When people with large differences in income get a divorce, things can quickly get complicated. What started as an arrangement where one spouse was happy to share their resources can quickly become a source of resentment and conflict. If you married a wealthy spouse and you are getting a divorce, even if your spouse is not actively withholding money, it can be difficult to know how to ask for what you deserve. Often times the lower earning spouse will feel as though their contribution to the marriage was not equal to the higher earning spouse because their contributions are not as easily calculated. It is critical to know how to negotiate about the financial aspects of divorce as once the divorce settlement is finalized it is difficult to change. The following are 4 Dos and Don’ts to consider if you are divorcing a wealthy spouse:
- Do: Compile Documents and Keep Records. When you’re getting a divorce from a wealthy spouse, it’s important that you are careful about keeping records and gathering documents. In a complex, high asset divorce, tracking down documentation and getting a full picture of the assets can take a while. If your spouse cooperative you can work together in compiling this information. Unfortunately, not every divorcing spouse is as forthcoming as they should be. Some high-net-worth spouses can be tempted to hide assets in divorce or resist turning over documentation necessary to evaluate the true value of an asset, such as partnership agreements, profit and loss statements and other documents. Keeping track of assets and keeping records of taxes and spending is critical. Dishonest spouses could be tempted to hide accounts, create trusts in your children’s name, or otherwise conceal assets.
- Don’t: Forget to Ask What for What You Deserve. When you are married to a wealthy spouse, and you are the lower earner, you might be tempted to undervalue yourself and ask for less than what you are due. Marriage is a financial union, not just a romantic one, and you and your spouse took on certain roles during the marriage in furtherance of that relationship, whether or not those roles were monetary in nature. The purpose of property division and alimony is to ensure that the divorce reflects the years both partners contributed to the marriage, the purpose of which is to ensure that both you and your spouse are able to maintain the marital lifestyle after the divorce. In all marriages, spouses have contributed their time and energy to the partnership. Whether it’s raising kids, helping with a business or providing emotional and logistical support, the law recognizes that people in a marriage should divide their assets in such a way that reflects their contribution and ensures that one spouse is not left much worse off than another.
Massachusetts Law can consider the conduct of spouses in the marriage and the earning potential of spouses after marriage to decide on alimony and asset division. Massachusetts courts use the concept of “equitable distribution” to decide who gets what in divorce. It may not be an equal split but it should be proportional to the time you have spent in the marriage and other factors. If you are doubting yourself about what you deserve in a divorce, you should speak to an experienced Massachusetts Divorce Attorney, and you might find that you are entitled to a lot more than you think.
- Do: Make sure to consider not just the current value of the assets, but the future appreciation of the assets. When you are dividing your assets in a Massachusetts divorce, you should consider the value of all assets in terms of their future as well as their current value and any potential tax consequences associated with the asset, which may be a difficult calculation to make. These values can also fluctuate significantly during volatile market conditions. You will likely need advice when dealing with assets that are highly variable like investments, stocks, cryptocurrency or an early-stage investor funded business. This is why it’s important to work with a divorce attorney who is experienced in dividing complex assets in high net worth divorces.
- Don’t: Forget about Tax. When you are getting a high net worth divorce, foreseeing the tax consequences of the distribution of marital property helps you receive a more favorable settlement and often works out better for both spouses. If you are mediating your divorce, tax planning is one of the most important aspects of working together with your soon-to-be ex-spouse. There are different tax treatments for most assets you will be dividing in your divorce. Some assets are taxed at income tax rates while others will accrue capital gains tax. Certain marital assets are treated differently from others, such as the family home. Investments like RSUs, stocks and shares will be treated differently for tax purposes, as some of these may be tied to work performance and taxed as income, while others will be subject to capital gains tax. Dividing retirement accounts such as a pension, 401k or 403b can only be properly accomplished with a court order and a properly draft qualified domestic relations order (QDRO) or there may be penalties and also tax consequences. There may also be tax and legal issues with breaking up trusts. An experienced Massachusetts divorce attorney will help you optimize the process of dividing your assets so you can be in a position to thrive after your divorce.
When you are divorcing a wealthy spouse the key takeaway is to remember that you were one half of the marriage, and that your shared marital assets should be distributed fairly. Just because you were the lower earner, it doesn’t mean that you should be left with very little. When you are divorcing a wealthy spouse, the divorce could be amicable or it could be more contentious, but either way, it’s important to have all the information you need to negotiate a fair settlement. If you are divorcing a wealthy spouse the time to contact an experienced Massachusetts divorce attorney is sooner rather than later. A high net worth divorce can take time and planning and the earlier you can begin to tackle the process the better. At Mansur Law Group we have years’ experience mediating and litigating complex divorces with high value assets. Please get in touch to see how we can assist you with your divorce. Massachusetts Divorce Attorney