High Asset Divorce: 5 Costly Mistakes Not to Make

Key Takeaways:

Rushing to settle a high-asset divorce can lead to unfavorable terms and financial losses.
Acting out of anger or spite can increase conflict, legal expenses, and costly mistakes.
Hiding assets during divorce can result in serious legal and financial consequences.
High-asset divorces can involve complex tax considerations, including capital gains and changes to filing status.
Choosing an attorney experienced in complex marital estates can help protect your financial interests.

In simple cases, usually shorter marriages with no kids and little shared property to divide, the divorce process is often relatively straightforward. Every divorce has a lot at stake, but high-asset divorces present unique challenges.

With multiple properties and a complex marital estate, the risks and stakes increase. So do the chances of making mistakes.

How Is High-Asset Divorce Different?

From a legal perspective, divorces are no different. Whether you have millions in the bank or you have a negative balance. The laws don’t separate one from the other.

But the more you have to keep straight, the more potential there is to trip up and make a costly error. For example, splitting up multiple homes takes more time and effort than dealing with one.

Perhaps you have a valuable art collection or robust joint retirement savings.

Common Mistakes in High-Asset Divorce

With that in mind, here are five common mistakes people make in a high-asset divorce.

Agreeing to Unfavorable Terms

When you’re in the thick of it, you probably want to get your divorce done as fast as possible. It’s a heated, stressful time. Unfortunately, this too often leads people to rush to settle.

People often give up assets they don’t have to in a mad dash to wrap things up. What looks like a good deal at first may not hold up on closer inspection. In high-asset divorces, these mistakes can be especially costly.

Acting out of Spite

Hurt feelings, anger, and bitterness often happen when you end a marriage. You may want to lash out and punish your spouse. Many people try to use divorce this way. These feelings are natural and understandable, but they don’t usually make for a good divorce strategy.

While it may be cathartic, a scorched-earth, conflict-heavy approach costs a lot of money. Fighting about every last detail takes time.

In high-asset divorces, where there’s more property to dispute, this approach can be especially expensive.

Related Reading: How Are Assets and Property Divided?

Hiding Assets

You must disclose all assets during the divorce process. That’s the law. But just because it’s the law doesn’t mean people always abide by it.

People transfer money or property to relatives or other outsiders, or attempt to conceal them in a variety of devious ways.

Judges and experienced divorce lawyers have seen these tactics before. If you’re caught hiding assets, you may face serious legal and financial consequences.

Forgetting Tax Changes

Tax consequences are often overlooked in high-asset divorces. Beyond changes to your filing status, property division and support arrangements can create additional tax considerations.

If the property you receive in the settlement is subject to capital gains tax, you may face a significant tax liability in the near future.
Items such as a principal residence and withdrawals from a retirement account are subject to different tax regulations.
Spousal support also has unique tax rules, which changed at the end of 2018.

Hiring the Wrong Lawyer

It’s usually in your best interest to hire an attorney, especially in a high-asset divorce. But many people hire the wrong lawyer. You may want the meanest, toughest representation you can find. In some cases, that’s the perfect fit, but not always.

Consider the specific needs of your case rather than hiring someone spoiling for a legal fistfight. Find a professional with experience in your type of case.

Look for an attorney who understands your financial circumstances, has experience handling high-asset divorces, and works well with you.

High-asset divorces present unique financial challenges, and mistakes can have lasting consequences. A careful, informed approach and an experienced divorce attorney can help protect your financial future.