Dividing a family’s assets during a divorce can be quite difficult, especially if there are significant assets such as real property investments/management companies, retirement plans, stocks, options, deferred compensation, brokerage accounts, cryptocurrency, businesses, professional practices, etc. Deciding the value of these assets and how to distribute them can be quite a challenge, even in the best situations. But, if your divorce is contentious, this can be especially complicated.
With such complex matters there’s a lot at stake and it is extremely important to have representation by qualified and experienced attorneys. Assets should be carefully analyzed to determine their liquidity, cost basis, and any tax implications tied to their ultimate sale after divorce. It is not always in a client’s best interest to distribute assets based on their current dollar value. The attorney must understand which assets will be best for their short and long-term financial security.
In divorce cases involving high-net-worth spouses, it is even more crucial for your attorney to analyze all of the divisible assets including:
- Any businesses or business property
- Deferred compensation packages
- Offshore bank accounts
- Tax Loss Carry-Forwards
- Annuities, pensions & retirement plans
- Life insurance policies
- Profit-sharing plans
- Stock options
- Complex tax issues
- Real estate holdings
When evaluating your selection of a divorce attorney for a high-net-worth or complex asset distribution, a client should ask about the following:
- Have they handled divorce cases involving complex division of business and personal assets in a divorce before?
- Do they have any special credentials related to such matters, such as Fellowships in The American Academy of Matrimonial Lawyers (AAML) or The American Academy of Certified Financial Litigators (AACFL)?
- How will they assist you with the identification, characterization and distribution of various assets?
- How do they evaluate your retirement benefits, private pensions, defined contribution retirement accounts such as 401(k) and 403(b) plans, received benefits through a trust, federal and state employee retirement benefits, and military service member pensions?
These are among the common questions to be asked in high-net-worth divorce cases when considering an attorney. There are many more, depending upon the particular types of assets in a given case. For instance, it might be wise to ask whether a prospective attorney has experience in distributing stock options, restricted stock units (RSU’s), phantom stock, stock acquired through employee stock purchase plans (ESPP’s), stock acquired through employee stock ownership plans (ESOP’s), and stock held in stock portfolios or even private investments. It is also a good idea to inquire whether the attorney has a team of financial experts available to assist with complex issues, such as forensic accountants, tax lawyers, forensic computer experts, commercial real estate appraisers, etc.
There are unique issues involved in a divorce where the party or parties own a family held business or a sole proprietorship. Working alongside financial experts who understand business valuations can provide a more accurate picture for your situation.
The Wrong Decision Could Be Very Taxing
Nolletti Law Group PLLC is able to meet all of your needs with respect to the complexities of high-net-worth divorces. We are also meticulous about incorporating tax liability into property settlements to protect the assets and maximize the benefit.
Failure to consider all tax-related issues/consequences can be very costly in divorce settlements. We work directly with CPAs and other tax professionals to assist our clients in getting and keeping assets obtained in a divorce. We recognize that being knowledgeable about divorce tax is critical to providing exceptional legal service to our clients.
Generally, there are little, if any, tax consequences realized at the time of a divorce. They usually come later when a divorced spouse sells or transfers assets obtained as a result of the divorce. By not directly addressing such future tax issues at the time of your divorce, and presuming that taxes are something your accountant can clean up later, you can end up agreeing to terms where the real value of the property awarded may be significantly different than what one or both parties are expecting. Tax consequences can be significant in a divorce and should be addressed in the context of the overall settlement.
Nolletti Law Group PLLC offers more than 40 years of experience in helping clients navigate through the minefields of a high stakes divorce involving complex property valuation and equitable distribution of significant assets. Our goal is to provide the information a client needs to make the best decisions possible for their specific financial circumstance during a divorce.