Divorce is never easy. In some divorce cases child custody or visitation is highly contested. In some divorce cases determining who will keep the marital home or specific items of property is highly contested. Then, in high asset divorce cases, the financial considerations of changing lifestyle and disputes over high value assets and payment of support alimony can be highly contentious. Unfortunately, some highly contested divorce cases involve all of the elements. Regardless of the issue of the other issues involved, a high asset divorce must be handled differently than a divorce without substantial assets.
Does a High Asset Divorce Need to be Handed Differently?
Divorces with parties that have a high net-worth and substantial or diverse financial assets must be handled by experienced divorce counsel.
High net-worth divorces involve a complex evaluation of current and future value of property. Financially speaking, parties with substantial assets have more to lose than those facing divorce without a wide variety of complex assets. The emotions involved in most divorces make it difficult for parties to intelligently evaluate their assets and potential future value. Preparation is key in high net-worth divorce cases to evaluate your position, consider the future value of all assets, and the tax implications of property division versus transfers of ownership.
Your best first step in protecting your interests in a high-net worth is meeting with and then hiring the right experienced Oklahoma City divorce attorney that has experience representing parties in high-asset divorces. Many of the issues you face in a high-net worth divorce are common to others that have gone before you in a high-net worth divorce. Therefore, retaining counsel with experience representing parties with substantial assets will be best situated to identify the issues in your high-net worth divorce and help you protect your interests.
An Oklahoma divorce attorney, experienced in high-net worth divorce, can advise you of your rights, the laws governing division of varied assets in divorce, and can assist you in developing a strategy to maximize your chances of protecting your financial interests during your high net-worth divorce process and beyond.
All that to say, you should only retain Oklahoma divorce counsel with experience representing individuals in high-net worth divorce cases. Cannon & Associates is dedicated to being Your Fierce Advocates™ and has successfully represented many wealthy divorce clients when substantial assets are on the line.
Common Issues in High-Net Worth Divorce Cases
Every divorce case is unique, especially high-net worth divorces, which involve a wide variety of assets and financial implications. However, every divorce case, whether involving substantial assets or not, includes some or potentially all of the following elements of divorce:
- Division of Marital Property
- Identification of Separate Property
- Financial considerations
- Spouse Support and alimony
- Child Custody
- Child Support
FINANCES IN DIVORCE
Dividing financial interests can be complicated in any divorce; however, the issues become highly complex when unrealized financial interests, capital gains tax, stock options, and out of state real property are at issue. In almost every high net-worth divorce, the complicated financial assets and related benefits at issue make resolution more complicated. It is important that you identify, organize, and most importantly protect all financial documents related to both marital and separate property in your high net-worth divorce.
Before your divorce begins, identifying all assets and their current values is an important step in protecting your financial interest. Some of the most common assets at issue in high-net worth divorces include the following: stocks, bonds, retirement accounts, investment accounts, certified deposits, vacation homes, vehicles, jewelry, rental properties, and land. In every high net-worth divorce all belongings must be categorized as separate property through the complicated process of tracing or the default category of marital property. Documenting the history of inherited property or property acquired prior to marriage will help you protect your interests and reduce your attorney fees by saving your divorce attorney’s time.
Community Property vs. Separate Property
Identifying all relevant assets in your divorce is only the first step in protecting your financial interests in a high net-worth divorce. The next and potentially more important step is identifying how the property will be categorized. Assets are either subject to division in divorce or protected from division. Obviously, the more property that can be identified as your separate property, the less you stand to lose in your high net-worth divorce.
As stated above, all property in divorce must be categorized as marital property, i.e. community property or separate property. Community property or marital property is acquired during marriage, either earned or acquired during the marriage or of the joint marital efforts. The later part, through join marital efforts is the more contentious issue, related to sourcing property’s acquisition. In divorces involving prenuptial agreements, specific agreements may be enforced impacting the definition of property acquired after marriage.
What is a Separate Property in a High-Net Worth Divorce?
Separate assets, i.e. non-marital assets either by their nature or origination belong to one spouse alone. This legal theory is very important and often contested in high-net worth divorce cases. The rule stated above that property brought into the marriage is separate property has exceptions. There are ways a party can argue that property brought into the marriage by one party is comingled or becomes marital property. The following are examples of the most common arguments for separate property becoming marital property:
- Inheritance, including money and property acquired as a gift is typically separate property. However, if the funds are placed in a joint savings account or joint investment account, it may be considered commingled and be considered marital property.
