While divorce is prevalent across the country, each case is different. Real estate, business ownership, and significant financial interests can put you in high-asset divorce territory. Couples experiencing a high-asset divorce are prone to a number of common mistakes, all of which can be avoided.
Like other marriages, high net worth couples don’t divorce without reason. From addictions to infidelity, extreme differences in parenting styles and growing apart, divorce always stems from one issue or another. In the case of a high net worth divorce, significant assets, such as business interests, real estate, large retirement accounts, investments, and valuable collectibles will need to be valued and considered for asset division. The process can be time-consuming and complicated.
To reduce stress and ensure a smooth asset division process, avoid the following pitfalls.
Mistake #1: Making Emotional Decisions
Guilt can be a huge factor in a high net worth divorce. A spouse with a guilty conscience can be subject to making emotionally-based decisions. This frame of mind can have detrimental effects when making financial decisions about divorce. Anger is another emotion that can impact sound decision making. Withholding information or acting out of spite will slow the process. Rely on your attorney’s council to help you make clear-headed decisions.
Mistake #2: Hasty Decisions
The desire to end things quickly can lead to financial disaster for the spouse willing to give up everything. It’s a mistake to agree to anything in an attempt to speed up divorce proceedings. Making a consequential financial decision cannot be corrected once the divorce is finalized.
Mistake #3: Listening To Others
A trusted friend or family member who has gone through a divorce isn’t the most qualified person to advise you on your divorce. Every divorce case has unique variables, factors, and circumstances. Comparing your divorce to someone else’s can work against you.
Mistake #4: Undervaluing Assets
It’s important to consider all financial assets in a high asset divorce. From valuables to properties and investments, it’s vital to include all assets to determine how much everything is worth. Hiring a firm that specializes in valuing assets can be helpful.
Mistake #5: Hiding Assets
Hiding assets is not uncommon in high stakes divorces. However, sheltering investments or funds during a divorce is fraudulent. If a party is found guilty of doing such, the spouse loses all credibility in court from that point forward.
Mistake #6: Not Considering Tax Consequences
Financial distributions often come with a tax consequence. Alimony, for example, is taxable. Most retirement plans are funded with pre-tax money and are taxed as ordinary income. An additional federal tax penalty can apply if funds are removed from a retirement account before age 59 1/2.
If you are seeking legal advice for your high asset divorce in the Commonwealth of Massachusetts, our highly skilled attorneys are here to help. We can advise you on making the best decisions for your future.