Challenges of a High-Asset Divorce

Do you have a high net worth and are preparing to divorce your spouse? When you understand the unique challenges of a high-asset divorce, you’ll see the importance of working with an experienced lawyer no matter how amicable the divorce.

As the trusted divorce lawyers in Phoenix, AZ, Lincoln & Wenk, PLLC, tirelessly advocate for you during divorce proceedings. We’ll help protect your assets and give you the highest chance of success after you complete the divorce.

What Classifies a High-Asset Divorce?

What do attorneys consider a high-asset divorce? When partners have a net worth over $1 million, including real estate, business interests, securities, and more, you have high assets. In areas with rising property values, couples who own a home could find themselves in the situation even if they don’t have other assets.

Unique Challenges of Divorces With High Net Worth

Professional practices that frequently handle divorce cases know that couples with high assets experience unique challenges throughout the process.

Valuing Assets

Determining the value of your assets is one of the first steps in any divorce settlement. If you have a high net worth, you likely have a variety of assets that professionals will comb through to ensure you properly disclose everything.

In a divorce with significant assets, you’ll need professionals to accurately appraise your high-value goods like houses, business interests, collectible vehicles, art, and more. This process can take considerable time even in an amicable divorce. In a contested divorce, one or both parties may prolong the process to gain an advantage over their partner.

Hidden Net Worth

In a high-asset divorce, partners may feel tempted to hide assets from each other. This can happen if you have an emotional connection to something of value like a car, business interests, or a second home. It also occurs when one partner experiences a lot of anxiety over their financial security after divorce.

Never hide assets, as it will often cost you the very asset you tried to conceal. An experienced divorce attorney can recognize the signs that your partner isn’t revealing all their assets. They can employ the help of a forensic accountant to uncover any assets your ex may hide.

Tax Implications

Dividing certain assets can make you vulnerable to tax implications like capital gains. For example, dividing your IRA accounts can count as a transfer. In general, you can avoid tax implications when you file correctly with the courts.

You may feel it easier to split some assets if you liquidate them into cash. This can leave you vulnerable to capital gains taxes. Working with an experienced divorce attorney and accountant can give you the highest chance of minimizing these implications.

Determining Spousal Support

Many people believe divorcing with children affects the level of spousal support, but that remains a popular myth. Child support and spousal support are two different aspects of a divorce settlement.

The following considerations help a judge determine spousal support:

• Income discrepancies between both partners
• Whether one spouse needs additional income
• If one spouse gave up a career to stay home and raise kids
• Marriage length
• The couple’s health and ages
• Asset division
• The ability of each spouse to maintain their financial security after the divorce, such as finding a well-paying job

Business Interest Division

Splitting your business interests proves one of the greatest challenges during a high-asset divorce. Assigning value to the business is the first step, but splitting shares or buying out your partner doesn’t always provide the right solution.

If you remained amicable during the divorce, you could continue running the business together without worrying about dividing this asset. You could also both consider selling your ownership stake and making a fresh start in this new life chapter. Talk with your attorney to consider the right approach for your situation, but remaining on friendly terms with your spouse can make the process easier.

Dividing Assets

Arizona is an equitable distribution state, which means the courts will seek a roughly even asset division. As a community property state, Arizona considers all marital assets as shared between partners.

This means they don’t consider mitigating factors like abuse, each spouse’s marital contributions, or income disparities when dividing assets. The courts will seek to split the following and more as equitably as possible:

• Cash and securities: Checking, savings, and tangible assets like gold, jewelry, and bonds remain one of the easiest assets to divide because they have clear value.
• Property: Property division can feel challenging if the couple only owns one home. With multiple properties, the courts can look at the value and income potential and balance it out.
• Stocks: Many couples choose to either split stocks equally or sell shares and divide the cash.
• Retirement accounts: The court can issue a Qualified Domestic Relations Order to transfer retirement money from one partner’s account to the other’s.
• Debts: The Arizona court system will divide your debt equally regardless of who accrued it during the marriage.

Privacy Concerns

If you have a high net worth, you likely have a level of influence or status within your community. Even if the community knows you’re going through a high-asset divorce, that doesn’t entitle them to all the details. To protect your privacy during this difficult time, consider the following tips:

• Keep the proceedings out of the courtroom by settling what you can through private negotiations. Court filings and proceedings grant public access, whereas mediation or arbitration remain private.
• Choose an attorney with a great record for settling out of court. However, they should still have experience in the courtroom if you and your partner can’t agree on everything.
• Finalize all your agreements and settlements before filing for divorce. This reduces the time the public has access to these records and helps you project the process as resolved and amicable.
• Both parties can consider filing anonymously. This means the court records appear as “Anonymous v Anonymous” rather than “Smith v Johnson.”
• Keep your children’s details out of the divorce documents and have your attorney take action against any press or person that threatens their privacy.

Lifestyle Adjustments

After a divorce, one or both spouses may not have access to the same type of lifestyle they did before the transition. You’ll have roughly half the property and savings, and if you pay alimony, you’ll have less disposable income.

Don’t let the fear and anxiety of this new lifestyle motivate you to act emotionally during the proceedings. It may tempt you to hide assets or take an overly combative approach to the asset division.

Remember that you’ve created your success this far in life, and you can do it again. Keep your focus on the long term and remain confident that this change in your lifestyle is only a temporary obstacle.

Ongoing Legal Fees

While an extended legal battle could help you protect your assets, it can also leave you vulnerable to financial challenges. With a significant net worth, you’ll have no issue paying for quality legal representation. However, consider that the average divorce takes a year to complete, according to Forbes.

If you’re filing for an uncontested divorce in Arizona, you’ll likely complete the process in just a few months. However, you’ll still want an attorney to help ensure you file the paperwork correctly for your high-asset divorce.

The more you and your partner disagree on, the more you’ll pay in legal fees. Carefully weigh the pros and cons of these battles and aim for compromise whenever possible.

Emotional Concern

According to the Life Change Index Scale, a divorce is the second-biggest life-changing event after the death of a spouse. Even under friendly and favorable circumstances, you’ll experience a wide range of emotions, such as the following:

• Anxiety: You’ll likely feel uncertainty about your future which can increase the general anxiety you feel throughout the process.
• Grief: Even if you want the divorce, you’ll feel an element of grief. This can affect your motivation to work or engage with things you love.
• Anger: You may feel anger at yourself or your spouse, depending on the reasons you’re divorcing.
• Denial: If a part of you wants your partner back, you may feel tempted to prolong the divorce process until they change their mind.

You’ll likely experience multiple emotions at once, and they may ebb and flow like waves. During your vulnerable moments, they may affect your decision-making. For example, if you just want the process over with, you may make concessions to your spouse that aren’t in your interest.

When you work with an attorney, they can help keep your emotions in check. Seeing a therapist during the process can also help you make the right choices.

Find an Experienced Divorce Attorney Today

When you’re navigating a high-asset divorce, you need an attorney who will tirelessly advocate on your behalf. Whether you’re wondering about divorcing without splitting assets or need to understand the tax complications of the process, Lincoln & Wenk, PLLC, can help. Our lawyers have decades of experience and take a client-centered approach to every process.

To request a consultation, call 623-294-2464. Reach out today.