Divorce isn’t easy for most couples, and the actual breakup isn’t always the hardest part; in many cases, it’s severing financial ties and addressing child custody issues. For someone with a high net worth, divorce becomes more complicated simply because there’s so much at stake. There’s a lot of room for error in divorce, and for a wealthy couple, there’s even more potential for life-altering mistakes. While most people think money makes a marriage easier, that’s not always the case. In this guide, readers will learn which mistakes wealthy couples make during a divorce, and they’ll also learn how a high net worth divorce attorney can help avoid them.
Making Decisions Based on Emotion
Where divorce is concerned, a spouse may feel overwhelming guilt that leads them to make bad decisions. For instance, an unfaithful husband may give his wife the house, more spousal support than she’d normally get, and more than her fair share of the marital estate. While it may seem a bit cold, divorces must be treated like business dissolutions and decisions must be made with advice from financial and legal professionals.
Rushing to Get it Over With
Spouses often say they want their divorces to go as quickly as possible. There are two reasons behind this: they’ve met someone else and they want to move on, or they simply can’t stand being around the other person anymore. Where there’s no physical violence involved, it’s not wise to divorce in a hurry. When couples do this, they may make serious financial mistakes that, once done, can’t be corrected.
It’s quite common for spouses, especially high earners, to hide assets in order to cheat the other spouse out of their fair share during a divorce. Typically, assets are transferred to friends, children from previous marriages, and business partners. When a spouse hides assets, they’re usually considered fraudulent and they lose credibility in court. In most instances, hidden assets are later found, and it’s simply not worth the enormous risk.
Not Thinking About Tax Consequences
When a couple gets a divorce, they should realize that most financial transactions have tax ramifications. For instance, if a spouse receives a certain amount of support, they have to pay taxes on it. If one keeps their 401(k) and they plan to live off its proceeds, withdrawals are taxed as income and they’re subject to a 10% penalty if taken before the age of 59 ½.
Not Understanding Assets
In most high net worth divorces, one spouse out-earns the other and the wealthier spouse knows more about marital assets. If you’re the low-earning spouse, it’s important to find out whether there are any assets you’re entitled to and may be unaware of.
Comparing Divorce Cases
When couples go through a divorce, they may hear all sorts of stories, both good and bad. However, every case is different, and you can’t expect to achieve the same outcome as someone else. Every case has unique factors, circumstances, and variables, and they all must be considered when setting expectations.
Making Decisions Out of Anger
Did your spouse leave you for someone else? Did they gamble away all your assets, or are they living a double life? No matter what they’ve done, it’s important not to let anger control your decisions. You can’t destroy your spouse’s belongings, you can’t spend all the money in the joint bank account, and you shouldn’t assault their new partner. When you allow anger to take over, it may lead to criminal charges and severe financial consequences.
Not Considering Collaborative Measures
Although it’s easy to pay for a divorce case if you have high net worth, that doesn’t mean going to court is always the best option. A collaborative divorce is cheaper, faster, and less stressful than a long, drawn-out court case. Even a high-net-worth individual has much to gain from a collaborative divorce, including greater peace of mind. The goal is to preserve marital assets and get the fairest outcome possible, and the best way to do that is to collaborate with your soon-to-be ex-spouse.
If you’re considering divorce, consult a high net worth divorce lawyer early on. An attorney can advise you of your responsibilities and rights, as well as possible outcomes. Lawyers will help you navigate the legal system and make sound decisions in your journey toward a brighter and more secure future. Call today to get started.