What are the Top 5 Questions High Asset Individuals Ask about Divorce?
Divorce is never an easy process, no matter how much money you have. No one gets married thinking divorce may be in their future, no matter what the current divorce statistics show. When you are a wealthy couple, some people assume the money you share will decrease the likelihood of your marriage failing, but it’s been my professional experience that divorce affects all economic levels equally. Therefore, when faced with the possibility of a high asset divorce, there are certain questions that come up more often than others with my high asset clients. Here are the top 5 questions that wealthy individuals tend to ask me about divorce:
How can I protect my assets in a divorce?
This is usually one of the first questions people ask. No one wants to lose half of everything they’ve worked so hard for, and that’s a valid concern. There are ways to protect your assets, but you need to act quickly and have a good team of lawyers and financial advisors on your side.
For instance, some people try to hide assets before getting divorced, but that’s not the best idea. If your spouse finds out, it could make the divorce even more difficult and expensive. You could also end up owing fines or penalties if the court decides you were trying to keep legitimate marital assets hidden from the court and your spouse.
The best way to protect your assets is to be open and honest with your spouse about what you have and what you’re worth. If you’re both on the same page from the start, it will be easier to come to an agreement about who gets what in the divorce. I routinely advise wealthy individuals before they get married to seriously consider a prenuptial agreement. You can read more about this type of pre-marital agreement here, but these agreements can drastically reduce the costs of litigation in the event of a divorce.
Ultimately, if you and your spouse are not able to come to an agreement, the court will divide the marital assets between you and your spouse according to the laws of your state.
How will this affect my credit score?
Divorce can have a pretty big impact on your credit score, especially if you’re not the one who initiates it. If you’re worried about your credit score taking a hit, there are things you can do to help mitigate the damage.
First, make sure you keep up with all your bills and payments. This may seem like common sense, but during the stress of a divorce, it’s easy to let things fall through the cracks. If you’re used to your spouse taking care of the bills, make sure you take some time to learn about what needs to be paid and when.
Another thing you should do is try to keep your accounts in good standing. If you have joint accounts with your spouse, try to negotiate who will keep each account and how the balance will be paid off. You may also want to consider opening your own accounts in order to build and control your credit as independently as possible.
If your spouse lets joint accounts go into a past-due status, you may want to consider the value of paying the joint bills through the divorce process and asking the Court for a credit for the portion your spouse was responsible for in the final division of assets. This will give a short-term benefit to your spouse, but it will also allow you to keep control over your high credit rating and limit your spouse’s ability to negatively affect it.
What will happen to our children?
This is usually one of the biggest concerns people have when getting divorced, and rightfully so. No one wants to think about their children being caught in the middle between two fighting parents. However, if the marriage has been falling apart for quite some time, odds are that everyone, including the children, is exhausted from living in an unhappy home.
Fortunately, there are ways to protect your children from the negative aspects of divorce. First, try to keep communication open with your spouse about what’s going on and what you’re both feeling. It’s important to be respectful of each other, even if you’re not getting along. Second, make sure you are both still involved in your children’s lives as much as possible. They should still feel like they have two loving parents who are there for them, no matter what happens between you and your spouse. Finally, don’t use your children to get back at your spouse. This will only hurt them in the long run and make it harder for them to adjust to the divorce.
How will this affect my taxes?
Another common concern for high-net-worth individuals is how divorce will affect their taxes. Unfortunately, there is not a simple answer to this question because it can vary so drastically from couple to couple, depending on how you and your spouse earn your taxable income(s). However, there are a few things you should keep in mind if you’re considering divorce.
First, if you have any joint accounts or assets with your spouse, you should be sure that the ones you receive are all transferred into your name only and updated to your new address, if necessary, following the earlier of the divorce or any Order from the Family Court that allows you do so sooner. This includes bank accounts, investment accounts, deeds to real property, and titles to vehicles, boats, etc. If any of these stay in both names, your spouse could still theoretically attempt to claim any tax benefits associated with those assets or accounts even after the divorce is finalized.
