High Asset Divorce Attorneys in PensacolaThe dissolution of a marriage can be a difficult and emotionally-charged process for the parties involved. When there are significant and unique assets involved, however, the process can become even more complicated and stressful. During high-asset divorces, the stakes are much higher and there are more complex issues that must be resolved. For this reason, it is important for high net worth individuals who are divorcing to obtain experienced legal counsel.
Crystal Collins Spencer, Attorney at Law, has more than three decades of experience representing clients for divorce and other family legal matters in Pensacola, Fort Walton, Sandestin, and surrounding Florida communities. Over the years, attorney Spencer has handled divorces for numerous high net worth individuals. She understands the complexities involved with these types of cases, and the unique issues that frequently need to be addressed.
Divorce for High Net Worth Individuals in Florida
Florida is an equitable distribution state, meaning that during the dissolution of a marriage, marital property is distributed “equitably”, rather than everything being split 50/50. Equitable property distribution during a high-asset divorce can be problematic, however. This is largely due to the complexity of certain assets and the difficulty determining their proper value. Some examples include:
- Businesses: Many high net worth individuals have family-owned or closely held businesses. Some businesses are owned and/or managed by both spouses. In other cases, just one of the spouses is involved in the business or practice. To further complicate matters, some businesses may be partially owned by other partners. To determine fair market value for a business, it may become necessary to bring in outside professionals who are not associated with any of the parties involved.
- Business Arrangements: It is not uncommon in high-asset divorces for one or both spouses to have arrangements stemming from their involvement in various business ventures. For example, executive level employees often have stock options and/or deferred compensation that may need to be accounted for if it is marital property. Another example may be purchase/buyout agreements among business partners, which may prevent the spouse of a business partner from owning a portion of the business.
- Real Estate Holdings: Properly valuing various types of residential and commercial real estate and determining how much of it is marital property is another financial issue with potential complications. Other considerations with real estate investments may include the positive cashflow it produces (if it is rental property) and how much is owed on it.
- Complicated Investments: High net worth couples frequently have several other types of complex investments that need to be properly valued; such as stocks, bonds, trusts, and international assets.
- Retirement Plans: If a retirement asset was acquired during the marriage, it is typically part of the marital estate. There are instances, however, when a retirement plan was started before the marriage and grew in value during the marriage. In such cases, this complex web needs to be untangled. If all or part of a retirement plan is marital property, a qualified domestic relations order (QDRO) may be needed to divide the account between the spouses.
- Unique Assets: Specialized assets often require consultation from an industry expert to determine their proper value. Examples include classic automobiles, art collections, and expensive jewelry.
In addition to properly valuing significant, complex, and/or unique assets, there are several other financial aspects of a high net worth divorce that may need to be dealt with. One of the most important is the risk and potential liability attached to certain assets. This often comes into play with assets that carry a high amount of debt. For each marital asset, it is important to examine the entire picture to determine its true value.
Another issue that may come up is hidden assets. An unscrupulous spouse may come up with several ways to conceal certain assets that they do not want to become part of the marital estate. Some common examples include transferring assets to a family member or business partner, opening a secret bank account, transferring funds to an offshore account, or asking an employer to defer a bonus or large commission payment until after the divorce is finalized. If there is strong reason to believe that this type of activity is occurring, a thorough investigation is needed to uncover all marital assets and property that has been concealed.
Tax Consequences Resulting from a High Asset Divorce
Assume that in a high-net-worth divorce there is eventually a settlement that specifies money be transferred from one partner to the other, all part of equitable distribution.
Monies paid from one spouse to another may be in the form of:
Lump sum – Under IRS rules, that money is not taxable to the receiver.
Alimony – Alimony is intended to maintain one spouse and may also be received in a lump sum or in monthly maintenance amount. Per the 2018 change in the tax laws, alimony is no longer deductible for the payer and taxable for the receiver.
Retirements Fund – Sizeable assets of most high asset couples are retirement funds, an IRA, an annuity, or a pension a 401(k). With most retirement accounts, contributions are pre-tax, so taxes must be paid when funds are withdrawn. Penalties may also apply if a distribution is taken before the recipients reach the required age.
To avoid penalties, specific language must be added to the divorce decree or settlement stating that the division of the account is part of the property settlement. For some accounts, it a qualified domestic relations order (QDRO) will be necessary.
Couples with significant and complicated financial assets also tend to have complex tax situations. For this reason, dividing these assets haphazardly can often create unforeseen tax consequences. During a high asset divorce, a thorough examination of the tax implications of the property distribution is needed to ensure that there are no unpleasant surprises in this area.
During a divorce with high net worth individuals, there is often a marital agreement in place to help specify how property should be divided in the event that the marriage is dissolved. This may have been a prenuptial (aka premarital) agreement that was signed before the wedding or a postnuptial agreement signed shortly after the couple was married. If there is a signed agreement and it is determined to be legally valid, the terms and conditions of the agreement serve as a guide in distributing the property, as well as any spousal support that may be awarded.
Child Support in High Asset Divorces
In Florida, child support is awarded based on the child’s best interests with the goal of providing the same or similar standard of living as when the couple was married. So, if children are involved in a high net worth divorce, child support is determined based on the income of both spouses and other relevant factors. It is important to note that the terms of a prenuptial or postnuptial agreement have no bearing on the amount of child support that is awarded. The sole concern of the court is the best interests of the child.
Speak with a Skilled Pensacola High Asset Divorce Lawyer
Divorces for high net worth individuals can get very complicated. There are numerous factors to consider, and it is essential to have an attorney by your side who has extensive experience handling these types of cases. Crystal Collins Spencer, Attorney at Law, understands the complex nature of high asset divorces. Attorney Spencer is a skilled litigator and strong negotiator. Whenever possible, she looks to resolve divorce cases amicably. If the other side is not willing to cooperate, however, she is ready and able to aggressively advocatedyou’re your rights and interest during litigation. Contact Spencer Law today at 820-912-8080 to schedule a consultation. You may also send a secure and confidential message through our online contact form.