Five tips to remember when heading into a high net worth divorce
A divorce can easily bring out the worst in you and your spouse as you try to protect yourselves and your assets. To avoid this, you might take a more passive stance, but this can be detrimental to your long-term financial health. Here are five tips to keep in mind when you’re starting the divorce process.
Don’t rush your divorce; prepare for long negotiations
You may want to finalize your divorce as fast as possible, but failing to negotiate thoroughly means you’ll receive less than you deserve. You shouldn’t agree to anything just because you’re impatient to get out of the situation. Before you agree to a division of assets and liabilities or to payments, make sure you analyze how these agreements could affect you in the long term.
Track your assets before you head to court
No one should be hiding assets when it comes time to negotiate, but it does happen. Transferring money to a third party could seem like a good idea, like giving your parents the bulk of your bank account or moving money to a foreign bank, but this ruins your credibility in the courtroom and can make it harder for you in the end. If you are concerned that your spouse is hiding assets, you should fully investigate what happened to money or assets you expected to be included in negotiations.
Take emotions out of the equation
You may feel guilty because you cheated on your spouse, or perhaps you are angry that you are losing your partner and the lifestyle you loved. In either case, you can’t let emotions guide you. Make sure to receive professional advice before you take a settlement or make demands. Anger toward a spouse can make you demand things that are petty or unreasonable, while guilt could make you give away more than you should as a kind of apology.
You may talk to friends or family members about what’s going on, but don’t take their advice as fact. Your case is 100 percent unique, and those who suggest that you should “take them to the cleaners” or seek out a contentious divorce aren’t doing you any favors.
Remember that tax matters will affect you in the future
When you have a high net worth, the last thing you should forget about is the tax implications of your divorce. For example, if one spouse receives alimony, that alimony will be taxed. If a spouse is paying spousal support, that spouse can generally write off the support on his or her taxes.
Negotiating without an attorney can be costly
According to CNN, it’s not a good idea to negotiate without an attorney when you’re dealing with a high-asset divorce, because there’s a greater potential for errors. You likely have businesses, real estate and large amounts of money over which to negotiate, and making a mistake could lead to your getting less than you deserve. Divorces are also highly emotional, so having a third party like an attorney step in can help you make the best decisions for your long-term financial health.