Common High-Asset Divorce Issues

Reaching a divorce settlement can be challenging. However, if you or your spouse have a significant amount of assets, the divorce process can be much more complex. A high-asset divorce — also referred to as a high-net-worth divorce — typically involves assets in the millions. Accordingly, there are a number of unique issues that couples with this amount of wealth can face when they are parting ways.

Some common high-asset divorce issues can include the following:

1. Property Division

Property division can be a contentious matter with high-asset divorce issues. The first step is to identify what is characterized as separate property and what assets qualify as marital property. While most spouses will have marital property to distribute when they end their marriage, assets in a high-net-worth divorce can be much more difficult to divide.

Marital assets in a high-net-worth divorce can include:

• Vacation homes
• Ongoing business interests
• Investment properties
• Vehicles and boats
• Retirement accounts
• Jewelry
• Stocks and bonds
• Art and collectibles
• Intellectual property rights
• Digital assets
• Investments
• Offshore accounts
• Life insurance policies

If a separate property was commingled with the marital property during the course of the marriage, a division could become much more complicated. It may be necessary to work with a financial expert who can trace the financial history of the property to determine a fair outcome.

2. Asset Valuation

Since high-net-worth divorces often involve complex assets, it may be necessary to obtain a valuation to ensure a fair division. Often, the assets at issue in these types of divorces may fluctuate in value. Small business interests present especially challenging issues of valuation in Maryland divorces. Appraisers, accountants, and financial analysts may need to be brought into a case to determine how much each asset is worth. This can allow each spouse to claim their fair share of the wealth that was accumulated over the course of the marriage.

3. Spousal Support

Spousal support, also referred to as alimony, is often a key aspect of a high-asset divorce. A spousal support award helps to maintain the financial status quo and ensures each spouse enjoys a similar standard of living after they have parted ways. In divorces involving a high-net-worth spouse or a significant income disparity, determining the appropriate amount and duration for support can be particularly contentious.

4. Complex Tax Issues

Wealthy couples should be aware of the tax implications that can come with divorce. Dividing property after divorce can trigger significant tax consequences — and selling assets could result in capital gains taxes. Retirement accounts must also be carefully handled to avoid any penalties that could come with early withdrawal. Spouses may consider transferring assets between themselves prior to divorce to avoid potential tax penalties.

5. Hidden Assets

Full financial disclosure is required during the divorce process. Nevertheless, hidden assets can be a major issue in a high-asset divorce case. This occurs when a spouse attempts to conceal assets to avoid disclosing them during the divorce process. For instance, a spouse may take the following actions to hide assets:

• Underreport income
• Inflate debt
• Create shell companies
• Deliberately undervalue real estate
• Put cash into offshore accounts to make it more difficult to trace
• Temporarily transfer assets to family members
• Create a bank account in a different name

Not only is the practice of hiding assets unethical, but it is also illegal. Hidden assets can sometimes be uncovered through the formal discovery process. However, it may be necessary to hire a forensic accountant to review a spouse’s personal and business assets to uncover assets that have been concealed.

6. Dividing Business Interests

Business interests are often at issue in a high-asset divorce. If a spouse’s business is considered a marital asset, it will need to be divided during the legal proceedings. Spouses may consider several options when it comes to dividing business interests, including:

• One spouse buys out the other spouse’s interest in the business
• A spouse gives up a business interest in exchange for another asset
• The business is sold and proceeds are divided
• The spouses continue to run the business together as co-owners

In some cases, a prenuptial or postnuptial agreement may have determined how business interests should be treated during divorce. These contracts can help to reduce any potential disputes, protect a spouse’s financial interests, and avoid any interruption to business operations.

7. Financial Privacy Concerns

Since high-asset divorce often involves high-profile individuals, complex assets, and complicated financial arrangements, financial privacy can be a concern for these couples. High-net-worth individuals may need to take additional measures to protect their financial information and prevent it from becoming part of the public record. In addition to executing confidentiality agreements, couples may also consider mediation and the collaborative divorce process to avoid litigation in the public courtroom.

Contact an Experienced Maryland Divorce Attorney

There are a number of unique issues that can come with a high asset divorce. If you are going through a divorce that involves significant assets, it’s vital to have an experienced attorney by your side who can protect your legal rights and financial interests. To learn more about the legal services we offer, contact Strickler, Platnick & Hatfield to schedule a consultation.