Navigating a high net worth divorce is no easy feat. Most high net worth divorces involve more than one million dollars in liquid assets, requiring a higher level of expertise to identify and assign ownership and value.
Unfortunately, common mistakes are often made during divorce proceedings that result in an unsatisfactory distribution of assets, unexpected tax implications and similar issues.
7 Common Mistakes In A High Net Worth Divorce
When going through a high net worth divorce, the following mistakes should be avoided:
Hiding Assets Or Debts
It may be tempting to hide certain assets or debts during a high net worth divorce to prevent the other person from gaining ownership. However, if the assets or holdings are discovered at any point in the divorce, the offending spouse could face legal punishments and the non-offending spouse may be awarded a higher distribution. In most high-net-worth cases, each attorney will generally retain a forensic accountant to identify and evaluate all assets to avoid these types of situations.
Not Hiring An Expert Appraiser
In standard divorce cases, the court will generally value property based on factors like fair market price. When dealing with high net worth divorces, this is not always the best course of action. Hiring a professional appraiser to provide a fair and accurate valuation of valuable property is important to ensure that assets are distributed as fairly as possible. The court does not always consider the unique aspects of the property when valuing assets. Still, an expert appraiser can deliver evidence that the court needs to arrive at a fair distribution agreement.
Hastily Accepting Settlements
It is normal to want to get through the divorce process quickly. Although both parties ultimately want to move on with their lives, it is important not to rush the process as this is when mistakes are often made. Avoid agreeing to certain terms in an attempt to quicken the divorce process, such as agreeing to a certain amount of child support or spousal support. Consider how any decisions made now could impact taxes and future financial goals. Always consult with a divorce attorney before agreeing to any terms.
Making Lavish Purchases
During a divorce, every asset is scrutinized to determine its true value and establish ownership. A spouse may make the mistake of making expensive purchases during the divorce with the belief that he or she may be entitled to retain these expensive items during the settlement or may attempt to keep the purchase separate from the final division of assets. In reality, the court may penalize the offending spouse and the lavish purchase will generally be included in the list of assets to be divided.
Allowing Anger To Fuel Decisions
Divorces are often preceded by years of bitterness and resentment. When a divorce finally occurs, spouses may find themselves making decisions out of anger or hurt. Although it can be difficult, it is important to think rationally during a high net worth divorce and make decisions based on facts rather than emotion. Revenge is never an appropriate motivator when attempting to make sound decisions that may directly impact the outcome of a divorce case. Find other outlets for stress and prevent anger from affecting decisions.
Making Decisions Based On Guilt
Just like a spouse should not make decisions fueled by anger, he or she should also avoid making decisions based on guilt. In cases involving unfaithfulness or lies, the offending spouse may experience high levels of guilt. To tame a guilty conscience, the spouse may give away too much to the other spouse or waive their right to spousal support or certain assets. High net worth divorces should be treated as business transactions and emotion should be left out of the process. Do not allow feelings of guilt to impact decisions during a divorce.
Hiring An Inexperienced Attorney
Although there are many incredible divorce attorneys out there, not all have experience with high net worth divorces. High net worth divorces involve many unique factors that are not as common in standard divorces, including large investments, real estate property, tax implications and other aspects that may be difficult to navigate. Hiring a divorce attorney that has years of experience handling these types of cases can help ensure the best possible outcome.
Speak With An Experienced Divorce Attorney
In Maryland, the court does not always divide marital property equally during divorce proceedings. Maryland is considered an equitable distribution state, meaning a judge will attempt to divide property fairly between the spouses, but not necessarily equally. This process can become much more complicated when there are high-value assets involved that must be divided in a way that the court deems fair.
To avoid costly mistakes during a high net worth divorce or to speak with an experienced family law attorney about a high net worth divorce case, contact the experienced divorce attorneys at SIEGELLAW today.