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Carmel High Net Worth Divorce Attorney

For business owners, professionals, and other individuals who have accumulated substantial assets during their lifetime, getting divorced can have significant financial implications. The same is true for spouses of high-earning individuals. Under Indiana law, the financial and property-related aspects of a divorce can have outcomes that are very different than those possible under the laws of other states; and for couples without a prenuptial or agreement, understanding how the law applies is one of the first steps toward making informed and strategic decisions.

Carmel divorce attorney Joshua R. Hains has significant experience representing spouses in high-net-worth divorces. While Attorney Hains works closely with his clients to negotiate favorable divorce settlements whenever possible, he will not hesitate to take his clients’ divorces to trial when necessary. Attorney Hains has more than a decade of experience practicing family law in Indiana, and he is intimately familiar with the property, tax, financial support, retirement, business ownership and other unique issues involved in high-net-worth divorces.

When is a Divorce Considered “High Net Worth”?

A high asset or high net-worth divorce involves dividing a large marital estate. These marital estates may include but are not limited to the following:

  • Various pension funds, retirement funds, annuity funds, IRA accounts, tax-deferred compensation funds, profit sharing plans, 401(K)s, 403(B)s, ESOPs, ESPs, KEOGHs, IRAs and other retirement plans, funds or accounts;
  • Various bank accounts, life insurance and/or investment accounts;
  • Fine art, automotive and/or memorabilia collections;
  • Business ownership and interests (corporation, LLC, limited partnership, etc.)
  • Various pieces of private and/or commercial real estate;
  • Complex mortgages, loans and notes;
  • Large inheritance(s).

It is important to keep in mind that high asset divorces are subject to the “marital pot” theory. This theory places all of the couple’s property (assets and liabilities) regardless of title (jointly or individually) or if it was a gift, inheritance, or owned before the marriage, in one pot, which is subject to division. Indiana courts follow a rebuttable presumption that a 50/50 division is just and reasonable. However, the court may, after hearing relevant evidence, find that a party should receive a greater percentage of the marital pot.

5 Key Aspects of High-Net-Worth Divorces in Indiana

1. Division of Assets

Whether you, your spouse or both of you have accumulated significant assets, the division of these assets is likely to take center stage in your divorce. Under Indiana’s “marital pot” rule, in the absence of a prenuptial or postnuptial agreement, all assets owned by either or both spouses will be on the table. Once again, this includes assets acquired prior to or during the marriage, and any designations of ownership on legal titles (such as for vehicles and real estate) will be ignored.

Even if you and your spouse agree to a 50/50 split (which is a decision that should not be made until exploring all potential options with the advice of an experienced attorney), there will still be several challenging issues that will need to be addressed during the divorce process. For example:

  • Which assets will be distributed to whom? In high-net-worth divorces, agreeing to a percentage split is just the first step in determining who gets what. The spouses must also agree upon a comprehensive inventory of their property, and then they must work through the process of dividing these assets appropriately.
  • What is the proper value to be assigned to physical assets? In order to divide your marital pot according to the agreed-upon percentages, it may be necessary to obtain valuations for several assets. This includes real estate, collections, antiques, artwork, jewelry and other items of personal property. In some instances, divorcing spouses may obtain competing valuations, and this can lead to intermediate disputes that need to be resolved before the division of assets can move forward.
  • What is the proper value to be assigned to retirement and investment accounts? There are special tax rules that allow for the division of retirement accounts during a divorce (through use of a “qualified domestic relations order” or “QDRO”); but, whether you will divide your retirement account or you will keep it in exchange for giving up your interest in other assets, you will need to arrive at an appropriate valuation. Similar to physical assets, there are various methods available for valuing retirement and investment accounts, and different methods may favor spouses with differing agendas.
  • Who will own and control your business? In a divorce, ownership interests in a privately-held business are treated largely the same as all other items of property. Disputes over ownership and control can delay proceedings significantly, and they can potentially force divorcing spouses into mediation or litigation.
  • How can you protect items with sentimental value? In high-net-worth divorces, it is not unusual for spouses to have particular attachments to certain high-value pieces of property. Whether you want to protect your car collection or your spouse wants to keep your vacation home, issues related to sentimental value can add to the already-significant complexity of dividing a sizable marital estate.

Importantly, while the above discussion focuses on negotiating a property settlement – and while negotiating a settlement will usually be in both spouses’ financial interests – it is not uncommon for property-related disputes to end up in court. While Attorney Hains is experienced in helping clients maintain productive out-of-court negotiations, he also works closely with his clients to help them understand when it may be in their best interests to go to trial.

2. Division of Liabilities

In addition to dividing individual and joint assets, divorcing spouses must also divide their individual and joint liabilities. This includes mortgages, home equity lines of credit, car loans, student loans, credit card balances and all other types of debt.

