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How can significant assets affect a divorce?

On Behalf of | Dec 6, 2023 | High-Net Worth Divorce

A divorce involving only minor assets may be relatively straightforward, as both spouses may be able to divide their assets with relative ease and move on. But if a couple has significant assets at the time of their divorce, it can have a major impact on how the process plays out.

Exactly how significant assets may impact the divorce proceedings depends on the specifics of the situation. Everyone’s divorce is unique. But here are a few things that are unquestionably worth considering when getting divorced with a relatively high asset level.

Hiding assets

First and foremost, you may be worried that your spouse will try to hide assets. Here are a few ways that people engage in this form of misconduct:

  • Creating fake debt: Creating fictitious debts to reduce the value of assets on paper is a common method to hide wealth.
  • Undervaluing assets: Individuals might undervalue assets such as real estate, investments or business interests to make them appear less valuable than they actually are.
  • Transferring assets to others: They might transfer assets to family members, friends or business partners temporarily to hide them during the divorce process, with the intention of reclaiming them later.
  • Overpaying taxes or debts: Some may purposely overpay taxes or debts with the intent of getting a refund or claiming a credit later, once the divorce is finalized.

Keeping an eye out for these red flags can potentially help you to identify when your spouse is trying to keep you from receiving your fair share of the marital estate.

Valuation issues

Another thing to consider is how to determine the real value of assets that must be divided. This can get complicated when couples do not agree. For instance, say that a couple owns a business and an art collection. In the divorce, one person suggests that the two have similar values, so one person should take the business and the other should take the collection. But are the values actually similar? It may be necessary to have a professional business valuation done or to have the art collection assessed to ensure that this arrangement would actually be a fair division of assets.

Tax complications

Finally, the divorce could have tax implications that make things more complicated. For instance, receiving assets with built-in gains might lead to tax consequences upon sale. If you accept an account believing that you get the full value, you need to consider how much you’ll have to pay in taxes to see what that account is really worth to you.

These are just a few areas that may inspire complexities during the high-asset divorce process. As a result, seeking legal guidance as proactively as possible is generally wise.