What Is A High Net Worth Or High Asset Divorce?
A high net worth or high asset divorce is when one or both parties have substantial assets or a high net worth, where the value of their assets is far higher than their debts or liabilities. This could be business assets, personal assets, or marital versus non-marital assets. It’s important that that all assets and liabilities are identified and valued accurately in order to achieve a fair result in a high net worth divorce.
What Makes A High Net Worth Divorce Or A High Asset Divorce More Complex?
The first step that has to be taken in a high-net-worth divorce is identifying all of the parties’ assets. This could include bank accounts, real property, investment accounts, retirement accounts, business assets, assets located at home or abroad, or assets held by other people on behalf of the divorcing parties. The second step would be valuing those assets, which can be done in various ways. For example, a bank account can be valued with the balance as of the date of marriage, the date of filing the petition for divorce, or the date of the final hearing in a divorce. The real property might need to be appraised by a professional real estate appraiser. A business may need to be valued, which would require a forensic accountant and a business valuation expert.
So, what makes these cases more complex is the number of resources that go into identifying the assets and gathering the valuations and the necessary expert opinions to provide an accurate valuation in court.
Does A High Asset Divorce Take Longer And Cost More Than A Standard Divorce?
I’ll give you the infamous lawyer answer, which is, “it depends!” It depends on the assets’ nature, how much the parties disagree on identifying the assets, classifying them as marital or non-marital, valuing the assets, or distributing them. If the parties agree on identifying the assets to be distributed, the value of each asset, and the proposed distribution, it doesn’t necessarily take longer or cost more than a lower asset divorce. But when the parties don’t agree, that’s where it takes additional time and money to get the process finalized.
What Are Some Of The Biggest Mistakes People Make In High Asset Divorces?
Some of the biggest mistakes that are made are assuming you know things that you may not. Too many spouses will rely on the other spouse’s identification of assets or value of assets without doing their own independent fact research to verify the identification or the value of certain assets. When you take the other party’s word for it, you’re potentially losing out on tens of thousands of dollars if the assets are not identified, are not properly valued, or are not adequately distributed.
What Are Some Things I Can Do Before Filing For A Divorce To Protect Myself Financially As The High-Income Earner Or The Spouse Who Earns Less?
The most important thing you can do to protect yourself financially, regardless of which party you are in the divorce, is to do your own research and ask your spouse questions. If you don’t know where your marital bank accounts are being held, find out! If you haven’t seen a copy of your joint tax return, ask for one – before signing! If you don’t know how much your spouse earns or what they do with their pay, ask! Ask questions about your monthly expenses and other questions about your household finances. Also, be observant about how your spouse handles money. For example, if you know your wife has a bank account at Bank of America, and suddenly she starts receiving mail from Chase, you should make a note of that. If your spouse appears to be spending more than he or she earns, ask how they are funding their spending, whether it’s through credit card debt, loans, savings, or contributions from others. It’s essential to ask questions and be informed about your own financial circumstances, and those of your husband or wife, before filing for a divorce.
When Might A Forensic Accountant’s Help Be Needed In A High Asset Divorce?
A forensic accountant can help with determining a party’s income. That’s especially important if one of the parties has a cash-based business or pays for personal expenses through his or her business. A forensic accountant can help trace those out. If there’s an alimony claim in the case, they can trace out what is being spent to establish the parties’ lifestyle by tracking expenditures to develop a lifestyle assessment. They’re also very helpful in tax effecting the distribution of certain assets. Other financial experts can assist with business valuations and other specific property valuations.
Should We Hire A Joint Forensic Accountant Expert Or Should We Each Hire Our Own?
It’s often helpful to start with a neutral forensic accountant because they are tracing the money, a neutral commodity. It can help to have a baseline to establish lifestyle expenses or to establish business-spending versus personal-spending. Once there is an impartial forensic accountant report, the parties are free to hire an independent forensic accountant just for that party to either dispute or bolster certain aspects of the neutral forensic accountant’s report.
I Trust My Ex-Spouse. Is A Thorough Investigation Into Our Net Worth Really Necessary?
Trust but verify! It’s always necessary to confirm what your soon-to-be-former spouse is telling you. It is important because the parties in a divorce will engage in mandatory financial disclosure, and you have an independent right, obligation, and opportunity to verify what they’re telling you. This is your one chance to double-check the bank balances, loan balances, and the value of certain assets and liabilities because if it’s not correct, you can’t come back later and say that you didn’t have an opportunity to engage in that process.