Divorce has a significant impact on your financial future. In some unions, the dissolution of marriage and division of property are relatively simple. Especially in short marriages where there’s little to divvy up. The more there is to do, however, the more complicated the process becomes. There’s a great deal at stake in most cases, but high asset divorce ups the ante even further.
On a legal and conceptual level, there’s no difference between big and small divorces in Oregon courts. Though practically speaking, they’re worlds apart. High-value estates factor into nearly every facet of divorce. With large sums in play, missteps can be especially costly. Here are some common high asset divorce mistakes to avoid as you dissolve your marriage.
1. Agreeing To Anything
As long-term economic stability often hangs in the balance, it’s important not to rush into anything. Divorce is an emotional time and some people simply want to get it over with. Far too often, this leads people to make hasty, rash decisions without taking the time to consider the consequences. Just getting it done may seem great in the short run, but it often has a substantial financial effect.
In the rush to finalize your divorce, you may give up more assets than you have to. While it may appear fine at the time, it’s easy to regret reckless decisions. On the other side, if you don’t take the time to account for what is available and what you need moving forward, people often leave things on the table the court may otherwise award them. In high asset divorce, it’s important to act in a calm, rational manner instead of with a short-sighted goal.
2. Acting Out Of Anger
Wanting to be finished with a high asset divorce often leads to rash decision making. So, too, does acting out of a sense of anger or bitterness. These feelings are natural and often part of the process. They also cloud judgment and lead to choices that aren’t in your best financial interest.
Some people try to use divorce as a means of punishment. While that may be cathartic in the moment, it may not be smart logistically speaking. Engaging in an epic, scorched-earth divorce is expensive. And with both sides drawing money from the same well, people often wind up costing themselves more money in the long run. Anger isn’t always the best foundation for making sound life and financial choices.
3. Hiring A Tough Lawyer, Not The Right Lawyer
Going hand in hand with the idea of using high asset divorce as retributions, many people try to hire the toughest, meanest lawyer they can find. Having a strong attorney to fight for you is definitely important, but enlisting a rabid bulldog of an attorney doesn’t always mean you hired the right one.
In a high asset divorce, an attorney with experience in similar cases is more important than someone who just wants a legal fistfight. Consider what you have to protect, what you want out of a settlement, and what you need in the future. An attorney with an understanding of these elements will likely prove much more effective and practical.
4. Trying To Hide Assets
Part of the divorce process is the division of property. This is where the court splits the shared assets and debts in accordance with Oregon’s equitable distribution model. Both sides must disclose all their property, though this doesn’t always happen. Some people go to great lengths to hide things from their spouse. They may attempt to conceal certain valuables or even transfer property or money to a third party.
In high asset divorce, it’s even more tempting to try this, but it’s best to avoid underhanded strategies. Unless you’re remarkably devious and clever, you will most likely be found out. Judges and opposing counsel have seen it all before. You face significant consequences if you get caught. Your credibility takes a huge shot and these actions may place you at a disadvantage for the remainder of your case.
5. Not Being Thorough
You may want your divorce to be over ASAP so you can move on with your life. That’s a completely reasonable feeling. But just like you can’t agree to things to shorten the process, you can’t simply glide through. You need to put in the time to be as thorough as possible. High asset divorce is a process, one with many steps along the path.
Being thorough and prepared benefits your case in a variety of ways. If you don’t dig deep enough, you may miss hidden valuables. When you present a list of assets and liabilities to the court, it needs to be complete and thorough. Mistakes or omissions often lead to penalties. Though it may seem tedious and like a huge time suck, attention to detail pays off in the end. Think how satisfying, not to mention beneficial to your case, it would be to catch your spouse stashing assets. It’s definitely worth the time and energy.
6. Not Considering Taxes
You have many details to consider during the division of property. High asset divorces only amplify this fact. With everything else to account for, one element that often goes overlooked is taxes. The potential impact is huge and can have far reaching consequences. The most obvious factor is that your filing status changes after divorce.
In general, divorce is a non-taxable transaction if handled correctly. It’s possible to disburse money out of a 401(k), 403(b), or deferred compensation plan without incurring any negative tax effect. With some retirement plans, such as a 401(k), the recipient spouse is often able to cash out the funds without paying penalties.
Disbursed improperly, cashouts can be costly, and other assets you receive often carry additional tax burdens. One example of this is when assets are subject to capital gains. This occurs when you sell something for more than you paid for it—that profit is often taxable. Most commonly, this applies to real estate, stocks, and investments.
But not all assets all under the same regulations. For instance, the federal government taxes the sale of a primary residence differently depending on the gain. There’s a $250,000 cap gain fee for individuals, $500,000 for couples. Before agreeing to any settlement in a high asset divorce, it’s important to know the tax implications of everything on the table.
Divorce has a significant impact on the financial status of each spouse moving forward. Though there’s no specific legal difference, high asset divorce ups these stakes even further. The greater the pool of assets to divide, the more complicated and heated things tend to become.
In these situations, it’s in your best interest to retain the services of an experienced attorney. If you have questions about high asset divorce, feel free to contact Goldberg Jones at our Portland office.