Divorces are always difficult, even if they are amicable. They all come with different elements. In some, there are very few assets involved. Then there are those involving millions or even billions of dollars in assets.
These are called high asset divorces. A high asset divorce is typically one that has $1 million in liquid assets, not including real estate or closely-held businesses, although these are subject to distribution.
In any divorce, the two main issues that need to be addressed are property division and alimony. This is especially true in the context of a high-net-worth divorce. While not every spouse is entitled to alimony, it is common in high asset divorces, since there is typically one breadwinner (although both spouses could potentially be high earners).
Ohio is an equitable distribution state, which means that the courts will attempt to divide your marital assets in a fair and equitable manner. A marital asset is any type of property that was acquired during the marriage. This could include a large number of assets, which could make a divorce of this nature extremely messy.
The good news is that you can make things easier with proper preparation. By knowing what to expect ahead of time and avoiding common mistakes, you can get through a high asset divorce with minimal conflict. Here are some tips to help you prepare for the process.
Get a Good Idea of Your Marital Assets
It’s common in marriages with significant marital assets that only one spouse is aware of their financial situation. One spouse is commonly left in the dark. Don’t be in this situation. If you do not have complete and detailed information about your marital asset portfolio, start taking the appropriate steps now to document your financial situation.
You can start by physically documenting your assets through bank statements, sales receipts, photos of household items, and any other documentation you can find. Have financial documents on hand, including tax returns and loan documents.
You can also hire a financial expert to help you document your marital assets. It would also be good to have a business valuation expert on hand to analyze the worth of a business and appraise any real estate, valuable art, antiques, and collectibles.
Work with a firm handling high asset divorce proceedings to get a comprehensive inventory of all your assets. Once you do that, your lawyer can classify each asset as community or separate property and advise you of the legal consequences of splitting the property. Sometimes it can be hard to tell if property, particularly money, is separate or marital, as funds can sometimes get commingled. A forensic accountant can help trace the origin of funds.
Look for Any Hidden Assets
Hiding assets is illegal in a divorce, but many people still do it. They may conceal property in order to keep it from getting split in a divorce. They may think their spouse will never know, but a forensic accountant can help locate missing assets.
Signs of hidden assets include closed bank accounts, transferring assets into your children’s names, and deferring promotions or bonuses until after the divorce. If you think your spouse might be hiding assets, let your lawyer know right away.
Choose Mediation
High asset divorces don’t have to be contentious. You don’t automatically have to go to court. If you wish to resolve your divorce matters in mediation, you should certainly try to do so. Mediation can be especially helpful if children are involved. It can resolve all issues associated with a divorce, so even if your divorce is more complex, you can at least try to mediate first and see how far you go. Mediation allows you to maintain control as you resolve issues regarding asset division, alimony, child support, and child custody. Mediation can also help you save time and money.
Understand Taxes
Splitting assets often comes with tax implications, especially if you are splitting retirement accounts, real estate, and other investments. You will likely have to pay capital gains taxes when you sell assets and make a profit. This is especially common with marital homes. While you should sell your home if you don’t want it or can’t afford to keep it, you need to be prepared when tax time rolls along.
Understand the Complexities of Child Support and Divorce
All states have guidelines for determining child support amounts in a divorce. However, this is for those who earn traditional incomes. When a person earns seven- or eight-figure incomes or has non-traditional income sources such as commissions, bonuses, and stock options, it can make things complicated. Plus, state guidelines have an upper income limit and are not designed to cover every possible financial scenario.
Also, children of wealthy families tend to have higher extraordinary expenses than other children, so that can create a lot of disagreement between divorcing parents. Therefore, courts often need to get involved to review each situation on a case-by-case basis and determine how much child support should be paid based on income and expenses for the child.
The same applies for alimony. Alimony may not be an issue if both parties are high earners. However, if one spouse is a multi-millionaire and the other does not work or earns a much smaller income, then alimony will likely come into play. In many cases, these are paid as lump sum amounts. Many celebrities have paid out tens or even hundreds of millions in dollars to ex-spouses, so keep that in mind.
Contact Us Today
A high asset divorce is not your typical divorce. Everything is more complex and there’s a lot more at stake.
Streamline your divorce with help from the Ohio high asset divorce attorneys at Lawrence Law Office. We know the laws involved and will help you prepare, and our unique blend of business law experience and family law experience will help you avoid mistakes along the way. To schedule a consultation, call (614) 228-3664 or fill out the online form.