High-asset divorces in Alabama are a breed apart, presenting unique challenges that require legal expertise. They are typically characterized by diverse assets, ranging from cars, boats, planes, and rare collections to trusts, investment accounts, stock options, deferred compensation, real estate, businesses, and international holdings. These assets can — and do — add up to well over a million dollars, potentially billions.
One noteworthy feature of high-asset divorces is the imbalance of power that often exists between the spouses. This can give one partner control, at least temporarily, and the opportunity for them to use that power to disadvantage their spouse. These disputes can extend beyond financial matters to include non-financial issues like child custody. If you anticipate, based on your holdings, that your divorce will be a high-asset divorce, here are a few issues to consider as you prepare.
Complexity of Asset Division in High-Asset Divorces
As mentioned above, due to the range of assets involved in high-asset divorces, obtaining accurate valuations can be more involved and nuanced than in non-high-asset divorces. Given this complexity, it is helpful to assemble a comprehensive divorce team. This team should begin with an Alabama family law attorney experienced in high-asset divorces and financial professionals trained in distinct areas who can provide nuanced valuations of complex assets.
The Need for a Team of Trained Financial Professionals in High-Asset Divorces
The financial professionals often enlisted to assist each spouse in a high-asset divorce include a forensic accountant, a tax professional, and appraisers of different sorts, depending on what they will be appraising. Forensic accountants are responsible for tracking and valuing those assets that are not readily apparent.
Homes, vehicles, and collections, such as art, classic cars, antiques, and wine, will require the insights of trained appraisers with experience in these areas. Finally, a tax professional, such as a certified public accountant, can also be valuable in advising on the tax implications that could arise due to asset division, both now and in the years to come, long after the divorce is final.
Alimony Considerations in High-Asset Divorces
Alimony can significantly affect how assets are divided in high-asset divorces. When spouses divorce, how each spouse lived as a couple during the marriage will be used to calculate spousal support. The idea underlying alimony is that one spouse should not become financially disadvantaged due to the divorce.
If one spouse worked outside the home, for example, while the other cared for their children, the spouse who wasn’t gainfully employed should not be so disrupted by the divorce that their lifestyle post-divorce is nothing like what it resembled. Depending on the circumstances, the spouses may experience a change in their financial situation that can impact their lifestyle. Still, the change shouldn’t be so severe as to render their post-divorce lifestyle unrecognizable.
Assets may also offset alimony awards. For example, some high-net-worth couples may opt for a settlement instead of spousal support. An asset transfer during equitable distribution can fund such a settlement. Another option is for the receiving spouse to opt not to forgo alimony altogether and take less of an alimony award in exchange for an asset.
Tax Implications Related to High Asset Divorces
Dealing with the division of assets like stock options and restricted stock units (RSUs) in high-asset divorces can be difficult, not to mention confusing. These types of compensation differ from regular salary income, more common in non-high-asset divorces, and their division often presents unique challenges.
Stock options, for example, give an employee the right to purchase company shares in the future at a set price, called the “strike price.” Stock options follow a vesting schedule, meaning the employee must earn the right to exercise these options over time.
RSUs, on the other hand, represent shares of company stock granted to an employee. The employee can typically access them following a vesting period or when the employee meets specific performance targets. Unlike stock options, RSUs do not require employees to purchase shares at a set price; they are granted once they vest. Due to their lack of liquidity and future potential value, how to value and divide stock options and RSUs is not immediately obvious.
Stock options are also not taxed or considered income until exercised. Additionally, unvested stock options may be treated as separate property, while vested options earned during the marriage could be subject to equitable distribution. Thus, the timing and value of these assets, along with their tax implications, which can arise even after the finalization of the divorce, matter for achieving a fair and equitable division.
Privacy Concerns in High Asset Divorces
Because those with significant assets or a high net worth may have high-profile jobs or be high-profile in their own right, such as celebrities, privacy can present more of an issue in high-asset divorces. Consequently, high-asset divorces may require divorcing spouses to sign confidentiality agreements restricting the disclosure of details about the divorce. Divorcing spouses may likewise request their court records be sealed.
Emotional Impact of High-Asset Divorces
Though high-asset divorces revolve largely around financial matters, they can be emotionally charged. Whether it is because assets are being used to gain leverage over other non-monetary issues involving children or because a particular asset, such as an alcohol or car collection, holds personal value, or because years of one’s life were spent building wealth, taking away from other pursuits, it can help to find emotional support during this time. Due to these factors, the uncertainty experienced when going through any divorce can be heightened for those going through a high-asset divorce.
In addition to an Alabama high-asset lawyer and the financial professionals on the team, it can, therefore, help to add a mental health professional, such as a psychologist or therapist, or a divorce coach to support your emotional needs during your high-asset divorce. A marriage counselor can likewise provide value; they can help you and your spouse together to implement strategies for exiting your marriage amicably. An Alabama family law attorney with an extensive network and resources can direct you to professionals convenient to Huntsville or Birmingham.
Find an Alabama High-Asset Lawyer to Help With Your Divorce.
At Summit Family Law, we understand the stress of a high-asset divorce and will work closely with you to achieve a positive outcome so you can move forward in your life. Because no two divorces are alike, we pay close attention to what is most important to you and guide you in achieving the goals you set for your divorce.
Our team of Alabama high-asset lawyers has extensive experience reaching settlements in high-asset divorces and can do the same for you. Contact our Huntsville or Birmingham offices today or schedule a consultation.
