While divorces involving relatively few assets can be uncomplicated, those that involve a business, rental homes, stock options, pensions, or other assets can present challenges—even when the parties generally agree on the division of assets. And when the division of assets is contested, the legal issues facing you can be even tougher. What should you know before embarking on a high asset divorce?
What Constitutes a High Asset Divorce?
Generally, a divorce that involves one of the following will be considered a high asset divorce:
- Large pre- or post-marriage inheritances
- A business owned by one or both spouses
- Stock options or voting rights
- Trust assets
- Real estate ownership or partnerships
- Very disparate income or earning potential
- Complex asset division
- High capital gains or losses
- Joint assets in excess of $750,000 to $1 million
Dividing and valuing these assets can be complex, and trying to negotiate the division of assets on your own can risk leaving money on the table. Further, the greater the assets, the greater the potential fallout from pre-divorce actions like attempting to hide assets, manipulate income, or take out extensive loans or lines of credit just before filing for divorce.
What To Expect During a High Asset Divorce
In many respects, a high asset divorce can proceed just like a lower asset divorce; one party files a divorce petition, serves the other party, and the case proceeds to trial. But negotiating the division of assets without a trial can be far more economical and may give you the ability to choose from among a wider range of potential outcomes.
Factors To Consider
The matters at issue in a divorce can vary widely depending on the circumstances of the divorcing couple. In some cases, the divorce can implicate child custody, visitation, and child support; alimony or spousal support; and the division of multiple pieces of real estate. In others, the divorce may involve only alimony and the division of stocks or bonds.
When the court is asked to make decisions involving a child—such as custody, visitation, and support—it will consider the child’s best interests first and foremost. If one parent wants to challenge this decision on appeal, they’ll need to meet a high bar on review by showing that the trial court’s decision was against the weight of the evidence. This is one reason it’s so crucial to have an attorney to guide you through this process.
When a court is dividing only property, it will consider equitable principles such as who contributed to the acquisition of the property, whether it was inherited before or during the marriage, and each spouse’s earning potential.
Mediation & Collaborative Divorce
There are alternatives to taking your divorce to trial, even if you and your spouse aren’t able to agree on terms. Both mediation and collaborative divorces can use dispute resolution principles to help you reach an agreement on some (or all) matters without having to go to court. This can reduce the fees associated with litigating a case while helping you craft the outcome that works best for your situation.
During mediation, a neutral party will work with you (and your attorneys) to identify the issues to be decided, determine where each of you stands on these issues (whether in a joint session or one-on-one caucusing), and see what compromises may be available.
A collaborative divorce is similar but requires those involved to commit to the collaborative process and agree not to litigate the case. By taking litigation off the table, both spouses are forced to commit to the idea of compromise on key issues.
Tips To Smooth the Path to Divorce
There are a few steps you can take to make a high-asset divorce proceed more efficiently.
Keep Your Expectations Realistic
Although you don’t want to inadvertently waive your right to assets you’re entitled to, it also doesn’t make sense to spend significant amounts in legal fees and trial costs to protect assets that are worth less than you ultimately spent. You also don’t want your desire to retain certain assets to overshadow your appetite for risk. By keeping your expectations realistic, you’ll be well-positioned to take advantage of any beneficial settlement offers that may come your way.
Think Outside the Box
Finding solutions that can help address your interests in common or build trust can benefit both you and your ex-spouse. And if you opt not to take your claim to trial, there are few restrictions on—for example, you may decide to remain in business together but rewrite an ownership agreement to allow you both an “out” if things don’t work. You may want to relinquish your claim on a spouse’s pension in exchange for a lump sum settlement. By keeping your mind open to the possibilities, you can avoid being boxed in.
Maintain Open Lines of Communication
There’s little to be gained from a scorched-earth approach, particularly in high asset divorces when both spouses have plenty of funds to spend on legal fees. By staying in regular contact with your attorney, and by remaining civil with your spouse, you’ll be able to evaluate and respond to settlement offers more quickly or indicate the issues on which you’re willing to compromise.
Although some divorces may be contentious no matter how much you attempt to keep things civil, adhering to the above guidelines can often help smooth an otherwise rocky path.
Consider Estate Planning With Your Divorce
When you’re dividing and reassigning assets, it can make sense to bundle estate planning services with your divorce, especially if you have children to consider. You may want to consider whether you and/or your ex-spouse needs to increase or decrease their life insurance, disability insurance, or other products to help protect their earning potential.
In this situation, you’ll want to either involve a trusts and estates attorney or ensure that your divorce attorney also has specific experience in estate planning. And even if you’d rather leave your estate planning for another day, having an experienced legal advocate to guide you through the divorce process can be invaluable.
For more advice on how to handle your high asset divorce, contact the lawyers at Weaver, Bennett & Bland.