Every Divorce in Washington is different from one another, but divorces with similar characteristics usually encounter similar challenges, following the same patterns. For example, couples without children go through a quicker divorce process than couples with children, who have to go through a complex divorce process involving child custody, parenting time, etc.
Similarly, couples who have worked hard to earn successful careers also accumulate substantial assets together. When a couple has plenty of liquid financial assets worth millions of dollars, they can be considered high net worth. Whatever the value of their assets is, their divorce process becomes undoubtedly more complex when such a high-profile couple decides to separate. In this blog, we are going to highlight some unique challenges dedicated to high net worth divorces in terms of dividing valuable assets and how to handle them. Keep reading below.
Asset Division Amongst the Divorcing Couple in Washington
Couples of high net worth usually own a substantial number of liquid assets that must be divided during a divorce proceeding. These assets may include dividing – real estate properties, like residences, commercial properties, second homes, etc.; businesses and companies with their associated debts and incomes; retirement accounts and numerous investment holdings; vehicles such as planes, boats, and cars; and other liabilities like jewelry, artwork, furniture, etc. The division of these assets is not as easy as it sounds. It cannot be declared just by drawing a line in the middle of the property papers. In such cases, an attorney of high net worth divorces is often asked for assistance. You can take your asset inventory for the division process and decide what you will keep and which assets you are ready to give up.
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Keeping The House vs. Selling It
When a couple is getting a Divorce in Washington, dividing the family home is a personal and an emotional matter. But it is also important to overlook the house’s sentimental value and look forward to the financial aspects of the house, thus making the best decision for the future. There are two main things you can do to your home:
Selling the House
Evaluate the value of your home after you pay off the broker’s fees, mortgage if applicable, and other taxes. This is a crucial step to getting an accurate and fair appraisal for dividing the property equitably among both partners. Generally, the profits from the sale of primary residence on the taxes are often excluded. The main question is, how much time will it take to sell the house, and what will be the alternate living options?
Keeping the House
Usually, a high-net-worth couple can afford the home in terms of the mortgage, insurance, real estate taxes, and upkeep. Most of the time, the couple needs to refinance the house only if each of them qualifies for the refinancing, which depends on their post-divorce financial status.
For making the final decision, a new budget is usually built, showcasing the post-divorce financial status of the ex-spouses. The cost of the current house is analyzed and compared to living somewhere else.
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Splitting Retirement Accounts
If you are a high net worth couple and going through a divorce and asset divisions, you must first understand a retirement account’s value. You also need to learn how withdrawals are taxed. Typically there are two primary types of retirement accounts:
Traditional accounts: In such accounts, contributions are made before tax payments, or you get a tax reduction from the contribution amount if the tax has already been paid off.
Roth accounts: The contribution in a Roth account is made after the tax payment, but the advantage is that the withdrawals and contributions are not taxed in retirement.
Furthermore, for splitting a retirement workplace account like 401K (a), 403 (b), etc., the couple requires a Qualified Domestic Relation Order issued by the court. Hence, you must ensure that all your beneficiary information is updated as soon as you file the divorce. After your death, the payment of your accounts is typically governed by the most recent beneficiary you added. Therefore, it is necessary to keep your account information updated.
The wealth of high-net-worth couples come in different types and sizes. Some couples have significant wealth that generates a huge income due to both spouses holding substantial careers. In most families, one spouse works outside the house, while the other takes care of the home, including the children. In such cases, the foundation of dividing the couple’s wealth is based on inheritance. Therefore, in cases where both the spouses have contributed to the marriage in different ways, the decisions about alimony are challenging to make. To determine the alimony, the court considers many factors, which include how each spouse contributed towards their marriage, such as the upkeep of the household via earning, unpaid childcare, etc., the future financial potential of each spouse, and the resources needed by them to live a particular lifestyle that they are used to.
