Under Alabama divorce law, money and property obtained during a marriage are considered marital property and should be divided equitably between divorcing spouses. In high-net-worth divorces, how the couple’s assets will be divided often becomes a primary consideration and point of contention.
If you are ending a marriage in which there are significant assets at stake, a Huntsville high-net-worth divorce attorney at Leigh Daniel Family Law can help you. Our goal will be to negotiate a settlement agreement that you can take before a judge to obtain a divorce. In court and at the negotiating table, we will be proactive in looking out for your financial interests.
Contact Leigh Daniel Family Law in Huntsville, AL, today for an initial discussion of the issues you may encounter in a high-asset divorce.
Preparing for an Equitable Division of Assets
One of the first steps required of a divorce in Alabama is for each party to compile a comprehensive inventory of their assets. In addition, all tangible assets must be professionally appraised. Each spouse must obtain their own appraisal to determine values.
The inventory and appraisals must be submitted to the court and shared with the other party. Once the documents are filed, we can review your spouse’s submittal to ensure that all known assets are identified and represented with accurate values. This inventory will be the basis for negotiating the division of assets.
As we inventory assets, we will take into account any existing prenuptial or postnuptial agreement. Typically, prenuptial agreements establish rules regarding how property will be treated if the marriage ends in divorce. If such an agreement exists, we will need to review it to determine whether its provisions are applicable and fair or whether we should contest it.
Identifying and Classifying Assets
A divorcing couple’s property, financial holdings, and other assets and debts are assigned one of two classifications when they are inventoried:
- Marital property – property and assets obtained jointly during the marriage.
- Separate property – property owned by either party alone prior to marriage or received by one party as inheritance or gifts.
Alabama divorce law requires an equitable division of marital property and allows each party to retain their separate property. In general, equitable means what the court considers to be fair.
Alabama’s requirements for equitable distribution of marital property allow the court to take into account such factors as:
- Length of the marriage
- Needs of each party
- Financial contributions of each party during the marriage
- The lifestyle that each party is accustomed to leading
- Age and health of each party.
Disputes and Financial Misconduct When Splitting Assets in Divorce
Sometimes, there is a significant difference in the value assigned to certain assets on each party’s inventory. If there are problems with valuations submitted by your spouse, we will push back and may be able to persuade your spouse to adjust their valuations. It is more likely that we’ll need to require each appraiser to testify about how they determined the disputed values so the judge can decide what is accurate.
Sometimes, we find that a spouse has not included all assets in their inventory. A spouse who hides or sells off assets or changes names on accounts after divorce papers have been filed may be sanctioned by the court. But these assets must be located or proven to exist for the court to consider them among your marital assets.
When necessary, Leigh Daniel Family Law can obtain the services of a forensic accountant to help uncover hidden assets and ensure an accurate and comprehensive asset disclosure.
Divorce and its Impact on Taxes and Estate Planning
When a couple divorces and their marital property is divided between them, the U.S. Tax Code says no gain or loss is recognized for either party, so there’s nothing to tax. This applies to transfers made in exchange for cash, the release of marital rights, and the assumption of liabilities or other considerations. Exceptions to this rule include certain transfers in trust and certain stock redemptions that are taxable.
If you transfer property that earns money, such as an interest in a business, rental property, stocks, or bonds, you may be obligated to report income from the property.
In a high-net-worth divorce, it’s often helpful to consult a financial professional during the divorce proceedings to protect your interests.
Leigh Daniel Family Law would be ready to help you rewrite or prepare a will and other estate planning documents to be filed upon your divorce. Under Alabama Code Section 43-8-137, a divorce automatically revokes anything a will provides the former spouse.
Frequently Asked Questions
- Is it possible to divorce without splitting assets?
- Alabama divorce law provides that “the marital estate is subject to equitable division and distribution.” However, a prenuptial agreement that provides for a spouse who came into the marriage with significantly less wealth or fewer assets might forestall a division of marital property if what it provides is fair to the less-affluent spouse. We would expect a judge to vacate a prenup that was not fair.
- Can assets be sold or liquidated before divorce?
- Generally, once a petition for divorce has been filed, this creates an injunction prohibiting the sale or disposal of marital assets. Some transfers may be allowed as long as the proceeds from marital property that is sold or liquidated are divided equitably between the divorcing parties. It is not legal to dispose of assets to hide their existence from the other party or to fail to disclose proceeds from sales.
Contact Leigh Daniel, Attorney at Law, to Protect Your Assets
The Huntsville high-asset divorce attorneys of Leigh Daniel Family Law can conduct a thorough review of your portfolio and develop a plan to pursue a divorce settlement that serves your needs and protects your financial interests. To schedule a consultation to discuss a specific asset protection strategy, contact us online today or call us at (256) 551-0500.
