Five Common High Asset Divorce Mistakes

 Posted on August 20, 2018 in High Asset Divorce

Divorce can be a financially and emotionally stressful time. This is true regardless of how much a couple’s assets are worth, especially when children are involved. However, families with unique or valuable assets do face specific issues when it comes to divorce, such as property division disputes, valuation problems, and attempts to hide assets. With this in mind, it is important for couples with business interests, complex assets, or significant financial interests to try and avoid certain pitfalls. Consulting with an experienced high asset divorce attorney can be crucial to the success of this endeavor, so if you are considering divorce and have diverse or substantial assets, you should consider contacting an experienced high asset divorce attorney for advice.

Making Emotional Decisions

One of the worst things that a divorcing couple can do is make decisions based purely on emotion. For instance, one spouse may attempt to relieve themselves of guilt for past wrongdoings by agreeing to pay more spousal support than is necessary or by giving the other party a greater share of marital property. Later, when tempers have cooled, the parties could realize that the decisions they made were not in their best interests. Unfortunately, it is often too late by this point and they will most likely be stuck with their court-ordered property settlement.

Failing to Conduct a Full Financial Investigation

While no one likes to think that their spouse will hide assets from them, the reality is that this does and can occur. For this reason, it is critical for divorcing parties to conduct a thorough investigation into their finances, especially if diverse, valuable, or unique assets are involved. Those who fail to take this step could end up the victim of the other party’s attempt to hide assets, which can lead to an unfair division of property. Divorcing parties should keep an eye out for any unusual financial activity, such as the transfer of assets to a friend or a business partner or large, unexplained withdrawals. If an attempt to hide or waste assets is discovered, a court can actually step in and force the at-fault party to cease spending.

Ignoring Tax Consequences

Couples going through high asset divorces should also make sure that they don’t ignore the tax consequences of potential property settlements. For instance, taxes could affect how much a party receives in alimony payments, while both parties may be required to pay taxes on assets that they are awarded in the settlement, which could significantly cut into the award itself. Similarly, 401(k) withdrawals are taxed as ordinary income and so are subject to a ten percent federal tax penalty if they are made before the age of 60 years old.

Call Today for Legal Advice

If you are on the brink of divorce, you should consult with an attorney ahead of time. At Powers and Kerr, PLLC, our passionate Round Rock high asset divorce lawyers can advise you of your rights, obligations, and legal options. Please contact us today to learn more.

Sources:

https://www.huffingtonpost.com/gobankingrates/40-secrets-only-divorce-a_b_8602766.html

https://www.cnbc.com/2018/03/07/dividing-401k-assets-in-divorce-can-be-an-expensive-minefield.html