Disclaimer: This article does not constitute legal advice. If you have any questions about your individual situation it is best to seek the advice of an experienced legal professional.
A “high net worth divorce” is defined as a divorce involving several million dollars or more. These divorces are also known as “high asset” or high stakes divorces. When the divorce is worth more, the assets are numerous. These assets are subject to different rules about tax and division, making them more complex to apportion. These divorces are also “high stakes,” as the gains and losses in the division of assets can be substantial.
When you use divorce mediation in your high net worth divorce, you can manage the risks, rather than being subject to the whims of the court or your spouse’s attorney’s negotiating strategy. Mediating a high net worth divorce should be understood as making a business deal involving very high value, sometimes high risk assets. It should be understood as a plan to optimize the community property rather than take value from the other spouse (as in adversarial divorce). This involves understanding the nature of the assets, the amount of liquidity they can render for both spouse’s new lifestyles, and the most tax efficient way to distribute the assets.
When you have high value investments, real estate, cryptocurrency holdings and more, you have to make a decision about whether to sell or keep the assets. To make these decisions you need to work with divorce mediation professionals with a high level of financial and legal expertise.
Foreign Assets
High Net Worth couples tend to have a lot of out of state and even international assets. Dividing these assets will involve working out a host of issues involving tax, laws and logistics. When it comes to foreign retirement accounts and foreign trusts for example there may be jurisdictional issues that make it more complex to get a court order that will divide the assets. Foreign real estate could need a specialized appraisal. The tax impacts in different countries will differ and the movement of funds internationally could lose on a currency exchange and even incur a capital gains obligation. Being smart about this complex situation means understanding the most efficient way to divide assets. In divorce mediation you can work out the equivalent domestic value of property overseas and make an exchange of foreign property for the same value in domestic property. This works out particularly well if one spouse is choosing to spend all or part of their time abroad where the property is located (say a home in France where the couple may also have a retirement fund). To make these decisions, careful valuation is key. You need to work with divorce professionals who are alert to the legal and tax implications of your complex international property division.
Volatile Assets
Some assets, like investments, stocks and cryptocurrency may be highly volatile. The timing of the division of these assets is extremely important. The best way to be smart about dividing these assets is to work out the timing of this asset division as soon as possible. You must also decide whether to keep or sell the asset, which may be determined by how much liquidity you need to pay off your divorcing spouse for any assets you have received or for buying a new home for example. When it comes to volatile assets it’s best to work with expert divorce finance professionals who understand the market and will help you to prioritize assets that need immediate attention.
Real Estate
Real estate may be foreign or domestic, and as with volatile assets the timing of selling or exchanging real estate could matter. Do you want to rent out a property you co-own, sell a property or pass the property on to your kids? When it comes to being smart about dividing your real estate in your divorce the major thing to evaluate is tax. You need to consider the capital gains tax on your home and the additional capital gains tax you pay if the home is not your primary residence. If you have foreign real estate you need to consider any foreign tax rules. You will have to factor in tax rules, deductions and depreciation, particularly if you own rental accommodation or commercial real estate. When you work with expert divorce finance professionals you can be smart about these decisions and make a plan that can benefit you, your divorcing spouse and any children you may have.
Our Services and How We Can Help
In any divorce your property division starts by determining what is marital and what is separate property. This is no easy task in itself and when you layer this on top of foreign and domestic trusts, domestic and foreign property, business interests, investments and other complex assets you need to proceed with extra caution.
More than anything else however, making smart decisions in a high net worth divorce means you need to find a way to clear away the weeds and streamline the process. When you engage West Coast Divorce Mediators who are experienced in handling the paperwork and the extensive financial analysis that comes with high asset divorce division, your divorce can become more strategic and manageable. At Divorce Options San Diego we are a one stop shop. During the process you work with a coordinated team of experts who help you to optimize your community property and move forward with your life. This saves the hassle and cost of hiring separate appraisers and attorneys who are at odds.
At Divorce Options San Diego we provide expert valuation, financial analysis and full document services to help you manage a complex divorce. We often work with clients who have international ties and who hold assets domestically and abroad. We have offices in Silicon Valley, San Diego and Berkeley CA. Please contact us for an in person or remote consultation to learn more about our divorce mediation services.
