The process of getting a divorce is an emotionally turbulent time—regardless of your finances. However, when you have a large amount of property to divide between the two of you, the stakes are considerably higher (not to mention more complex!).
As a result, high net worth couples may panic about their impending singlehood and may even attempt to hide assets to “keep them away” from their soon-to-be ex-spouse. Unfortunately, this only further muddles an already-complicated divorce process.
Understanding how high net worth divorce cases work can give you better insight into the steps you need to take to protect your assets.
High Net Worth vs. High Asset
First, it’s important to understand that there is a difference between high assets and a high net worth.
When family law attorneys talk about net worth, they are referring to liquid wealth (i.e. cash). A high net worth individual is someone who has more than $1 million in liquid assets.
Marital assets, however, refer to things like real estate, retirement accounts, jewelry, art collections, and other items that may be worth a lot of money but aren’t immediately available to convert to cash.
As you can probably imagine, a high asset divorce will be handled differently than a high net worth divorce. Understanding which of these categories applies to you will give you a great deal of information on the details of your case.
How Divorce Works In Florida
If you are getting divorced in Florida, it’s important to understand how the Sunshine State views marital property.
Under Florida law, assets (or debts) acquired outside of the marriage are considered “separate property,” while those acquired during the marriage are considered “marital property.”
Fortunately, Florida recognizes equitable distribution in divorce.
Equitable distribution does not mean that assets and liabilities are split 50/50, but that the asset division is fair to both parties. One spouse may not care if she gets 50% of her ex-husband’s boat, while he would prefer not to have half of her business.
If you are dealing with a high amount of marital property, ask your divorce lawyer how they handle the division of assets. Splitting everything “down the middle” may not work in your case.
Unless you both signed a prenuptial agreement, the two of you will have to decide how to divide your property. You may come to this decision through a collaborative process, but if you cannot agree, mediation can help.
In a high net worth divorce, it may be as simple as writing a check to your ex-spouse and wishing them well. With a high asset divorce, however, dividing property can be a bit more complicated.
When there is a lot of marital property to divide (including debt), with very little money available to cover alimony and child support, many couples may decide to withdraw the funds from their 401(k).
While it is possible to convert retirement accounts into liquid assets, doing so can incur tax penalties or a significant loss in value. This is not a step that should be handled without an expert in high asset divorce.
If one of you started a business during the course of the marriage, both of you hold a one-half interest in it—even a spouse that has no hand in running the business.
In my practice, I frequently see businesses valued at millions of dollars but with no available liquid cash to buy out the other spouse. These scenarios need to be handled delicately so that property distribution is equitable and fair.
Equitable distribution of property requires that both parties are completely honest about their assets. Although both spouses must sign a financial disclosure affidavit, there are occasions when one spouse may attempt to hide assets in order to skew the divorce proceedings in their favor.
Working with a forensic accountant can uncover any hidden assets and bring the divorce into balance.
It isn’t only assets that are divided in a divorce, but debts as well.
This may involve converting your assets into cash in order to pay your debts, but this step must be done deliberately and carefully to retain as much of the original value as possible.
A Divorce Attorney That Works For You
At Leap Frog Divorce, our approach is designed to make sure no stone is left unturned so that you are aware of your rights.
From your first consultation, our divorce attorneys will take the time to discuss the details of your case to ensure that property is divided fairly with minimal loss of value. Whether you are a high net worth individual or are simply trying to work out child custody, we will fight for your rights every step of the way.
Call today to schedule an appointment.