Just as January is the most popular month for divorce, the first several months of the year make up ‘divorce season’ – and thousands of Americans are making good on their New Year’s resolution to start fresh.
While most lower to middle income families are typically left wondering how to support two households when finances were already tight when the family was together, obstacles are much different in a high-asset divorce. The question in a high net-worth divorces isn’t how do we survive, but rather, how much support is enough?
When you have significant assets or a business at stake, you can never be too careful when keeping your piece of the pie intact.
Where substantial business assets are involved, personal expenses need to be quantified. Family expenses like nannies, private schools and second homes will be considered by the court when it attempts to determine the level of the family’s lifestyle.
If those extraordinary expenses are being incurred at the time a divorce is sought, spousal and child support as well as the division of property may well be increased to take them into consideration. This assessment is even more crucial for a business owner or someone with complex investments.
Next, be sure to make copies of all of your important financial records from the last three to five years and keep them in a private place that your spouse cannot access.
Getting to the courthouse fast is sometimes important and the more financial information you have on-hand, the faster your paperwork can be processed. Moreover, recovering or replicating important financial documents can be costly as well as time consuming.
As part of the divorce proceedings, you will be required to completely and accurately self-disclose the extent of your assets and liabilities. Having important financial records like bank accounts, credit card statements, investment portfolios, retirement accounts, income tax returns and mortgage payments will be critical.
As a business owner or someone with a significant stake in a company, who knows better than you the importance of planning ahead to protect not only your assets, but also your business? Although it may be hard to completely shield a business from the impact of a divorce, taking the appropriate steps can limit the efforts of a non-titled spouse’s claim for a slice of the pie.
Be warned, however, that valuation clauses that are patently unreasonable, or that have been altered on the eve of the filing of a divorce, may be disregarded by the court when it equitably divides the property.
It’s important to understand that the IRS and the state are financial partners in your divorce. When you introduce spousal support into the equation, there can be a significant uptick in cash flow to both parties which needs to be reported. Working closely with your attorney and possibly a financial professional will help you pinpoint the tax implications, both positive and negative, of support payments and property distribution.
The goals in a high-asset divorces are unique. While lower income couples often struggle to fund two households, high net-worth individuals have an opportunity to craft a settlement without financially jeopardizing their future or their children’s. Settling with integrity will allow you to preserve your standard of living by promoting a quicker (and thereby cheaper) divorce.
Jay Babbitt and the Columbus divorce attorneys at Babbitt and Dahlberg will fight for you every step of the way to ensure your assets and finances stay intact. If you’re facing a high-asset divorce, get in touch with the Columbus divorce attorneys at Babbitt & Dahlberg today.