5 Mistakes to Avoid in a High-Asset Divorce
It is no secret that high-asset divorces are more complicated than regular, run-of-the-mill Media divorces. When couples have substantial assets, the process for valuing everything and dividing it is extended.
Unfortunately, as experienced Media divorce lawyers, we see many common mistakes that cost high-income individuals big time. Below, we highlight 5 mistakes that we encourage all our clients to avoid.
Forgetting about the Tax Consequences
Many of the assets that you get in a settlement might actually qualify for capital gains taxes, and you could be facing a hefty tax bill once you are a single filer. Tax planning should be at the heart of your property division strategy. The fact is that not all assets are alike. Some might result in a larger tax bill, so carefully consider this fact before deciding which assets to request in a settlement.
Failing to Disclose Assets
Divorce involves dividing all marital assets, which includes anything obtained while you were married. Too many people try to hide assets because they don’t want their spouse to get a share. This is a serious mistake and could cost you in the divorce. Judges are empowered to penalize you for hiding assets, and you could end up leaving your divorce with less wealth than had you been honest.
Of course, sometimes people simply forget about assets, and the risk of this happening increases when you have large estates. However, you never want a judge to suspect that you are being dishonest. Disclose everything. And hire an attorney who can help you identify all assets that you own.
Agreeing to Anything to Get the Divorce over With
There is never a point in dragging out a divorce because you are fighting about minor things. However, the opposite also tends to happen: clients are so eager to finally get divorced that they just sign any settlement agreement.
Individuals with a high net-worth are at risk of losing substantial sums of money if they do not strategize. At our firm, our Media property division lawyer will carefully review all assets to determine which are likely marital. We then develop a strategy for maximizing the amount that our clients take. Although this process is lengthy, it is worth it in the long run. Quickly signing a settlement agreement is a good way to be taken to the cleaners.
Valuing a Business Improperly
Business valuation issues are some of the trickiest we deal with. For one thing, there are different ways to value a business, which can sometimes produce dramatically different numbers. Depending on your situation, you might want a business to be valued on the high end or the low end. Finding the right valuation specialists is critical, because the other side might contest the number we come up with.
You should not spend lavishly while the divorce winds its way to completion, because your spouse could argue you are wasting assets. A judge might agree and award you less property. Instead, live as you normally would and delay any unusual, large expenses.
There is another reason not to spend a lot of money: anything you buy might get characterized as marital property, subject to division. There is no reason to let your spouse get more of your wealth.
Get Divorced the Right Way
Barbara Flum Stein & Associates has helped many high net-worth individuals through their divorces. Contact us today to speak with our firm.