Bohm Wildish: Divorce Business Ownership – Divorce finance is complicated as it is, but trying to divide a business makes it extremely vital to know the process before making business decisions. The business is typically an asset and a source of income for the couple. [Read more…]
With the steady recovery of the stock market, investment accounts roaring back to life and deferred compensation coming back, high-income individuals are again dividing assets instead of debts when it comes to divorce.
Yes, in what is known as a “divorce economy,” homes, businesses, investments, vehicles and even cash must somehow all be divided. But how?
In what the courts call “high asset cases,” it is imperative to hire a qualified attorney who specializes both in family law and high-income individuals with complex asset division.
Plus, wealthy individuals with complicated portfolios usually need to set up a divorce team. Once you have hired your family law lawyer, it is time to think about hiring a tax accountant, financial specialists and perhaps even a psychotherapist to help you through the stress of divorce.
Community Property or Separate Property?
Let’s get down to basics. Who owns what? Well, it depends on timing and on your pre-nuptial agreement (if you have one).
Community property is any property that you and your spouse bought after you got married. In some states, “separate property” includes property acquired before marriage or as part of an inheritance or gift. This “separate property” designation can also pertain to assets received from said property (such as selling a house before you were married).
Dividing High Assets
According to family court, couples with a lot of accumulated property and wealth are considered “high asset” divorce cases. Some examples of assets to be divided include pensions, cars, boats, real estate, securities portfolios, business partnerships, stocks, investments and bonuses.
What about Taxes?
Divorce can really put a wrench in your tax situation. In high asset divorce cases, a tax accountant works closely with your family law attorney to steer you into the right direction. Your tax accountant and family law lawyer should help you settle all your tax “problems” in the final divorce settlement including:
Should you file taxes jointly or separately and for which year?
What are the tax consequences of selling the family home? What about any other properties?
Which spouse is going to claim any dependent children on their tax income returns?
How will capital gains on the liquidation of long-term investments affect your tax bracket?
What about any tax defaults? How do you deal with that when it comes to dividing liabilities?
How Much are you Worth?
It is also important to bring in a team of specialized financial experts when it comes to high-asset divorce. Why? It is most important to determine the monetary value of each asset so there can be a fair and equitable division.
What types of financial experts might you need to determine your entire worth? The list is long: certified public accountants, certified financial planners, forensic accountants, business valuators, personal property appraisers and residential/commercial property appraisers.
Trial, Mediation or Settlement?
Yes, asset and property division even in complex cases really can be decided amicably via mediation or a private settlement. Sometimes, however, high asset divorce cases can become contentious and do go to trial. This is when it is even more important to hire a divorce attorney who specializes in wealthy clients because you will need a tough negotiator in court when it really counts.