In a high net worth divorce in Massachusetts, spouses often face several unexpected issues that complicate the process. In a divorce with complex assets, the stakes are high, and there may be a financial imbalance between the spouses that can add stress, tension and conflict. It is not advisable to enter into this process without expert support. Speaking to an attorney who specializes in high net worth divorces in Massachusetts who can help you plan for and navigate some of these issues can make all the difference. While every divorce is different, people getting a divorce in Massachusetts should expect the unexpected. Below are eight common obstacles that often blindside divorcing spouses in Massachusetts:
1. Complex Asset Inclusion Under Massachusetts Law
Massachusetts applies an equitable division standard where “equitable” means fair but not necessarily equal. Uniquely, Massachusetts courts consider a broad range of assets as marital property, including assets acquired before marriage, inheritances, and gifts unless a valid prenuptial agreement excludes them. This often surprises spouses expecting a narrower asset pool. Wealthy couples typically have diverse and complex assets such as business interests, restricted stock units (RSUs), investment portfolios, real estate, art collections, and trusts. Accurately valuing these assets and deciding what is marital property subject to division can be surprisingly complicated and contentious, often requiring expert appraisers and forensic accountants.
2. Privacy Concerns
Divorce proceedings in Massachusetts are generally public records, which can expose sensitive financial information. Wealthy spouses may be shocked by how accessible this data becomes and often need to consider privacy-preserving alternatives like mediation, conciliation or arbitration to keep matters confidential. You may also wanted to consider confidentiality agreements when dealing with the disclosure of certain documents in the divorce process.
3. Lengthy Factor-Based Asset Division
Massachusetts judges weigh 13 factor (or 15 if children are involved), also known as the Section 34 factors, including the length of marriage, age of spouses, income sources, and future needs. The law also gives Judges the discretion to consider each spouse’s contribution (money and “sweat equity”) to the marriage, which is applied variably and can create unpredictable outcomes for dividing assets. For more info on Section 34, see The General Court of the Commonwealth of Massachusetts.
4. Business Valuation Challenges
Valuing closely-held businesses or professional practices is especially complex and costly in Massachusetts. Courts often rely on expert business valuation specialists. Unlike liquid assets, business interests typically stay with the owning spouse, with buyouts for the other party, which can entail complex payment arrangements not anticipated by divorcing spouses, especially when the business is also a source of income for one of the parties.
5. Digital and Hidden Assets
Massachusetts law requires full financial disclosure. Unfortunately, hidden assets, including offshore accounts, cryptocurrency, NFTs, and non-traditional holdings, pose discovery challenges. Forensic accountants are frequently used to uncover such assets. This process can be surprising for spouses who underestimate the level of scrutiny involved, or who don’t have a clear picture of their spouse’s assets.
6. Tax Consequences of Property Division
Massachusetts divorcing couples often face unexpected tax liabilities, such as capital gains tax on real estate or investment sales and penalties arising from improper division of retirement funds. Strategic asset transfer and use of Qualified Domestic Relations Orders (QDROs) are crucial, but many spouses underestimate the need for tax specialists in these matters. We often work with tax professionals so that our client’s are making the best possible decisions in determining which assets they would like to retain.
7. Child Impact Considerations
If children are involved, Massachusetts judges must consider the children’s present and future needs, which adds complexity and can alter division outcomes, such as spousal support or asset allocation.
8. Postnuptial and Prenuptial Agreement Validity
High Net Worth couples often get prenuptial and post-nuptial agreements to safeguard property, such as inherited property. If these agreements aren’t carefully drafted or if circumstances change radically, things don’t always go according to plan. Massachusetts courts scrutinize premarital agreements thoroughly. If either spouse contests the validity of a prenuptial or postnuptial agreement, lengthy additional hearings may ensue, which many spouses do not anticipate.
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High net worth divorces in Massachusetts commonly involve complex asset issues, hidden asset risks, tax implications, privacy challenges, and emotional and procedural difficulties that spouses may not initially foresee. In a divorce with a complex balance sheet, it’s always better to consult with a Massachusetts divorce attorney who understands the complexity of your legal issues and will advocate for your present and future financial needs.
At Mansur Law Group, we address each divorce with sensitivity and care. We offer several divorce alternatives to traditional litigation that are often sought by high-net-worth clients. Whether you want to pursue mediation conciliation, arbitration or collaborative divorce, or whether it’s best to go the route of traditional litigation, our team brings the legal and financial insight needed to protect your interests during every stage of the process. Contact Mansur Law Group today at (978) 961-6389 to schedule a confidential consultation about your divorce and learn how to avoid the unexpected in your high-net-worth divorce.