Dividing Properties Other Than the House
The property division is one of the most complex processes of a high-net-worth Divorce in Washington since they tend to be highly valued. Usually, disputes over properties during a divorce are settled outside the court. Still, the settling amount can be worth more than millions of dollars for a high net worth couple, depending on the total net value at hand. In most cases, both the separating spouses would have personal assets that are not considered marital. Such assets as an inheritance or account ownership before the marriage are considered separate property, not included in the asset division. This is why a prenuptial agreement is precious because it clearly states all off-limits properties that are simply not available for distribution during a divorce proceeding.
The Duration of High Net Worth Divorce Proceedings
High net worth divorces as compared to regular ones are more problematic since there is so much at stake. This intricacy often results in more extended court hearings regarding the time taken to evaluate the assets and decide on their equitable divisions among both partners. The divorce hearings in which the court does not decide how to divide certain assets can prolong the divorce even further. Therefore, most attorneys suggest that courteous negotiation or mediation outside the court is the speediest way to proceed with the divorce procedure and saves time.
The Undiscovered Assets
The individual’s attempt to conceal certain assets to avoid an equal distribution and keep a more significant share is known as “financial infidelity.” Examples include opening a bank account that is not in the partner’s knowledge, making major transactions without consulting with the spouse, starting businesses without letting the partner know, etc. Thus, hiding financial activities from one’s husband or wife is not something we would recommend, as this would offer no benefit in the longer run.
How To Smartly Handle a High Net Worth Divorce in WA?
Despite all the challenges of high net worth divorces mentioned above, a few positive actions would assist in resolving a high-end divorce, thus reducing the accompanying stress.
Hiring an Experienced Divorce Attorney in Washington
To resolve a divorce that includes a high-value asset division, it is necessary to hire a Washington Divorce Attorney with good experience handling such cases because they simply know how to keep the matter private. The attorney should be able to resolve the dispute through negotiation or mediation, significantly reducing the cost of litigation.
Enlisting the Whole Property
If a couple is aware of the impending divorce, it is essential to enlist all the properties they own, including their purchase price, current value, and other important information. The couple should also separately make a list of items they wish to keep for themselves and the ones they want to give up. As we mentioned earlier, couples who hide their assets from their partners at the time of Divorce in Washington often lose their credibility with their exes and the court. This makes the settlements lengthier and more complex, thus increasing the costs if an accountant is hired to determine the hidden property.
Maintaining a Good Relationship with Your Spouse
Whether it is high net worth or a regular divorce, seeking revenge on your partner can be emotionally and financially draining. Understandably, the ex-partners are angry and upset with each other, but handling the process professionally like a business transaction can positively impact the long run. It will be beneficial if both spouses agree on common terms that interest both parties.
Being Realistic and Patient
Realizing that a high net worth divorce proceeding takes more time than usual is essential. Do not rush to settle asset divisions and avoid making decisions out of anger. This is the most common mistake that every divorcing couple makes. Decisions made in a hurry or out of emotions can risk losing valuable assets and incurring some burdensome financial liabilities. Therefore the key to making the best decisions regarding property and other asset divisions is to remain calm, informed, and in contact with experienced professionals who will craft a thorough strategy to follow mediation or negotiation.
Call Today For A Free Consultation With An Experienced Washington Divorce Lawyer
Going through the Washington Divorce Process is never a pleasant experience, whether it is a regular or a high-end one. However, it can be made less costly and less stressful if you hire trusted and experienced professionals to streamline the divorce process. Therefore, begin with searching for a well-reputed attorney to successfully resolve high-asset separation. Maintaining a positive relationship with your ex-partner and hiring an experienced attorney will go a long way to achieving the desired results in ultimately less time while keeping the matter as private as possible.
The dedicated divorce lawyers at Aberdeen Family Law in Bellevue, WA understand that divorce is never an easy decision and are dedicated to helping you find the answers to your questions. To learn more, please don’t hesitate to contact or call us at (855) 593-1497 today.