Every divorcing couple will have their unique set of challenges, but high-asset divorces add a whole other layer of complications. There are intricate financial and legal dynamics at play, coupled with California’s community property laws.
Understanding what’s involved in a high-asset divorce will better equip you for what lies ahead.
Protect your financial future
According to California’s laws, all debts and assets acquired during the marriage are considered community property and are to be split equally between spouses during a divorce. Although this may seem straightforward, some areas can become contentious.
Separate property refers to any assets acquired before the marriage or through inheritance or gifts. These are to remain with the original owner. However, disputes often arise when those assets have been commingled, such as being placed in a joint account or used towards remodeling the home.
High-asset divorces typically involve assets that are challenging to value, such as businesses, stock options, intellectual property or artwork. An appraiser or other expert may be brought in to provide an assessment.
Considering the substantial value of the marital assets, there is an increased likelihood that one spouse may attempt to hide assets to get a larger share in the division. Offshore accounts, luxury items, “gifting” money to friends and family and unreported income streams are common tactics. High-asset divorces often involve hiring forensic accountants to uncover hidden assets.
It’s also important to consider the tax implications of some financial transactions during the divorce. Selling high-value assets, such as a second home, could result in capital gains taxes. Penalties can occur when dividing retirement accounts without a Qualified Domestic Relations Order (QDRO).
For many affluent couples, maintaining privacy during divorce proceedings is a top priority. To protect personal and financial information, consider filing a motion to seal sensitive court records. All the parties involved can also sign non-disclosure agreements to restrict the sharing of the divorce’s private details.
Given the complexities of high-asset divorces, it’s crucial to have an experienced legal professional. They understand its financial intricacies. They will work with you to assemble a team to help ensure a fair and equitable outcome.