Going into a divorce as a high-earning spouse with numerous assets can be scary, especially if you are divorcing a lesser-earning spouse or spouse who didn’t contribute financially to the marriage. You may fear being “taken to the cleaners” or “raked over the coals,” whether your spouse has threatened to or not. In these situations, hyperbole is not your friend. However, knowledge is. Here’s what you need to know if you are a high-earner navigating a high-asset divorce.
Value your assets.
Before entering the divorce process, evaluating your assets can help you to get a firm handle on your financial picture. That includes gaining an understanding of what your assets are worth today. Valuations can fluctuate, so assessing your portfolio, including investments, real estate, business interests, retirement accounts, vehicles, and collections, such as antiques, wine, and collectibles, is a good place to start.
If some of your assets could be designated separate assets, provide supporting evidence to the legal and financial professionals you hire to see you through your divorce. Compile any documentation, such as purchase agreements, receipts, and prenuptial and postnuptial agreements, that could prove assets are separate from the marital pot.
Hire skilled and experienced legal and financial professionals to advise you.
The earlier you hire legal counsel, the better. Even if you and your spouse are merely discussing divorce, or you individually are considering your options silently, talking to a skilled and experienced divorce attorney to learn more about what you should be doing to prepare or learning about what is to come can help you get organized.
You should also speak with financial professionals, such as forensic and certified public accountants, who are familiar with high-asset divorces. They can help protect your interests by addressing complex issues like asset valuation, including highly nuanced goodwill, tax implications, and asset division strategies.
Prepare for the possibility of paying spousal and child support.
As the higher-earning spouse, you may be responsible for paying spousal and child support. Though child support in Alabama is dictated by a formula, alimony is not.
When calculating alimony in Alabama, the court will require a showing of entitlement along with the paying spouse’s ability to pay. Remember that in Alabama, spousal support is not a given in all divorces; where spouses have comparable earnings and earning potential, for example, alimony may be denied.
If you believe, based on your circumstances, that you will have to pay alimony to your spouse, you can best prepare by understanding how alimony is calculated and what factors can weigh into the court’s decision. Among those factors are the length of the marriage, the spouses’ ages, the condition of their health, work and educational histories during the marriage, and whether either party has contributed to the breakdown of the marriage.
Consider the tax implications.
Divorce settlements can give rise to significant tax consequences, from dividing retirement accounts to selling real property. If you have deferred compensation, there can be deferred tax consequences as well that, if not taken into account, can rear their head when you least expect.
Therefore, working with a financial expert with experience in high-asset divorce cases is wise. This way, you can do the most to minimize the tax impact on your post-divorce financial picture.
Prepare to negotiate.
High-asset divorces often involve extensive negotiations that can become heated due to what’s at stake. Formerly amicable divorces can also become contentious when spouses try to leverage assets to “win” on other issues, such as child custody, causing negotiations to turn ugly.
While it’s helpful to be open to compromise since reaching a fair agreement outside of court can save time, stress, and money, having a high-asset divorce lawyer with litigation experience to protect your interests can be a big plus. Though no one wants to think their divorce will devolve into a battle, it could.
Protect your privacy.
High-asset divorces, particularly those between recognizable names, tend to draw more attention than divorces involving non-famous people. Such attention is often unwanted and can affect a divorce case negatively.
If you anticipate interest in your divorce, contact a divorce lawyer immediately. They will work to prevent information from being released by establishing a confidentiality agreement between you and your spouse. You may also want to consider hiring a public relations expert to help mitigate damage caused by private information being exposed.
Plan for your long-term financial security.
Divorces can put a dent in the finances of even high-asset individuals. Beyond the division of assets and legal fees, you may want to consider what life may look like post-divorce, even if you predict your divorce will take a long time to settle. Speaking with a financial analyst can help you plan ahead.
Find an Alabama high-asset divorce lawyer with experience representing high-earning spouses.
It may be difficult to think about sharing your wealth with the spouse you are divorcing, but avoiding the topic is generally not a smart strategy. The sooner you begin facing your divorce, the more time you will have to strengthen your case.
At Summit Family Law, our team of high-asset divorce lawyers have extensive experience negotiating divorces on behalf of high-earning spouses. We recognize how much you value your financial security and will work to preserve it and your rights in your divorce.
With offices conveniently located in Huntsville and Birmingham to serve you, we are here to help. Call us today or schedule a time to speak here.
