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:
- 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
- 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)
Dividing Assets in High Net Worth Divorce
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
post-nuptial agreement –
all assets owned by either or both spouses will be on the table. This includes
assets acquired before or during the marriage – any designations
of ownership on legal titles will be ignored.
Even if you and your spouse agree to a 50/50 split, you will still have
to address several challenging issues during your divorce.
For example, you’ll likely have to determine:
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 those assets appropriately.
What is the proper value to be assigned to physical assets? To divide your marital pot according to the agreed-upon percentages, it
may be necessary to properly appraise several assets. This includes real
estate, collections, antiques, artwork, jewelry, and other personal items.
In some instances, divorcing spouses may obtain competing valuations,
which can lead to disputes that need to be resolved before the property
division process 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, but you will need to arrive at an appropriate valuation.
Like physical assets, there are various methods available for valuing
retirement and investment accounts. 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 assets. 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 be attached
to certain high-value assets. 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 complexity of dividing a sizable marital estate.
Dividing Debt & Liabilities
In addition to dividing individual and joint assets, divorcing spouses
must also divide their individual and joint liabilities.
- Home equity lines of credit
- Car loans
- Student loans
- Credit card balances
- All other types of debt
Spousal Maintenance in High-Asset Divorce
Although the grounds for a divorcing spouse to seek alimony in Indiana
are limited, it is common for the parties to agree on an award of maintenance
in a divorce where one spouse earns significantly more than the other.
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.
Child Support for High Net Worth Couples
child support calculations are made according to the Indiana Child Support Guidelines,
high net worth spouses can face some unique issues when calculating child
support obligations. Along with accurately calculating each spouse’s
gross income, divorcing spouses must consider their respective
child custody rights, maintenance payment rights or obligations, special and extraordinary
expenses, and various other factors.
Tax Considerations in High-Asset Divorce
Tax considerations can significantly 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.
Our Approach at Hains Law, LLC
Our high net worth divorce lawyer in Carmel represents individuals with
high incomes. Whether you are a doctor, dentist, business owner, CEO,
or professional athlete, Hains Law, LLC can help you dissolve your marriage
and divide your property.
Given the complexity of high-asset divorces, Attorney Joshua R. Hains works
closely with forensic accountants, CPAs, and financial advisors to ensure
that our clients are well informed regarding their marital estate. With
this information, you can confidently settle or take your case to trial.
Our goal is to assist you in protecting your wealth and transitioning
to life after divorce.
(317) 588-2883 or
contact us online to schedule a free phone consultation today.