Navigating High Asset Divorce: Key Tips for Dividing Marital Property

Going through a divorce is difficult emotionally and financially under any circumstances. But for wealthy couples with millions of dollars in assets like homes, investments, and businesses, the process of evenly splitting up marital property can be extremely complex. 

If you're facing a high net worth divorce, here are some key things to keep in mind when dividing assets and debts:

Define Your Marital Property

In divorce, only assets acquired during the marriage are deemed marital property to be divided. This includes homes purchased, bank accounts opened, retirement investments made, businesses started, and other assets obtained during the years of marriage.  

Separate property that belonged to one spouse before marriage or was inherited solely is not marital property. A prenuptial agreement may also define separate assets exempt from division.

Get Accurate Appraisals

Valuing all your marital assets accurately is crucial. For real estate, investment accounts, business stakes, luxury vehicles, jewelry and other high-end items, professional appraisals are a must. Guessing asset values won’t cut it.

Organize Finances Thoroughly

 

Gather statements on all your assets, investment accounts, debts, and liabilities. Track down documentation on everything. Make spreadsheets clearly outlining all marital assets and debts with current values, ownership percentages, who brought what into the marriage, etc.

Understand Tax Implications 

Transferring assets between spouses triggers things like capital gains taxes and gift taxes, especially with appreciation on investments and properties. Work with financial and legal advisors to develop a tax-efficient asset division strategy.

Consider Both Current and Future Needs

The division of assets should adequately provide for both spouses' present and future financial needs and retirement goals. Project how proposed divisions will impact each spouse long-term.

Look at Creative Solutions

Getting creative with how to split certain assets can prevent the need to fully sell and split proceeds. One spouse buys the other’s share of a business. One keeps the vacation home while the other keeps the primary residence.

Compromise is Key

It’s highly unlikely either spouse will receive exactly 50% of all marital assets. Be prepared to compromise on certain assets or accounts to reach final settlement.

Address Any Debts Owed 

In addition to assets, any marital debts like mortgages, credit cards, taxes, loans etc. must also be divided appropriately between spouses. Understand each spouse's share of joint liabilities.

Retain a Divorce Attorney

Work with an experienced divorce attorney, especially if assets are in the millions. They will guide negotiations, account for all assets, help determine valuations, and ensure you receive a fair property settlement.

Manage Emotions

Divorce evokes intense emotions but allowing feelings like anger, resentment, or spite to drive negotiations around asset division almost always leads to poor outcomes. Make calm, rational financial decisions.

Seek Mediation If Needed

If you become deadlocked on asset division, mediation can be a good option. An impartial mediator may propose compromises and help you avoid costly litigation.

The division of substantial assets and accounts that make up marital property in a high net worth divorce brings unique challenges. But by getting organized, understanding tax impacts, compromising when reasonable, and working collaboratively with divorce professionals, an equitable outcome can be achieved.