Why High Net Worth Divorce Is High Stakes
Any divorce is tough, but when you deal with big money, every choice you make can have long-term impacts. In Sherman Oaks and the greater Los Angeles area, a high net worth divorce could involve real estate, businesses, investments, retirement accounts, taxes, and a need to protect your privacy.
That is why it is so crucial to hire a high net worth divorce lawyer in Sherman Oaks, Los Angeles, California. These matters are high stakes because the results will involve not only the divorce, but it will also have a lasting effect on your long-term financial stability.
Why Is High Net Worth Divorce Different?
A high net worth divorce involves assets that may be harder to find, value, and divide. A case doesn’t just look at a house and a bank account. It requires a detailed review of intricate property and income streams.
Common issues include:
- Homes and investment properties
- Businesses or professional practices
- Stock options, bonuses, or deferred compensation
- Retirement accounts and pensions
- Trusts, inheritances, or separate property claims
- Personal property or collectibles
When the financial picture is intricate, the mistakes can be expensive. An asset may be under-valued, not taken into account at all, or divided in a way that results in tax or cash flow trouble down the road.
California Property Rules Make Things Complex
California is a community property state (go here for more info). In general, everything you and your spouse acquired during the marriage is split down the middle. However, when it comes to high net worth divorce, not all assets easily fit into either category.
Say you owned a business prior to your marriage, but the business gained value while you were married. Or say you purchased your house with separate funds, but your marital income was used to make improvements and pay down the mortgage. Say your investment accounts included both pre-marital funds and community earnings.
That’s where details matter. A high net worth attorney in Sherman Oaks can help you understand what belongs to the community estate, what belongs to an individual estate, and what falls into a community and personal mix.
Business Interests Make Everything Risky
Business ownership may add a layer of complexity to any divorce. You may have to value a business, divide it, one spouse may buy the other’s share out, or other assets may be awarded in lieu of a business stake. Additionally, a business can affect support.
Valuation may require looking at a business’ revenue, expenses, goodwill, ownership agreements, and income potential. If one spouse controls the books, the other may need help getting access to those financial numbers.
If you rush a business valuation, or value it wrong, you could end up with an unfair result. Or worse, the business may end up with a problem as well. Proper planning will protect the business and the spouse.
Income Is Not Always Easy
With a high net worth divorce, income could be comprised of many sources. One spouse may earn wages, bonuses, commissions, dividends, rent, investment income, and business distributions. And the income you’re receiving may not be immediate.
This is relevant because the amount of income received will affect child and spousal support. If income is not accurately reported or understood, the award may not be representative. You may need tax returns, statements, business records, and compensation documents.
Confidentiality and Status Count
People with high net worths are often worried about the confidentiality of their divorce. You could be revealing financial data, business specifics, and personal issues. And with professionals, executives, and business owners, there is a reputation risk.
Though not every detail will remain confidential, the delicate issues can be carefully addressed. There is a way to negotiate, mediate, and draft an agreement that minimizes exposure.
Local Experience Is Important in Sherman Oaks
Sherman Oaks is part of the larger Los Angeles area. It’s an environment where property is expensive and many families have multiple, intricate assets. Local attorneys know the nuances of Sherman Oaks real estate, businesses, and Los Angeles courts.
An attorney who understands Sherman Oaks can also strategize in the best possible way. He or she can understand how complicated financial disputes are handled and make the proceedings more efficient.
A frequently forgotten matter is whether a prenuptial agreement or postnuptial agreement exists that governs property distribution or support.
In cases involving high assets, this may dictate property division, and it may also be contested by the opposing party. A high net worth divorce lawyer, Sherman Oaks, Los Angeles, California, can assess enforceability in the early stages of representation.
Wait Before You Settle
High net worth divorce is high stakes. You will have one agreement that shapes your financial picture for decades. Prior to entering into a settlement, understand the full scope of your assets, how an asset should be classified, the tax consequences of a settlement (with the full details at irs.gov/publications), and the implications of support for the long haul.
Wealth and your future security are at risk. You want preparation on your side, and proper counsel can help you to make good decisions and protect what counts.
