Even under the mildest conditions, divorce is often a difficult and uncomfortable process to endure. Unfortunately, high net-worth divorces can make the process even more cumbersome.
Because there are more assets to divide, it can take a little longer to come to a fair and practical divorce settlement. Having a prenuptial or post-nuptial agreement can help streamline the process, but don’t worry if you don’t have one. There are still plenty of options to consider with the help of a skilled attorney.
Read on to learn more details about high net-worth divorce.
What Is Considered High Net-Worth
When a married couple with more than a million dollars in net liquid assets decides to split up, it is considered a high net-worth divorce.
Understand Your Assets
In a high net-worth divorce, one of the first things to do is determine the property you owned before the marriage and the combination of assets accumulated throughout the relationship.
Once you establish the marital property, you must have it valued before the assets may be equitably divided.
When dealing with high-value assets, it can be challenging to determine marital property and separate property.
What Is Considered Marital Property
Any property that you and your spouse attained during the marriage is typically regarded as marital property, no matter whose name is on the title.
Marital property can include most assets of value, such as:
- Real estate equity
- Vehicles, RVs, etc.
- Personal property and household goods
- Bank accounts
- Retirement accounts (401(k), IRA, etc.)
- Business interests
- Stock options, frequent flyer miles, etc.
- Increased value of the separate property during the marriage
The marital property will be distributed equitably based on the value of the assets on the day of dissolution unless you and your spouse agree otherwise.
Elements of Distribution
The court may not divide all of the assets equally, but the division must be equitable. That typically means the marital property will be distributed equally, but several factors are considered regarding a fair distribution, including:
- You and your spouse’s individual contributions to acquiring the property, including homemaker contributions
- The value of property reserved for each spouse
- The financial situations of you and your spouse at the time of the division, including the appeal of providing the family home to the spouse who cares for the shared children
- Increases or decreases in the value of the separate property during the relationship or exhaustion of separate property for marital purposes
Be Transparent About Your Assets
It is critical not to hide any assets you own, whether the omission is done intentionally or not.
You may think you can exclude certain high-value assets from your marital property by transferring them to a friend or a business partner.
The courts have the ability to review the transfer of assets and may consider such actions fraudulent. This can have a serious impact on the outcome of the divorce settlement.
It’s also critical to be transparent about any and all marital liabilities. Doing so can help make sure that the division of assets is truly equitable.
Be Mindful of the Tax Consequences of Property Distribution
When the property is divided in a divorce, certain belongings and assets will be divided amongst the spouses. Others may be sold and the funds can be equitably distributed between the spouses.
For instance, if you and your soon-to-be ex-spouse own a home together, it may be more practical to sell the property and divide the proceeds equitably than it would be for one of you to retain the home.
Keep in mind if you are awarded especially valuable assets during property distribution, such as a home or a vacation property, you may face significant tax consequences. These tax implications are important to consider because paying the taxes on an expensive property without significant liquid assets can be a challenge.
Suppose you are considering divorce in Colorado Springs or are currently working toward ending your marriage. In that case, it is in your best interest to consult our experienced attorneys here at Knies, Helland & McPherson. These matters can get complicated very quickly, so it’s best not to try to handle them on your own. Let us do the heavy lifting for you.
Schedule a consultation with our Colorado Springs lawyers today by calling us at (719) 626-8530.