8 Concerns for People Facing a High Net Worth Divorce

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If you own significant assets, generate substantial income, and are facing divorce, the following article could salvage a large portion of your net worth.

In divorce, the more you make, the more you have at stake. Unless you have an ironclad prenuptial agreement, up to 50% of any net worth accumulated during your marriage could belong to your spouse – and maybe more.
The following eight tips will help you understand how to protect yourself through the divorce process.

1. Use valuation specialists if necessary. If you own a business, your business could be an asset subject to division upon divorce. This means you will have to determine the value, which likely includes the blood, sweat, and tears (aka goodwill) you’ve poured into it over time. Never enter into settlement negotiations for divorce without first knowing the actual value of assets like a business, professional practice or real estate.

2. Consider a forensic accountant. In many cases, spouses comingle funds or assets, which can give those assets a mixed characterization and make pinpointing the source difficult. Using a forensic account to trace funds and assets may be necessary.

3. Evaluate the strength of your prenuptial or postnuptial agreement. If you plan to handle your divorce as outlined in a prenuptial agreement, be sure it is well-drafted. If you’ve failed to disclose any assets or failed to have your prenuptial agreement executed under the proper conditions, your prenuptial agreement could be invalidated along with its terms.

4. Consider the tax consequences of your divorce. Transferring assets by way of divorce almost always involves significant tax consequences for high net worth individuals. Your divorce attorney should collaborate with your accountant to ensure any asset transfers as a result of your divorce are structured to mitigate as much tax liability as possible.

5. Understand your potential alimony obligation. If you generate substantially more income than your spouse, and your spouse needs financial support, you could end up with a significant alimony obligation. Alimony payments have tax implications for both the receiving and paying spouse so you want to be sure you can negotiation an alimony agreement that will be favorable to your overall financial picture.

6. Understand the implications of marital waste. Since your marriage has been on the rocks, is your spouse suddenly spending more? Is your spouse funneling marital assets into accounts for which you don’t have access?

It is not uncommon for high net worth individuals to experience this type of behavior from their spouse, or even be tempted to do the same. Thankfully, the law doesn’t allow the waste of marital resources to go unaccounted for, and with the proper guidance of a family law attorney you can take appropriate steps to prevent the unnecessary loss of assets and income.

7. Consider the cost of attorney’s fees (for you and your spouse). If your spouse has little to no income, and your income is substantial, you can expect to pay some amount of their attorney’s fees if you are the spouse seeking the divorce. Treat your divorce like a business decision. Plan how much you are willing to spend to get a reasonable divorce settlement and stick to that decision. Your net worth will thank you.

8. Calculate the cost of your divorce. Would you spend $20 on a $21 dispute? Of course not. Know the value of your fight. Do you want to spend tens of thousands of dollar (or more) on a dispute you could settle for the same amount? You’ll end up spending double what you’d pay, just to fight over the value. While it may be difficult to put your emotions aside and compromise, considering settlement could save you tens of thousands of dollars.

To learn more about how you can reduce the risk of diminishing your net worth as a result of divorce, click here to request a consultation or call 407-872-3161 to speak with one of our Orlando Divorce Attorneys today.

How do I Protect My Assets in a Divorce?

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Divorce requires a division of assets acquired during the marriage, so you can’t keep every asset you own out of your spouse’s hands. Knowing that, is there any way to protect your assets in Divorce?

Obtain a Prenuptial Agreement

A prenuptial agreement is an agreement between future spouses that sets forth the rights and obligations of each spouse upon divorce, death, and even during the marriage. In your prenuptial agreement make sure you designate your business as non-marital property. If you’re currently married, you may be able to achieve the same result by obtaining a post-nuptial agreement.

A postnuptial agreement is an agreement drafted after marriage but serves the same purpose as a prenuptial agreement. Having said that, if you’re currently contemplating divorce, a postnuptial agreement will likely not be very useful to you. Once a divorce is imminent a postnuptial agreement becomes a separation agreement, which doesn’t mean you’re business will be protected.

Prenuptial and postnuptial agreements are very specific documents that require experienced legal insight when drafting. Simply missing one essential element in drafting and executing a prenuptial or postnuptial agreement can render the entire thing void – and for you useless.

Consider a claim for an unequal distribution

Florida is an equitable distribution state which, based on some factors requires spouses to divide their assets “fairly.”

However, where one spouse rightly deserves total ownership of a business that is subject to division in divorce, the court must consider whether it is actually more equitable to allow one spouse to retain a “business, corporation, or professional practice, intact and free from any claim or interference by the other [spouse].”

If your business is at risk in your divorce, this could be one way to protect it. Be sure to speak with an experienced family law attorney to determine whether or not unequal distribution applies to your case.

Reconcile with Your Spouse

Now, don’t get this wrong. We are not suggesting you stay married just to protect your business. But maybe the challenges you’re facing as a result of your prospective divorce can serve as a catalyst for evaluating whether or not you want to sever the very things you and your spouse have built together?

Perhaps your marriage is salvageable?

Perhaps with the right help it could thrive?

Reconciliation isn’t always an option, but you should be sure it isn’t before you pursue the path of divorce. As strange as it that sounds coming from divorce lawyers – take our word for it.

To learn more about how you can protect your business if you’re facing divorce, click here to request a consultation or call 407-872-3161 to speak with one of our Orlando Divorce Attorneys today.

How Does Property Get Distributed In Divorce?

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For those who being the dissolution of marriage process an initial concern commonly arises regarding how the belongings and finances will be divided: who gets what?

In the state of Florida the two parties can either agree among themselves, or the court will hold a hearing and impose its own decision on them regarding the division of their property.  If the two parties choose to reach an agreement between themselves, the court will ratify the agreement with a Court Order.

The basic principle of property division in the state of Florida begins with the identification of assets and liabilities.  Property includes everything that can be considered an asset such as a house, cars, timeshares, investment property, investment accounts, retirements accounts, retirements assets, stocks, bank accounts, a business, cash-value life insurance policies, furniture, and jewelry.

Liabilities generally include the home, credit card debt, etc.  The next step is to determine whether the assets and liabilities are considered marital or non-marital property.  Although martial and non-marital properties can sometimes be difficult to clearly determine, below are some examples of both.

  • Non-martial property may include:
    • Property acquired by either spouse prior to the marriage
    • Property acquired by either spouse via a non inter-spousal gift or inheritance
    • Income derived from non-marital assets during the marriage, unless that income was used or relied upon as a martial asset
    • Assets and liabilities excluded from martial property via a valid written agreement, such as a pre-nuptial agreement
  • Marital property may include:
    • Property acquired by either or both spouses during the marriage
    • Enhancement of value of a non-martial asset, as a result of efforts by either spouse during the marriage or from a contribution of marital funds to an expenditure of marital funds or assets
    • Inter-spousal gifts during the marriage
    • All vested or non-vested benefits or funds occurred during the marriage such as retirement, pension, profit sharing, annuity, deferred compensation, and or insurance plans or programs
    • Property held by the parties in tenancy by the entirety or otherwise commingled or acquired during or prior to the marriage.

If you have any questions feel free to contact our office.