Being rich changes everything. With the right finances, you can find yourself granted access to a lifestyle of which others only dream. Such a lifestyle often includes extravagant properties, exotic vacations, celebrity friends, and the regular occurrence of opportunities that would typically be deemed “once in a lifetime.”
Yet, for all of its perks, being a high net-worth individual also has stark disadvantages. A glaring example is a divorce. Being “rich” amplifies the intensity of divorce because there is usually far more money, assets, and assorted “moving pieces” in play. Couples who are not in the upper echelon of wealth do not have to worry about dividing so many financial assets. This is not to diminish divorce by those in differing income groups. It is just that, as the late rapper Christopher Wallace declared, “More money; more problems.”
Below are examples of complexities in high-asset divorce:
Increased Complexity and Necessary Care
While divorce is already a complicated issue, adding various assets and high values multiplies the complexity. The inclusion of factors such as stocks, bonds, real estate, and other appreciable assets requires attention to detail and care in order to obtain the right settlement when the divorce is finalized.
For those with these types of assets, here are key considerations you should remember when planning your divorce.
What Factors Make a High-Asset Divorce Different?
A high-asset divorce, as its name implies, involves high income or a larger number of assets belonging to both spouses compared to those of a more “traditional” divorce. High-asset divorces can include the following assets:
Businesses or private practices owned by you and your spouse.
Real estate investments.
Stocks, bonds, mutual funds, cryptocurrencies, and other investments.
Retirement accounts.
Art collections and other similarly high-valued collectibles.
Jewelry.
Any other asset with significant value.
The high level of complexity coupled with the greater value of each asset surrounding these types of divorces necessitates diligent attention to small details; even the seemingly smallest error, no matter how unintentional, can cause serious consequences and can disrupt the process.
Community Property in California
California’s community property code can add further complications to a high-asset divorce. Under the California family code, all assets, earnings, and debts acquired throughout the marriage (aside from gifts or inheritances left to a single person) are owned by both spouses and must be divided equally in the event of divorce. This could cause greater worry for higher-income earners because of the larger number of assets that may need to be divided.
While a couple going through a divorce can certainly work to come to an arrangement on how all assets should be divided, couples with a larger number of assets have more to work through and may not be able to come to an agreement, leaving property division up to the court.
Spousal Support
The issue of spousal support should also give one cause to be more diligent in a high-asset divorce. Higher-income earners or those with various assets can face shockingly high spousal support payments. While spousal support varies upon several factors, including the amount of property a dependent spouse receives in the divorce, a higher income increases the likelihood of higher support payments.
Protect Yourself with Accurate Asset Valuation
Alternatively, a high net-worth divorce can be complicated by the division of known assets. In this case, the couple’s problems may stem from the inability of given assets to be divided or a reluctance by either to part with the assets. The couple could find trouble, for example, if they both desired a priceless antique that they had previously co-owned. The antique couldn’t be physically cut in half, as would be the case with a bank account. If neither spouse compromised, the only way to resolve such a situation would be to battle it out in court. A judge might then award the asset to one of the spouses, or the judge might order the asset to be sold and the proceeds divided equally between the spouses. Such a situation may seem uncommon, but in a high net-worth divorce, the sheer volume of wealth makes it imperative to expect the unexpected.
Those who are rich have to deal with divorces that are amplified by their wealth. In doing so, radical new problems may emerge that are unknown to the average divorcee. One of these problems is omitted assets. A high net-worth party may be tempted to conceal a shared asset to prevent the other from benefitting in the property division. Such action would be unlawful of course, but the wrongdoer would only be punished if the other spouse became aware of the fraud and exposed it.
In order to protect your best interests, it is important to work with someone to help you determine the value of all of your assets. While some assets can be difficult to place an accurate value on, such as a business or stock options, working with our divorce law firm and having the proper resources can help you understand how the assets could be divided and what you could realistically expect to receive after the agreement is complete.
Thoroughly Prepare for Your Divorce
In any divorce in the state of California, the law requires that all parties submit information disclosing all sources of income and an inventory of all assets owned. It is of utmost importance to ensure that you are thorough in providing this information and that you speak with your attorney throughout this step.
While potentially tedious to those who have a large number of assets, the courts do not look favorably upon those who fail to disclose assets. Failure to disclose all assets and income could lead to an unfavorable settlement agreement or penalties such as fines or jail time.
Be Prepared for Negotiation and Litigation
Many couples regardless of net worth will attempt to negotiate a settlement agreement in order to avoid litigation. Couples with a higher number and value of assets may attempt this step, as well, but these individuals should also prepare for the possibility of going to court for asset division.
It is advisable to work with a skilled attorney capable of negotiating settlement agreements in a high asset divorce in order to work to a favorable outcome.
Hire a California Attorney
Perhaps the most important step you could take in your high-asset divorce is to hire an attorney who understands the complexity involved in such a divorce and is skilled in handling complicated financial issues surrounding this type of divorce. Feinberg & Waller, APC has been recognized by executives and other business professionals for our ability to handle even the most complex high-asset divorce case.
To schedule your consultation with our certified family law specialists about your high-asset divorce, call our office at (866) 452-3644 or visit us online.