This blog continues to list struggles and potential solutions that are often associated with high-asset divorces.
Marriages generally have two classifications of property: marital assets and separate assets. Both spouses own the marital assets equally, and only one person owns separate assets.
Separate assets can, however, become commingled. This happens when a spouse contributes to the property, increasing its value. For instance, you may enter the marriage as the sole homeowner. However, your spouse may help with renovations and additions.
This is another scenario where we would recommend attending mediation. Your attorney could present unique solutions, ones you would not have considered on your own. They can help create plans for one partner to buy out the other. There may even be ways to share the property without causing friction between the divorcees.
Remember, property isn’t always divided among spouses in a divorce. Sometimes, it’s necessary to sell assets and split the proceeds. In these situations, it’s easy to forget some of the heavy taxes you must pay on that sale.
Before you begin the process of divorce, start setting money aside for these potential tax payouts. You know that preparation is always the best way to protect your money, and dealing with taxes works the same way.
Alimony is one of the biggest challenges in a high-asset divorce. It can be easy for one person to keep the other comfortable and fed, but spousal support demands more than that. The system also wants each spouse to stay within their “accustomed lifestyle.” This expectation extends even to luxury lifestyles.
Here’s where this becomes a problem: One person may have enough assets to keep another in luxury and still have plenty left over for themselves. Finding a fair balance between what they should and give up becomes a struggle. Fixing this problem becomes a long process, full of detailed negotiations.
The best way to emotionally deal with this issue is to be ready to accept change. From now on (or at least until spousal support ends), the money flow will simply be different for both parties. Both parties can stay comfortable, but they may be forced to have less than before. This is true whether you are the payor or receiver.
Divorces often result in bad blood between former spouses. This fact is especially true when it comes to money concerns. Given all the issues we’ve discussed in this series, it’s easy to see how a high-net-worth divorce can create bitterness in the parties involved.
It may be necessary to maintain a good relationship, especially if you share children, business interests, or both.
Mediation may be helpful in this area as well as the others we’ve mentioned. People don’t always walk away from it with everything they desire. They can, however, have the satisfaction of knowing they agreed to all outcomes. No court forces them to do anything, and no one uses underhanded tactics to get what they want. These negotiations can make it easier for people to get along in the future.
Regardless of the challenges in your divorce, Ford & Friedman is ready to step in and help. Contact our firm online or call our office at (702) 904-9898. We are ready to help make this difficult time easier for you.