Divorce can be difficult, even under the best circumstances. When one or both parties have a high level of assets or a high net worth, the complexities can increase. If this happens to be the situation in your divorce, it is extremely important that you have a Georgia divorce attorney who is specifically trained and experienced in high asset divorces and all that come with them, including property distribution, complex tax issues, and support obligations.
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Spouses in a high asset divorce could share bank accounts, business assets, investments, and more than one high net worth property. These assets must be separated, as far as marital and non-marital property, and must be properly valued prior to distribution. Some of the most common issues associated with a high asset divorce include the following:
- Tax issues can be extremely complex in a high asset divorce to ensure there are no problems associated with taxes after the divorce is complete.
- Business asset valuation can be a crucial aspect of a high asset divorce. When one spouse has a successful legal or medical practice, or when one spouse is a part of a thriving family-owned business, these business asset valuations become even more significant.
- The future earning capacity of each spouse is an important component of a high asset divorce. Professional licenses or degrees acquired during the marriage will affect this aspect of a high asset divorce, particularly if one spouse worked and perhaps gave up educational or career opportunities of their own in order to put the other through school.
- Expensive jewelry, furnishings, art collections, or vacation properties must be properly valuated and divided.
- Timeshares and club memberships will undergo valuation and division.
- Real estate will be valuated, transferred when appropriate, and equitably divided, as will stocks and bonds.
- All corporate benefits associated with either spouse, including any stock options as well as deferred compensations, will be properly assessed to determine a realistic worth of the benefits in order to divide. Retirement funds, pensions, 401(k) accounts and IRA’s can be one of the higher-worth assets in a high asset divorce.
- Any assets which are held in trust for either spouse will be valued and divided.
- An evaluation of any pre or post-nuptial agreements will be completed, then legally adhered to.
When One Spouse is Hiding Assets in a Divorce
In some cases, during a high asset divorce, one spouse may attempt to hide assets to avoid having to share the worth of those assets with his or her spouse. Such a practice is not legal and is a serious breach of trust. Some of the more common tactics among those seeking to hide assets include withdrawing money from a joint account and opening another account that only he or she has access to, under-declaring on tax returns, or not reporting cash income.
Others may delay payments of stock options, raises or work bonuses until the divorce is final as a means of avoiding splitting that income. If you suspect your spouse may be attempting to hide assets, it is crucial that you discuss the situation with your divorce attorney, perhaps discussing the possibility of hiring a forensic accountant who can uncover any discrepancies in the accounting, and who has the tools and necessary skills to track down any hidden assets. Ensuring that all assets are on the table before the division is important to an equitable settlement.
Equitable Distribution in a High Asset Divorce
While a handful of states are considered community property states—where all assets and debts are divided exactly down the middle—most states, including Georgia, are equitable distribution states. This means that the assets and debts are distributed between the spouses fairly, but not necessarily 50/50. A Georgia judge will consider a variety of factors when dividing assets and debts in a high asset divorce and may give more weight to one factor than another. The factors the judge may consider when dividing assets in a Georgia divorce include:
- How long the marriage has lasted;
- The health of both spouses;
- The current age of both spouses;
- The standard of living of the spouses during the marriage;
- The proposed living arrangements for the couple’s children;
- Whether there was any dissipation of marital assets;
- The needs of each spouse, taking into consideration current circumstances as well as future opportunities of each spouse to gain income and assets;
- The value of the marital property;
- The service of each spouse as a wage earner, homemaker, and parent, and
- Whether one spouse contributed to the increased earning power of the other.
Generally speaking, the longer a couple in the state of Georgia has been married, the closer to equal a property division is likely to be.
When Assets are More Difficult to Value
In many cases, during a high asset divorce, there may be hard-to-value assets or a business which is difficult to properly value. This can create anxiety on the part of one or both spouses. Some of the more difficult assets to value include hedge funds, limited partnership interests in hedge funds, real estate partnerships, private equity funds, and funds in private equity management companies. Issues to consider when attempting to divide these more difficult assets include:
- Carried interest taxation;
- Phantom equity;
- Personal goodwill;
- Market approach;
- Future life of the fund;
- Future investment returns;
- Cash basis versus accrual accounting methods;
- Waivers for management fees, and
- Volatile performance.
Biggest Mistakes Made in a High Asset Divorce
In some ways, a high asset divorce is like any other, in that a couple must agree—or have a judge decide for them—how assets will be split and shared. Neither spouse may want to budge on certain issues, and when large amounts of money and assets are at issue, there is a correspondingly larger “risk.” Mistakes most commonly seen in a high asset divorce—or, in some case, any divorce—include the following:
- Agreeing to anything simply to have the marriage over and done. It is important that you allow your attorney to work for the good of your future before you agree to the first divorce settlement offered. Remember—the way you feel today is likely to be very different months from now.
- Neglecting to consider tax consequences. It is especially important for spouses in a high asset divorce to consider current and future tax matters carefully—you could be taxed on assets you receive or could agree to spousal support without considering your future after-tax income.
- Failing to account for all assets and liabilities. The court requires a financial affidavit and other financial documents which should be taken very seriously by both spouses. All information and inventories should be up-to-date and accurate to ensure an equitable division.
- Allowing emotions, such as anger, motivate your actions regarding asset division. If your emotions are running high during your divorce, let your attorney do his or her job, determining the settlement on your behalf. Revenge is rarely a good emotion to rely on during an already difficult divorce.
- Failing to hire an experienced, high asset divorce attorney. Your Georgia high asset divorce attorney can competently guide you around any potential legal mishaps, ensuring your future is financially sound.
At Alderman and Hutcherson, our attorneys are experienced in all issues related to a high asset divorce. We will work hard to ensure you can maintain your current standard of living following your divorce. We will bring in a forensic accountant when warranted and will ensure the realistic valuation of all assets. Regardless of the extent of your marital assets, we will represent your interests aggressively, working closely with you through the entire process. Contact an experienced Georgia divorce attorney at Alderman and Hutcherson today.