Property distribution during a divorce can be a matter of contention between couples. The disagreements are higher in a high asset divorce. These disagreements often complicate and lengthen the divorce process. The process is also tasking for the divorcing couple both physically and emotionally.
Navigating through property division in a high net worth divorce requires the assistance of a skilled Los Angeles Divorce Lawyer. Working with an attorney will help you understand the local laws on property division as well as identifying the boundaries with each asset you own.
A high asset divorce is one, which involves millions of dollars in assets. These divorces are typically common in California, especially among couples who have amassed substantial wealth before or during their marriage.
Outside factors such as the publicity these divorces get further complicates high asset divorce. Such publicity can affect the privacy of these individuals and lengthen the emotional recovery time for these couples. Having an attorney can help you explore techniques that will maintain as much privacy as possible and minimize interference from the fourth estate.
The high amounts involved in these divorces also increases the emotional reactions of the concerned party. Another common factor in such divorces is the challenge of maintaining the lifestyle you enjoyed during the marriage. Normally, the court strives to ensure that everyone can maintain a lifestyle to which they were accustomed during the marriage.
Having children in a high net worth divorce also makes the matter more complicated, especially in determining custody issues.
The complexity of these cases calls for having an attorney to work with you. The attorney might need to contact forensic accountants and other experts to help in the division of the property.
The couples are also more likely to disagree, thus lengthening the process, especially where one of the spouses has a higher net worth compared to his or her spouse. If these couples cannot agree on a settlement, the divorce process becomes long and emotionally draining for both parties.
Most people in high asset divorces are more likely to hide assets to prevent their spouses from accessing them. Therefore, if you are involved in a high profile divorce, you have more to do than fill out the paperwork. You must hire a skilled divorce attorney to work with you in identifying the common problems and helping you settle with your spouse.
Preparing for High Net worth Divorce
Divorce is different for different couples. Some agree on how to divide the assets and custody without relying on the court. Others must rely on the court for settlement of the little details in the proceedings.
While these divorces are different, high asset divorces present a bigger challenge. The assets involved in these divorces are highly valuable, and spouses might not want to part with the wealth they created.
Some of the divorcing couples in such divorces under-represent their assets or value to avoid losing their assets to the other spouse. This can be unfair to the spouse, who honestly declares his or her assets. It can also lead to additional legal processes, not to mention the expense and time the process will take.
However, you can avoid these issues by preparing as much as possible for the process. The first step when you learn your spouse, or you intend to file for a divorce is to analyze the assets you have.
California is a community property state; therefore, the property you acquired within the marriage will have to be distributed equitably between you and your spouse. So, when a divorce is impending, you need to take stock of your community and separate property. Include a record of assets, finances, and debts.
In a high asset divorce, the property involved includes:
You should also have the documents proving the existence of these assets. Sometimes, preparation involves identifying whether your spouse is hiding any assets. As mentioned earlier, high asset spouses are likely to hide some of their wealth to lock it out of a divorce settlement.
Some of the property your spouse can hide includes:
Physical possessions such as art, stamps, antique collections, valuable furniture, and corporate assets
Income - a spouse can hide income by underreporting or delaying income so that they can receive it at the end of the divorce. Some partners also delay important and high-value business decisions until the end of the divorce
When identifying hidden income, look out for abnormal withdrawals, the sudden closure of accounts, and unknown accounts. Your partner could also pay fake debts or give suspicious gifts to friends and relatives. These gifts are often returned immediately after the divorce proceedings.
If you suspect that your spouse is hiding assets, notify your divorce attorney so that he or she can conduct an investigation. The investigation will involve a forensic expert with the skills in uncovering hidden assets.
The Discovery Process
Discovery is the fact-finding process during the divorce after filing a divorce. At this stage, you and your partner are expected to disclose your income, assets, and debts. You must also present proof of the property you own and the debts you owe.
The discovery process includes:
Interrogations where you and your lawyer will prepare questions to ask your partner. These questions are designed to derive facts about the financial situation
Requests for reproduction where you have to provide access to the documents about the contested issues in the divorce. Some of the documents include tax returns, bank statements, income statements, and receipts.
Requests for admission in which you and your spouse will accept or deny facts related to the divorce
Deposition where both of you give sworn testimonies which are transcribed by a court reporter
In an uncontested divorce, the discovery process can be informal and less expensive. The process above is usually for a formal discovery process, which can also be expensive. You can make the process easier for you and your spouse by being open with each other.
The information from the discovery process forms the basis of the court or trial process. You can help your attorney by reviewing the questions to ask so that you can modify them to provide more accurate information.
High asset divorce cases can have a complicated discovery process that involves sanctions and motions to compel. You file a motion to compel if the other party fails to respond properly to discovery requests.
Disputes can also arise about the type of property a couple owns. For example, your spouse could claim that a certain property is community property. If you fail to participate in the discovery process, the court will rule that the property is community property.
The ruling is made through an issue sanction in which the facts are taken as established. And since you refused to participate in the discovery process, you will have missed your chance to prove that the property is actually separate property.
Collaborating with your attorney and your soon-to-be-ex will allow you to retain more of your property and have a much easier settlement with your spouse.
Protecting Your Assets in a High Asset Divorce
One of the questions high net worth couples ask during a divorce is how much of their wealth they can protect. In very few cases will the divorcing partners agree on a settlement that is fair for both of them. Therefore, they have to leave the decision to the court.
However, you and your spouse can be proactive about property distribution amongst yourselves.
