November 17, 2023

High-asset divorces – where the combined assets are valued at over $1,000,000 – mean that mistakes during the process can be costly. While divorce is challenging no matter what the circumstances, in a high-asset divorce with a significant and varied pool of assets, the stakes are high. To protect yourself and your financial future, there are smart moves to make and mistakes to avoid.

What are the Main Concerns in a High Asset Divorce?

High asset divorce cases come with challenges because of the amount of property and assets that require division, or because of complicated financial organizations, or simply due to the stakes being so high that emotions come into play. With a large value of assets, negotiations can become complicated. The goal of a high-asset divorce is to preserve as much of the full financial picture as possible. How difficult your high-asset divorce will be often depends on how well you and your partner can negotiate during the process.

Mistake: Panicking Over the Lack of a Prenup

Most spouses who have significant assets before marriage will have a prenuptial agreement in place, which makes the divorce process straightforward. But if you acquired your assets during the marriage, you may not have any legal documentation in place, which can make some spouses in a high-asset divorce panic and start making poor decisions. If you don’t have a prenuptial agreement and are entering into a high-asset divorce proceeding, look at the big picture. You want to end the marriage fairly with your assets intact. This means that you need to be transparent and honest with your financial picture and find an attorney you trust who will work you through the process with integrity. When you go into the divorce process with an attitude of respect, you can negotiate far more easily, even when the stakes are high.

Smart Move: Having a Tax Professional Help You Look for Potential Issues

High assets can be subject to significant taxes, especially if you make financial moves without consideration. Some tax exemptions are possible if you are going through a divorce and selling joint assets, but in a high-asset divorce, you may not qualify. When you file for divorce, it can impact your tax filing status. The best way to navigate the complex tax issues of a high-asset divorce is by having a tax professional review your situation and advise you on how best to proceed. They may recommend keeping assets intact rather than liquidating to split the proceeds, and finding another strategy for equitable division. If you suspect that taxes will be an issue in your high-asset divorce, work with a tax professional alongside your attorney early in the process so you can use their advice during your negotiations.

Mistake: Letting Emotions Get in the Way

Divorce is emotional. If you go into the process thinking that high asset divorces mean high stakes fighting and no chance for an amicable divorce, you may find that prophecy to be self-fulfilling. When wealth is self-made, many partners begin to feel a sense of entitlement that prohibits them from recognizing the contributions of both spouses, and in some divorces, there is a sense of wanting to punish the other spouse by making the process as difficult as possible. Having some emotions during divorce is inevitable, but letting your emotions drive your decision making process is a big mistake, and that mistake is only magnified in a high-asset divorce. If you are having trouble separating out the emotional from the practical, look to your attorney and financial professionals to help guide your decision making so you are making logical and long-term decisions, not emotionally charged ones.

Smart Move: Hiring the Right Attorney

You need an attorney for a high-asset divorce. An attorney will be able to look at the full picture and work to get the most fair and equitable division of assets. Be very cautious about hiring an attorney who tries to fuel the flames of your emotions and goes into the process with the intention to “win” the divorce. In contentious high-asset divorces, the cost of the fight can make a significant dent in the assets you are fighting so hard for. Look for an attorney who will be tough in fighting for your fair share, but not one who is encouraging you to make rash and emotional decisions.

Mistake: Trying to Conceal the Full Financial Picture

We want to believe that all partners can go into a divorce with transparency, but there are many partners in a high-asset divorce who will attempt to conceal their full financial picture to avoid dividing certain assets. This is always a mistake, and when it is discovered by the court, the spouse who attempted to conceal assets can face serious consequences.

Smart Move: Planning for Your Lifestyle Post-Divorce

Even if you will still retain significant assets, your lifestyle will change after your divorce. If you don’t plan for those changes during the divorce process, you can find yourself in a precarious situation when everything is finished. During the divorce process, do a cash flow analysis that will take into account all your post-divorce income and expenses, which can include predicted spousal and child support. Once your post-divorce financial picture is laid out, make a budget. Many couples find that both will need to make changes to their lifestyle, at least in the initial post-divorce period, and planning now can help you avoid unpleasant surprises.

An amicable divorce with fair distribution is possible, even in a high-asset divorce, but both partners need to make the right decisions to get through the process with the majority of assets intact. Look at the big picture, don’t make emotional or unethical decisions, and trust your divorce attorney to guide you down the right path toward your future. If you’re going through a high-asset divorce and need a trusted, experienced lawyer by your side, contact my office today.