When a lot of assets are on the line in a divorce situation, it can make an already difficult situation seem almost impossible. Aside from the emotional weight that a divorce carries, there are a lot of legal and financial complexities that arise when handling and dividing significant assets between spouses. Careful thought and planning are important in a high-value divorce, and by avoiding some common pitfalls in the process, you can make the process go as smoothly as possible.
The Biggest Mistakes People Make in a High-Asset Divorce
Here are a few of the most common mistakes that people with a high net worth often make in a divorce and how to avoid them:
- Poor recordkeeping or accounting. As a part of your divorce, you’ll be required to create an inventory of all your assets, as well as any debts you may have. As Washington is a community property state, your partner will have an equal interest in any assets or property gained while you were married, so properly accounting for everything is vitally important. This will ensure that you’re not giving away more than you should or not getting your fair share in the divorce settlement.
- Intentionally hiding assets. If you know you have an asset but don’t list it on your financial disclosure forms, you may be opening yourself up to severe penalties during your divorce. Attempts to hide assets will almost always be discovered by diligent legal and investigative work by your partner’s attorneys. It can result in large fines and heavy sanctions against you in court, and your spouse may be awarded a larger share of the marital property as punishment for your misconduct. It also costs you creditability in the eyes of the court and can even result in criminal charges. Do not try to hide assets during the divorce.
- Failure to investigate assets. Along similar lines, don’t forget to investigate the assets your partner is claiming to be sure they’re true and accurate, and be sure your spouse isn’t trying to hide assets from you. There are also cases where you may not have been aware of a particular asset or income stream that you’re entitled to a portion of. Your attorney can help you with this investigation, and he may connect you with a forensic accountant, appraiser, or other professional who can assist in finding and evaluating assets.
- Acting purely on emotions. There’s no denying that divorce has an emotional component, and it’s easy to fall into the trap of relying solely on your emotions to guide your divorce. While it may be important for you to acknowledge your feelings and work through them in a way that you find to be healthy, it’s also important to not let your feelings take control of your decisions. You may end up with a lot less than your fair share if you don’t think things through. You also may get penalized or even face criminal charges if anger or another negative emotion guides your behavior.
- Ignoring the tax consequences of divorce. Your tax situation can change significantly after the divorce. You may end up owing taxes due to asset transfers, alimony payments, or capital gains, so you may want to consult with an accountant or financial planner during the divorce process.
Get Legal Help During Your Divorce
The biggest mistake of all during a high-asset divorce is not having adequate legal counsel throughout the entire divorce process. Every divorce is unique no matter how many assets are involved, and when a high net worth is involved, complexity builds fast. Choose an experienced attorney to help you early in the process to make sure your rights are protected from day one.
If you have legal questions or concerns about your high-asset divorce situation, the Law Offices of Molly B. Kenny is available to serve you. Reach out to us by telephone, or use the contact form to send an email, and arrange a private consultation in our Bellevue offices today.