- A home owned by one party prior to marriage is separate property; however, if title to the home is changed to both spouses’ names, it may be considered commingled and marital property.
- The increased value of a home owned separately by one spouse will likely subject to division as marital property, as the increase in value occurred during the course of the marriage.
- Gifts that a spouse receives during the marriage are arguably separate property; however, if the gift is commingled it may become marital property.
Sometimes separate property or assets that are non-marital will become marital property due to commingling. Individuals with substantial assets facing a high-net worth divorce need to worth with a divorce attorney experienced in high net worth divorce cases, to trace or build the record of the separate asset to show the asset was not commingled and retained its nature of separate property. The argument to support an asset is separate property is much stronger, if tracing the lineage of the asset can be done to show it is separate property.
Division of International Assets and Out-of-State Assets
High net-worth parties often own assets in a wide variety of formats. Oftentimes, the assets held by wealthy parties, facing divorce, are outside of the parties’ state or at least managed by wealth management firms out of state. Out-of-state and international assets are often subject to additional restrictions and tax implications than assets held in the state the divorce is occurring. Therefore, experts or additional experience is necessary to protect client’s interests when dealing with international assets and out-of-state assets.
Property Valuations in Divorce
Valuing property in many instances is straightforward, such as bank accounts and depreciable assets. However, more complex or fluid assets are more difficult to value, such as stocks, retirement accounts, and varied real property. The assistance of experts in specific fields, such as appraisers, realtors, and forensic accountants can assist in providing an opinion on the value of complex assets. Businesses are one of the most difficult assets to determine a financial valuation on.
Determining the value of a business held by both or a single party in a high-asset divorce is complicated, but possible. The following are some factors considered in determining the value of a business: historic income or income trends, profit and loss statements, tax returns, property and assets owned by the business, equipment and real property owned by the business, service contracts of the business, i.e. future income, profitability projections, including brand recognition, accounts receivable, and other factors. It is more complicated determining an accurate valuation of a business than a home; however, with a divorce attorney experienced in high net-worth divorce cases and the right experts, you can create a clear picture of the value of business interests.
Risks of Hiding Assets in Divorce
It is illegal to hide assets in a divorce proceeding and can result in serious consequences if discovered during or after your high-net worth divorce. There are obvious reasons to be tempted to try to hide property and assets from your spouse during divorce, such as transferring them to a third party or securing them in a shell business; however, if the other side retains experienced high asset divorce counsel, it is more than likely that you will be discovered.
In any divorce, especially high asset divorces, it is wisest to fully disclose assets. The fact that an asset is disclosed to the other party does not mean that you will lose it or that it must be divided. The determination of an asset being marital or separate property cannot happen if the asset is hidden. Our team can assist you in investigating your suspicion of your spouse hiding assets. We will help the court hold your spouse accountable for their misconduct, if it is discovered they are in fact hiding assets.
Negotiating a High-Net Worth Divorce Settlement
There is no question that a settlement in a high net worth divorce gives you more control and will cost you less in attorney fees than a contested high net worth divorce trial. When you work with an experienced high-net worth divorce attorney, you will be able to develop a clear understand of the assets and debts involved in your divorce and you may be able to begin the process of negotiating a settlement.
An experienced high asset divorce attorney can help you formulate a plan to protect your interests and maximize the results in your divorce case. Developing a plan early in your divorce will assist you in reaching your financial goals and identifying what is really at stake and what the likely outcomes may be concerning the classification and value of all of your assets. Oklahoma, as in many states, equitable distribution of assets is the rule. Therefore, whether in a negotiated divorce settlement or at trial, the concept of equity will be a major factor in the distribution of your assets.
Retaining an experienced high asset divorce attorney with a track record of success in helping clients protect their financial future is the best way to face this process with peace of mind.
How Do Divorce Courts Divide Marital Property at Trial?
