Like other marriages, high-net worth couples don’t just divorce without reason. Heartache is heartache no matter portfolio size; however, when there are significant assets, such as business interests, real estate, large retirement accounts, investments, and other assets on the line, emotional decisions can wreak havoc on high-net worth divorce settlements, and the spouses’ assets after the divorce.
As New Hampshire divorce attorneys who represent couples in high-net-worth divorces, we thought we’d list some common mistakes made by couples with high-net worth during divorce. Fortunately, these mistakes can be avoided with quality legal counsel.
- Making Emotional Decisions: When it comes to divorce, one spouse often feels guilt. In effect, the guilty spouse can make poor decisions based on emotions alone. For example, an adulterous husband can give his innocent wife the house, double the spousal support she’d normally receive, and more than half of the marital assets. It may seem cold, but we must treat divorce like a business dissolution and any associated decisions must be made with sound advice from divorce and financial professionals.
- Hiding Assets: It’s not uncommon for spouses, especially the higher-earner, to hide assets from their spouse to cheat them out of their fair share in the divorce. Usually, they’ll transfer assets to a friend, a child from a previous marriage, or a business partner. When spouses hide assets, they’re generally set aside as fraudulent and in effect, the spouse loses all creditability in court from that point forward.
- Not Considering Tax Consequences: When you get a divorce, realize that many of the associated financial transactions have tax consequences. If you keep your 401(k) and you plan on living off some of that money in the future, don’t forget that withdrawals are taxed as ordinary income and are subject to a 10% federal tax penalty if they’re taken before age 59 ½.
- Failing to Fully Understand the Assets: In most high-net-worth marriages, usually one of the spouses earns more than the other, and the wealthier spouse often knows more about the assets than the lower-earning spouse. If you’re the lower-earning spouse, it’s important to invest money upfront in investigating whether there are any assets or income you’re not aware of, but might be entitled to under New Hampshire law.
- Failing to Consider a Collaborative Divorce: Even though you can afford divorce litigation, that doesn’t mean you should hire a shark divorce attorney and hash out your differences in court. Collaborative divorce is faster, cheaper, and a lot less stressful than divorce litigation. Even high-net-worth individuals have a lot to gain from collaborative divorces, including peace of mind! Remember, the goal is to preserve the marital estate and get as much of the assets as possible allocated appropriately. Often, the best way to accomplish this is through a collaborative divorce, not litigation.
Contact Law Offices of Parnell, Michels & McKay
Our law practice covers every area of family law and includes all divorce and post-divorce issues, unwed parenting and property issues, domestic violence, adoption, guardianships and other family issues. Our family lawyers ensure that our clients understand the law as it applies to the issues they are facing. We are sensitive to the relationship changing between couples and work to bring the issues to a conclusion promptly and fairly with sensitivity and compassion. Contact our office today and we will help you with move forward with your legal separation, divorce and post-divorce issues.
At Parnell, Michels & McKay we specialize in personal injury law such as motor vehicle accidents, falls, dog bites, workers compensation, social security disability, and other injuries. We also practice family law, including divorce, post-divorce, unwed custody and property division, and collaborative divorce. We have extensive experience in bankruptcy, probate, boundary disputes, estate planning, corporate formation and other real estate litigation.