Any divorce is challenging, but high-asset divorces come with a slew of hurdles all their own. If you're filing for a high-asset divorce, it can be challenging to know what you should expect.
Today, we're giving out some tips and tricks for high-asset divorcees, so you know what to expect going into the divorce process as a high-net-worth individual.
Figure Out How Divorce Will Affect Your Taxes
Many people underestimate the impact a divorce can have come tax season, especially in high-asset divorces, where valuable assets and liabilities are involved in the divorce. You should consider working with an accountant to understand what to expect when taxes roll around for the first-time post-divorce.
If you're involved in a high-asset divorce where one party is the primary breadwinner and the other has a lower-paying occupation, getting divorced could completely change your tax bracket (assuming you filed together pre-divorce).
Similarly, how you divide assets and liabilities during the divorce could impact your taxes. For example, if you keep the marital home, you may be faced with estate taxes. If you sell it, you may need to pay capital gains.
Understanding how divorce will change your taxes ahead of time can help reduce the financial impact of your tax payments post-divorce.
Keep Track of How Your Assets Are Valued
As you probably know, $10,000 in cash is different than $10,000 in an investment account. One is a liquid asset you can use immediately that's stagnant in value, while the other is susceptible to tax, more difficult to access instantly, and can fluctuate in value.
You should work with a financial professional specializing in asset valuation to discuss how much your different assets are really worth, and how much trouble you'll need to go through to access different assets.
Many people underestimate post-divorce expenses, like finding a new place to live, purchasing a new vehicle, furnishing a new living space, etc. Understanding how much your assets are worth and how to easily access them can make the post-divorce transition less of a hassle.
Be Aware that Child Support and Alimony Arrangements May Be Unique for Your Case
There's a reason countless horror stories are floating around about how courts sometimes fumble facilitating equitable alimony and child support arrangements in high-asset divorces.
In a high-asset divorce, a variety of complicating factors often affect these legal processes in unique ways.
For example, traditionally, the custodial parent receives child support payments from the noncustodial parent. However, in a high-asset divorce, a high-net-worth custodial parent may receive less child support than they technically "deserve" because the court thinks they don't need much extra income to care for the child.
Additionally, individuals in high-asset divorces who do get saddled with child support costs often find themselves paying for unique expenses, like tutoring and extracurricular activities, because the child received those while the parents were married.
Similarly, alimony arrangements are more complicated in high-asset divorce cases. Courts have a fair amount of leeway in deciding how much parties should pay in spousal and child support cases (and for how long), and many go off the books and make unique arrangements during high-asset divorces.
For these reasons, it's important to work with a law firm that understands high-asset divorce and can fight for an equitable child or spousal support arrangement on your behalf.
Don't Discount Alternative Dispute Resolution
Methods of alternative dispute resolution, like mediation, may be more easily overlooked by individuals who have the funds to handle an expensive divorce in-court. But that doesn't necessarily mean you should write them off.
Using a less combative, out-of-court solution to resolve your divorce, like mediation or collaborative divorce, can help you keep the process away from prying eyes (which may be useful if you're a public or influential figure). Additionally, these processes can help save a significant amount of money by encouraging parties to peacefully negotiate for a mutually beneficial resolution, which can be advantageous when valuable assets are at stake.
At Lane & Lane, LLC, we work with high-net-worth clients to help them handle the high-asset divorce process.
To schedule a consultation with our team and receive the counsel you deserve during your high-asset divorce, contact us online or via phone at (908) 259-6673.