The judge is the final decider concerning property division in your divorce case, if your high net-worth case goes to trial. The court is allowed to consider almost anything that impacts the equity of distribution of property, so long as the court finds specific property is marital and subject to division. Some of the factors the court will consider in equitable distribution of property during a high asset divorce trial include the following:
- The length of the marriage
- Each parties’ contribution to the marital estate
- The property and income brought to the marriage by each party
- The standard of living held by each party prior to marriage and the standard of living by the parties during the course of the marriage
- The marital contribution of each party, either as a homemaker or earner
- Prenuptial agreements describing the disposition of property and assets
- Each party’s contribution to the acquisition, preservation, decrease in value (depreciation), or increase in value (appreciation) related to specific property
Approaches to Distribution of Property
There are many approaches to effectuate an equitable distribution of marital assets to be divided. Some parties want to divide all divisible assets in half; however, this is rarely the best approach due to tax implications such as capital gains tax when assets are divided or transferred. Some parties in high asset divorce cases will identify assets, subject to division, with equal or similar value and trade one asset for another. Some parties will elect to forego division of all or certain marital assets in exchange for the other party to receive a lump sum of money or incremental distributions for many years.
It is important to evaluate the future value of an asset before you agree to offset or trade assets. Some assets will automatically increase in value incrementally over many years versus other assets that have less certainty with higher upsides. The liquidity of an asset is also import to consider. You may not be as readily able to sell real property or real estate as investment accounts; therefore, it is important to consider during division of marital assets if you prefer the certainty of concrete value or the potential for greater increase in value. This is only one of many considerations to take into account when determining your strategy for equitable division of marital assets in your high net-worth divorce. Our skilled high net-worth divorce attorneys have the experience, tools and knowledge to help you evaluate these issues and reach a decision regarding liquidity versus certainty that best suits your future plans.
The key idea in Oklahoma’s divorce laws concerning equitable distribution is “equity.” An experienced Oklahoma high-asset divorce attorney, familiar with Oklahoma property laws and family law judges’ individual perspectives on fairness in high asset divorce, will be best situated to answer these strategic questions for you. It is crucial to your case that your chosen divorce attorney can tell a compelling story of your efforts during the course of your marriage and before in building what the court is considering dividing in your high asset divorce. Whether in negotiating on your behalf towards a settlement in your high-net worth divorce or fighting your case in a divorce trial, the ability of your divorce attorney to tell a compelling story on your behalf is vital to your success.
Will Alimony be Awarded in my High-Net-Worth Divorce?
Support alimony or spousal support is provided by the spouse will greater resources to the dependent spouse in a high net-worth divorce if the parties agree or the court decides to order support alimony. In high net-worth cases the amount of support alimony paid each month can be in the thousands, adding up to a very large sum of money over time. When the parties have been married for a lengthy period of time and their income disparity is great, support alimony is almost surely to follow.
Alimony is presumed in cases where one party has a need for spousal support and the other party has the ability to pay spousal support. However, alimony is rarely perpetual, i.e. forever. In most family law courts in Oklahoma, support alimony is actually transitional support alimony; designed to give the dependent spouse the time and ability to become financially independent and become stable in a standard of living near or relative to their standard of living during the marriage.
Are High Net-Worth Divorces Handled differently than other Divorces?
Yes and no, high net-worth divorces are subject to the same rules and procedures as other divorces; however, what is on the line or at stake in a high net-worth divorce is different than a simple divorce. As discussed above, the strategy and steps necessary to protect your interest in a high net-worth divorce are vastly different than a divorce that does not involve substantial property or assets. You want to ensure that you work with an attorney experienced in high-asset divorce that has developed tried and true strategies to protecting client’s financial interests now and in the future.
You need Your Fierce Advocates™ if your divorce involves substantial wealth, assets, or businesses, in which you need to seek to protect your interest. At Cannon & Associates we are dedicated to representing client’s facing high net-worth divorce and division of complex property interests. We have assisted wealthy clients across Oklahoma in complex divorces, including a wide variety of financial and property interests, both realized assets and unrealized assets.
Contact Your Fierce Advocates™ for High Net-Worth Divorce
Divorce is a stressful process; however, you can reduce your stress by ensuring the divorce attorneys you work with have experience representing clients facing issues similar to your own issues in divorce. Cannon & Associates has the legal experience in high net-worth divorce cases to help you achieve the best possible outcome in your divorce. Contact Cannon & Associates by completing the CONTACT FORM ON THIS PAGE NOW or CALL at 405-657-2323 for a free confidential strategy session and answers to your questions about high-net worth divorce.