Divorce is difficult for anyone, but especially so for high net worth individuals and couples. High net worth divorces often require closer attention and more strenuous work to resolve disputes involving property and debt division, child support, and alimony.
With so much at stake, you cannot afford to give any less than your all to the divorce process. It can be a painstaking, emotional, and longwinded process, but even a minor mistake can have a profound impact on your future.
Here are five common mistakes that you should avoid if you and your spouse have a high net worth and are filing for divorce:
1. Letting emotions affect your decisions
Emotions and tensions run high in divorces, but you cannot let these feelings of sadness, guilt, anger, or remorse get the best of you. Decisions affected by emotions rather than logic and a focus on the future may have a long-term effect on you and your family.
For example, an adulterous spouse who feels guilty might feel compelled to concede more property to the other spouse even if it is not in their best interest or they have rightful ownership of the property. In a particularly contentious divorce, bitter or resentful spouses may try to exact revenge rather than cooperate to resolve disputes effectively. This will only hinder the process, cost more money, and leave you with a less-than-favorable divorce decree.
2. Hiding assets
In high net worth divorces, high earners often feel compelled to protect what they feel is rightfully theirs by hiding assets and failing to disclose them to their spouse. Never try to cheat the system by transferring assets to a friend, holding back your business’s financial information, or otherwise hiding assets. One way or another, they are usually found, and you’ll only be getting yourself in trouble.
3. Failing to properly value all assets
Being blasé about the value of your assets and failing to get them professionally appraised can leave you with less than your fair share after the divorce. Be sure to hire a financial expert who can value all of your assets properly and ensure that get every penny you deserve in the divorce settlement.
4. Ignoring tax consequences
What some people fail to think about in high net worth divorces is the impact their decisions have on their taxes and finances. Married couples enjoy certain tax benefits that a divorce will undo. Discuss with your lawyer the tax consequences of every aspect of your divorce decree. For example, you may not have known that you have to pay taxes on alimony or that you will be taxed if you withdraw from your 401(k) before you are 59 ½ years old.
5. Rushing into litigation instead of trying mediation
Just because you can afford divorce litigation doesn’t mean you should resort to it. Before you try to take the case to court, make a genuine effort to resolve your disputes outside of the courtroom, through mediation, arbitration, or some other form of alternative dispute resolution. You might be surprised how effective these methods can be and how much you can get out of them by making the effort to compromise and collaborate with your soon-to-be ex-spouse.
Navigate Your Divorce with the Right Legal Representation
No matter your wealth or background, the divorce process is best navigated with a trusted lawyer by your side. This is especially true for high net worth individuals. At Goldweber Epstein LLP, we set our clients up for success by helping them avoid the common pitfalls of high net worth divorces.
Schedule a consultation with us today by calling (917) 809-7669.