Second, you’ll need to be aware of the tax implications of selling any joint assets. For example, if you sell the family home or cash out any large investments to pay any divorce settlements to your spouse, you may have to pay capital gains taxes on any profit made from these sales. You should consult with a tax advisor or wealth advisor to figure out what, if any, taxes you’ll owe on any assets sold during or after the divorce.
Finally, keep in mind that your filing status will change from “married” (whether filing separately or jointly) to “single” once the divorce is completed. This could affect your taxes both positively and negatively, so again, it’s important to speak with a tax advisor about how this will specifically affect your return. You may need to change your W-4 form for any job where you receive a paycheck, or you may need to adjust other withholding taxes if you receive income from other sources so that you don’t end up owing a bunch of taxes the first year after the divorce.
Will I have to pay alimony?
This is a common concern, especially for high-earning individuals. Alimony, or spousal support, is the amount of money one ex-spouse pays to the other to help them maintain their standard of living during and after the divorce. Whether you will have to pay alimony will depend on a variety of factors, including each spouse’s income and earning potential, the length of the marriage, each spouse’s age and health, whether either spouse put their career on hold to support the other’s career, and whether either spouse stayed home to care for any children from the marriage.
If you’re concerned about having to pay alimony, it’s important to speak with a divorce lawyer who can help you understand how likely it is that a judge may order you to make payments and how much those payments might be. There are several ways to structure alimony payments so that they work for both parties, and a good divorce attorney can help you find the best solution for your situation.
These are just a few of the most common questions high asset individuals ask about divorce. If you’re considering divorce, it’s important to speak with an experienced divorce lawyer who can answer any questions you have and help you through this difficult process. Contact our office today to schedule a consultation. We can help you understand your rights and options and make sure that your interests are protected throughout the entire process.
If you’re in South Carolina, you can reach out to Ben Stevens today to discuss your specific situation. If you are not, Mr. Stevens is happy to provide a referral to a well-qualified attorney located in your state. He is a Fellow in the prestigious American Academy of Matrimonial Lawyers and the International Academy of Family Lawyers, and he is a Board-Certified Family Trial Advocate by the National Board of Trial Advocacy. He has represented parents in child custody and other Family Court cases across South Carolina for well over twenty-five years. If you or someone you know is facing a child custody or visitation case, contact our office at (864) 598-9172 or SCFamilyLaw@offitkurman.com to request a consultation.
Related Articles by Mr. Stevens:
Contact our office at (864) 598-9172 or SCFamilyLaw@offitkurman.com to schedule an initial consultation.
ABOUT J. BENJAMIN STEVENS
Ben.Stevens@offitkurman.com | 864.598.9172
Aggressive, creative, and compassionate are words Ben Stevens' colleagues freely use to describe him as a divorce and family law attorney. Mr. Stevens is a Fellow in the prestigious American Academy of Matrimonial Lawyers, the International Academy of Family Lawyers, and is a Board Certified Family Trial Advocate by the National Board of Trial Advocacy. He is one of only two attorneys in South Carolina with those simultaneous distinctions. He has held numerous leadership positions in the AAML, and he currently serves as one of its National Vice Presidents. Mr. Stevens has a statewide practice and regularly appears all across South Carolina. His practice is focused on complex divorce and child custody cases.
ABOUT OFFIT KURMAN
Offit Kurman, one of the fastest-growing, full-service law firms in the United States, serves dynamic businesses, individuals and families. With 17 offices and nearly 250 lawyers who counsel clients across more than 30 areas of practice, Offit Kurman helps maximize and protect business value and personal wealth by providing innovative and entrepreneurial counsel that focuses on clients’ business objectives, interests and goals. The firm is distinguished by the quality, breadth and global reach of its legal services and a unique operational structure that encourages a culture of collaboration. For more information, visit www.offitkurman.com.
DELAWARE | MARYLAND | NEW JERSEY | NEW YORK | NORTH CAROLINA | PENNSYLVANIA |SOUTH CAROLINA | VIRGINIA | WASHINGTON, DC