The first step in protecting your assets is proving that the assets you want to keep are separate property. Separate property is that which:
You acquired before the marriage
You received as a gift or inheritance to you (not your spouse) during the marriage
Is the proceed of a separate property
You acquired after a separation
You could also negotiate a settlement that gets you what you want. Of course, the final settlement must be fair. The first step towards successful negotiations is communicating what you want from the beginning.
For example, if you do not want your spouse to have ownership rights in your business, tell your attorney early so that he or she will develop a negotiation strategy that works for you.
You could also refer to your prenuptial agreement, especially if it is legally enforceable. A legally enforceable agreement must meet the following standards:
No spouse was forced into signing the agreement
The agreement was not grossly unfair to either spouse
The spouses had legal representation at the time of signing the agreement
Both spouses understood the legal implications of signing the agreement
You can also refer to your postnuptial agreement if you entered into one. These agreements have provisions that divide property amongst yourselves fairly and equitably. They can address issues such as:
Providing the boundaries of your separate and community property including the specifics of what each party brought into the marriage
Providing the boundaries of marital property including what the couple considers as marital property
Establishing support for children born before the marriage
Establishing premarital debt from each spouse
The court will evaluate the provisions of each agreement to determine which are admissible. Some of the factors you cannot include in a prenuptial agreement in California include:
Waiving the right to child support by either spouse
Predetermining child support and visitation
Waiving the right to alimony
Property Division in High Asset Divorce
Property division follows the principle of community and separate property. Couples have to decide the property that falls under separate property and that which is community property. The community property (including assets and debts) will be divided equitably between you and your partner.
Equitable division does not mean you have to divide everything into two equal parts. It means that each one of you gets fairly the same amount or value. For example, if you have multiple real estate properties, you can get the value of each property, and then divide them equitably such that each one of you has property of almost equal value.
You could also divide the property based on the interests of each party. For instance, if you have two homes, each one could choose a property they prefer and settle there.
If, in the end, one of the parties gets property of a higher value, then you can assign more debt to that person. This way, you have balanced the assets and liabilities so that one spouse does not end up with a greater financial burden.
The first step in dividing your property will be noting down every property you have. Once you have the list, separate community, and individual property, get a valuation of these assets. You should also note down all the debts you have, and those that are communal debts.
You probably disclosed your assets and liabilities during the discovery phase, so this should not be a problem. A problem can arise in how you choose to divide the assets and debts. In this case, you can have a mediator or divorce attorney intervene.
A financial mediator helps you in dividing the property fairly. He or she will help you identify and resolve your money problems. Such a mediator does not make decisions on your behalf; he or she provides an environment where both of you can discuss the property division and settle the issue.
Some of the issues that can complicate property division in a high net worth divorce include:
Complex evaluations which are required to establish the actual value of assets such a business, intellectual property, investments and pensions
Forensic accounting to identify hidden assets, your financial worth and the identity of assets as either community or separate property
International issues including taxes where wither spouse has investments or assets in a foreign county
Most high asset divorces end up in the courtroom due to disagreements about property division. However, if you and your spouse are willing to find a common solution, you can pursue mediation, which is cheaper and less emotionally draining. Mediation can also protect you from the publicity of high net worth divorces, especially if you are a celebrity or a well-known personality.
Common Mistakes in High Net-worth Divorce
When you are involved in a high-value divorce, you might be too focused on the wrong things and end up on the losing end. The emotions associated with these types of divorce do not make it easier to avoid these mistakes. Some of the mistakes you can avoid include:
Failing to value your property correctly - The best way to approach a high asset divorce case is by hiring an expert to value your assets. Such an expert will use different valuation strategies to determine the current market value of your asset. Overvaluing an asset could lead to getting a lower valued item.
Failing to investigate deeper - Investigating the financial situation of your spouse can lead you to lose a lot in a high net worth divorce. Investigating the assets your partner has will help you determine whether he or she is hiding some assets from you. You can hire a forensic accountant to help you with the investigation. Hiring such an expert is important, particularly if your partner also has one.
Failing to consider the tax consequences - High-value assets also have high tax obligations. You must, therefore, examine the tax consequence of the property division to determine the value of the property you are receiving. You must also check whether there are unpaid taxes on the properties you get.
Settling too fast - Divorce is a complicated and emotionally draining process. You might, therefore, be tempted to settle for whatever you are getting just to end the process. While this does not mean you should be unreasonable just for the sake of it, you should not settle too fast, either. If you are too willing to settle, you might end up losing more assets than your partner. This could mean financial difficulties after the divorce.
Failing to seek the right legal help - High profile divorces are sensitive due to the size of the marital estate. Therefore, you must hire a lawyer who has worked on similar cases before. An attorney without the relevant experience will thwart the possibility of getting a fair settlement.
Find a High Asset Divorce Attorney Near Me
High net worth couples have considerably more complex divorces compared to standard couples. The large size of their marital estate, investments, and wealth portfolio make property division a complicated task.
The divorce might also affect the business relationship, especially where the couple owns businesses together. A divorce involving such couples also attracts greater press attention, which could further complicate the emotions during the divorce.
One of the best decisions you can make during a high asset divorce is to hire an experienced attorney, such as the Los Angeles Divorce Lawyer.
A divorce attorney will help you navigate logically through the property division and custody. We help negotiate with your spouse and his or her attorney to get the best possible settlement. Contact us at 310-695-5212 and schedule a free consultation.