Getting a divorce can involve many different financial factors, particularly when a couple owns significant assets. In a high net worth divorce, the financial stakes are considerably higher, and disagreements over money or property can be difficult to resolve. However, failure to properly address these issues can make matters even worse, potentially leading to a longer, more drawn-out, and more costly divorce process.
An experienced attorney who understands the best way to address concerns related to assets and income can provide crucial guidance and take steps to protect the client’s interests. An attorney can help avoid common mistakes such as:
Failing to Accurately Disclose All Assets
Property division is one of the most critical issues in a high net worth divorce. When addressing concerns related to the property a couple owns, it is crucial to ensure that there is a full and frank disclosure of all assets. This includes everything from real estate and business interests to investments, retirement accounts, and valuable collections. Both spouses should fully disclose all of the assets they own, the income they earn, and any other relevant financial information. Mistakes or omissions during disclosures could potentially lead to legal penalties. In the most serious cases, a divorce agreement may even be invalidated, and future litigation may be needed to challenge or correct the division of assets.
Overlooking Hidden Assets
In some cases, one party might attempt to hide assets to skew the division of property in his or her favor. It is important to disclose all assets, and a spouse who suspects that the other party is being deceptive may need to work with a forensic accountant or other financial experts to uncover assets such as offshore accounts, cryptocurrency holdings, or investments that were not properly disclosed. A spouse who attempts to hide assets may be penalized, and the other spouse may receive a larger share of the marital estate.
Ignoring the Need for Expert Valuations
In high net worth divorces, accurately valuing assets is crucial. This often requires the assistance of financial professionals who can perform business valuations to determine the fair market value of business interests, as well as real estate appraisals and valuations of items such as artwork, jewelry, and collectibles. Without professional valuations, spouses may rely on their own estimates of their assets’ value, potentially leading to unfair outcomes.
Underestimating the Impact of Taxes
The decisions made during divorce can significantly alter the tax obligations that apply to both spouses. Failing to consider the tax implications of asset division or other financial decisions can result in unexpected losses. Key tax considerations include capital gains taxes that may apply to the sale of shared property or investment distributions, tax credits that may be affected by decisions about child custody, and taxes and penalties on retirement fund distributions.
Neglecting the Implications of Divorce on Estate Planning
A divorce can profoundly affect each party’s plans for what they would like to happen with assets in the future. It is vital to review and amend wills, trusts, and other estate planning documents to reflect post-divorce circumstances. Failure to do so can lead to assets going to unintended beneficiaries, legal disputes among heirs, and ineffective execution of an estate plan.
Letting Emotions Drive Decision-Making
A high net worth divorce can become a battleground due to the significant stakes involved. However, allowing emotions to drive the decisions made during divorce process can lead to poor judgment and increased costs. Staying as calm as possible and approaching issues logically and pragmatically can help ensure that a couple will be able to negotiate a favorable settlement, ensuring that spouses can protect their long-term personal and financial interests.
Contact Our Wheaton, IL High Net Worth Divorce Attorneys
Navigating a high net worth divorce requires an understanding of both legal and financial issues. Taking a strategic approach to property division, asset protection, and financial management can help ensure a positive outcome to a case. At Mirabella, Kincaid, Frederick & Mirabella, LLC., our DuPage County, IL high asset divorce lawyers can provide guidance on how to resolve these matters successfully while avoiding the mistakes discussed above. Call 630-665-7300 to schedule an initial attorney meeting. Our team has extensive experience representing clients in complex divorce cases, and we are dedicated to helping our clients achieve favorable outcomes that will provide for ongoing success.
