- Appraisers who can establish values for complex assets like business interests, high-value real estate, or collectibles/artwork
Having an experienced and well-rounded professional team to advise and advocate for you during a high-asset divorce can help you pursue settlement negotiations for a favorable resolution that protects your financial interests. A divorce attorney can seek a tailored legal strategy, advised by economic experts.
Asset Division, Tax Exposure, and Protection Tactics
In Alabama, courts divide marital property owned by couples under the equitable distribution method. In equitable distribution, a court splits marital assets fairly, which does not necessarily mean evenly. Instead, courts consider numerous factors to determine what constitutes a “fair” split for a couple, including the length of the marriage, each spouse’s contributions to acquiring or maintaining property (including contributions as a homemaker), and each spouse’s earning capacity and separate financial resources.
As couples negotiate or litigate a split of their marital assets, they must also consider the tax consequences of a proposed division. For example:
- Liquidating a vacation home and splitting the proceeds may require a couple to pay capital gains tax on the sale.
- Transferring stock options or other equity interests can also have unintended tax implications.
- Dividing retirement accounts requires couples to follow specific procedures that utilize qualified domestic relations orders to avoid tax penalties from withdrawing funds from tax-advantaged retirement accounts.
Spouses headed for a high-net-worth divorce may pursue various legal strategies to protect their financial interests, including:
- Beneficiary designations for life insurance or pension accounts
- Transfer-on-death or pay-on-death designations for financial accounts
- Trusts to safeguard separate assets
- Business governance documents to restrict the ability to transfer ownership interests
Planning for Financial Stability After Divorce
Preparing for life after a high-net-worth divorce can become incredibly challenging, especially if your ex earned the majority of your family’s income. However, even primary breadwinners should consider what life after divorce will look like. A divorce may mean not having the benefit of two incomes to support a household. And when spouses have unequal earning capacities, a divorce may mean that one spouse has an alimony obligation, while the other spouse relies on financial support to maintain their standard of living after the divorce.
Best practices for financial planning in a divorce for high-net-worth couples include:
- Budgeting – A spouse may need to develop a budget to ensure they can afford their regular expenses, especially if they assumed the role of a homemaker during the marriage and need to become financially self-sufficient after divorce.
- Estate planning – A divorce should prompt you to review and revise your estate plan. You may need to amend your will, revocable trusts, and beneficiary designations to replace your ex-spouse with another beneficiary or to change your appointed executor. You can also coordinate with your ex for nominating a guardian for your minor children should you and your ex both pass away.
- Setting long-term financial goals – After a high-net-worth divorce, you may need to reevaluate your long-term financial goals, including retirement plans. When you have had to split marital assets you built with your ex or you have alimony obligations, readjusting your financial plan may become necessary to help you achieve your financial objectives.
Work with Leigh Daniel Family Law to Protect Your Financial Future
When you have a high-net-worth divorce, hiring experienced legal counsel can help you pursue a favorable resolution to the financial issues in your divorce. At Leigh Daniel Family Law, our legal team can protect your interests through our extensive experience representing clients involved in high-net-worth divorces. We understand the financial and reputational implications of getting divorced when you and your spouse own significant assets.
Our team has over 30 years of experience advocating for clients in divorce cases, earning us the respect and trust of the clients we’ve represented. When you choose us to advocate for your interests, you can rest assured that our firm will provide you with the discreet, results-focused legal representation you want and need.
Schedule a Confidential Consultation Today
Don’t leave the outcome of your divorce case to chance when you and your spouse own substantial assets. Contact Leigh Daniel Family Law today for a confidential consultation with a knowledgeable financial strategy divorce attorney to learn more about how to prepare for a high-net-worth divorce to best protect your rights and economic interests.
