When the marriage includes significant assets, property division can be an ordeal. If you are contemplating or going through a high-net-worth/high-asset divorce, preparation is essential to streamlining the process and protecting your rights.
From gathering documentation of your property, debts, income, and expenses to reviewing community and separate property to valuing your assets and assembling records and evidence for court, there are many details to manage. Having expert legal counsel can make the process easier. Let’s review the process.
Collect Property, Debt, Income, and Expense Documents
In a divorce, no one – especially a judge – will simply take your word about your financial status, nor should you blindly accept what your spouse claims. Here are specific items you will need as proof:
- Recent tax returns.
- W-2 and 1099 statements.
- Bank, investment, and retirement account statements.
- Credit card, mortgage, and other loan statements.
- A detailed list of your property, including real estate, businesses, vehicles, jewelry, artwork, and collectibles, along with intangible property, like stock options and intellectual property.
Distinguish Community Property from Separate Property
Determine which of your assets and debts are community property (jointly held or owed by you and your spouse) and which are separate property (held or owed individually). In Washington, community property includes all income, assets, and debts that either or both spouses acquire during their marriage. Separate property includes assets one spouse owned before marriage, as well as gifts, bequests, and certain legal settlements.
Courts generally divide community property in divorce but may also divide separate property. A valid prenuptial agreement may also affect how the court designates and divides your property.
Establish Accurate Property Values
You must also assess what your property is worth. Establishing asset values may require advice and guidance from experts, such as:
- Financial specialists. Accountants or financial planners with training and experience can analyze the parties’ financial situations in a divorce.
- Appraisers. Appraisers can accurately value property like real estate, artwork, or jewelry. Use only appraisers with training and experience assessing the type of property in question.
- Business Valuators or Business Appraisers. If one or both of you have an ownership interest in a business, you will likely need a business valuation. Business valuators specialize in evaluating companies’ assets, liabilities, and capital. Whomever you choose for this role should have experience and skill in assessing the industry and factors that could influence the business’s future performance and revenue.
- Actuaries. Actuaries use statistical analysis to determine the present cash value of assets like pensions and life insurance policies.
Avoid Unnecessary Courtroom Battles
High-net-worth divorces can be contentious, but they need not be. The more you and your spouse exchange information honestly and openly and reach agreements without involving the judge, the less expensive, time-consuming, and stressful your divorce will be.
Engaging in a collaborative process like mediation can be a good choice in a high-asset divorce by cutting the time attorneys need to review evidence, prepare paperwork, and appear in court. You and your spouse may also be able to share experts, further reducing costs for report preparation and expert witness appearances.
Do you have questions about preparing for a high-asset/high-net-worth divorce? Whether you are beginning to collect your documents or are already in the middle of a divorce dispute, we can help you move forward.