Similar to assets, the presumption in Indiana is that divorcing spouses’ liabilities should be split 50/50. However, also similar to assets, this presumption can be overcome. While it will often make sense for secured debts to be assigned to the spouse who receives the property serving as security (for example, the spouse who receives the family home would also take responsibility for the mortgage and any home equity lines), this will not be the most-appropriate outcome in all cases. An individual spouse’s financial resources may not make this a practical solution, and lenders will not always approve the formal assignment of joint debts to individual spouses.

3. Spousal Maintenance

Although the grounds for a divorcing spouse to seek maintenance (more commonly known as “alimony”) in Indiana are limited, in a divorce where one spouse earns significantly more than the other, it is not uncommon for the parties to agree on an award of maintenance subject to court approval.

The most common form of alimony in Indiana is referred to as “rehabilitative spousal maintenance.” This is alimony that is intended to allow a spouse with limited earning capacity to obtain the education or training necessary to become self-supporting. The courts will generally award rehabilitative spousal maintenance for a period of up to three years; and, when negotiating an out-of-court divorce settlement, separating spouses will often jointly address division of assets, division of liabilities and spousal maintenance.

4. Child Support

Although child support calculations are made according to the Indiana Child Support Guidelines, high-net-worth spouses can face some unique issues in calculating an appropriate support obligation. Along with accurately calculating each spouse’s gross income, divorcing spouses must take into consideration their respective child custody rights, maintenance payment rights or obligations, special and extraordinary expenses, and various other factors as well.

5. Tax Considerations

In high-net-worth divorces, tax considerations can greatly influence the spouses’ decisions regarding transfer and liquidation of assets, payment of spousal maintenance, and other property and financial considerations. The Tax Cuts and Jobs Act of 2017 made drastic changes to the federal income tax treatment for spousal maintenance, and spouses who get divorced after 2018 must consider the new law’s effects on the overall tax burden resulting from their divorce.

Q&A with Attorney Joshua R. Hains: Preparing for a High-Net-Worth Divorce in Indiana

Q: How is spousal maintenance taxed under the Tax Cuts and Jobs Act of 2017?

The Tax Cuts and Jobs Act eliminates the tax deduction for former spouses who pay alimony. Under the new law, which is effective for divorces finalized on or after January 1, 2019, alimony payments are not deductible by the payor, and recipients no longer need to report them as taxable income.

Q: When dividing assets in a divorce, what are some alternatives to the proverbial “splitting the baby”?

While splitting assets down the middle is certainly one option for dividing a marital pot, the costs and tax consequences of liquidating assets will often be undesirable for both spouses. As a result, it will often be in both spouses’ best interests to apportion their assets according to their agreed-upon percentage split. This still raises certain issues, such as the valuation issues discussed above, but it will often be the most-desirable and most-cost-effective resolution for both parties. For more information, you can read:

Q: If I get divorced, will I be able to keep my business?

In the absence of a prenuptial or postnuptial agreement, protecting a privately-held business in a divorce under Indiana’s marital pot rule presents unique challenges. However, there are strategies for maintaining ownership and control of a business after a divorce, and we can help you if this is one of your priorities. To learn more, you can read: Divorce Considerations for Indiana Business Owners.

Q: When should I speak with a divorce attorney?

As a high-net-worth individual, if you are thinking about divorce, it is a good idea to speak with an attorney sooner rather than later. There are decisions that will need to be made, and preparing in advance can make the process go much more smoothly. If your spouse has already filed for divorce, you have a deadline to respond, and you should speak with an attorney as soon as possible. We offer free initial consultations, and we can help you make confident decisions with your long-term best interests in mind.

The Hains Law, LLC Approach

Carmel high net worth divorce attorney Joshua R. Hains represents individuals with high incomes (“bread winners”) who are doctors, dentists, business owners, CEOs, CFOs, professional athletes and their spouses to dissolve their marriage and divide their property (assets and liabilities). High net-worth divorces often involve discovery, which is the process of obtaining information from the other party and/or witness. The discovery process typically includes interrogatories (written questions answered under oath); requests for production (obtaining documents); and depositions (answering questions in person under oath with a transcript).

Given the complexity of high asset divorces, Attorney Hains works closely with forensic accountants, CPAs and financial advisors to ensure that his clients are well informed regarding their marital estate. With this information, his clients are able to settle or take their divorce case to trial. Joshua R. Hains’ goal is to assist his clients in protecting their wealth and transitioning to life after divorce.

Schedule a Free Consultation Today With a Carmel High Net Worth Divorce Attorney 

If you or someone you know is in need of a lawyer to handle their high asset divorce, Hains Law, LLC is ready and willing to help. We assist clients in Carmel and throughout Hamilton County in every step of the divorce process. Call us today at 317-688-1305 or contact us online to schedule an initial consultation, and learn your options.