Divorces in which at least one spouse has more than $1 million in wealth or assets are characterized as high asset. This type of divorce can be exceedingly complex and lengthy, especially if one of the spouses has higher financial standing. High-asset divorces require top-notch legal representation by a reputable firm with attorneys experienced in handling large estates, vast wealth, and numerous high-value assets.
What Types of Assets Are Commonly Involved in a High Asset Divorce?
The majority of high-asset divorces involve a closely-held corporation or longstanding family-owned business. Under New Jersey’s equitable distribution and property laws, even family businesses are considered during divorces, even if the business is owned by only one spouse. Other common types of assets considered during a high-asset divorce include:
- Domestic and offshore bank accounts
- High-dollar retirement accounts
- High-value primary residence and vacation residences
- Intellectual property
- Investments in other businesses and closely held enterprises
- Long-term employment incentives
- Offshore investments
- Portfolios of other investments
- Real estate holdings other than residences
- Stock options and investments
The division of closely-held businesses are typically the most complicated assets to navigate during divorce. Unfortunately, in many high-asset divorces in New Jersey and many other states, marital assets are often hidden from one spouse within the business when only one spouse actively engages in the operations of the business.
What Is New Jersey’s Equitable Property Law?
When divorcing, whether high-asset or not, it is important to understand state laws pertaining to the division of property as they have great bearing on how your assets will be distributed between you and your spouse. Each state considers asset division as either community or equitable property.
In community property states, all assets are divided equally between both spouses, regardless of whether they are marital or separate. In equitable property states, such as New Jersey, the courts determine division of assets in a fair and reasonable manner, which may or may not be equal. Under equitable property law, the origin of assets – marital or separate – is taken into consideration when determining division of property, with the exception of premarital agreements.
Marital assets are defined as those acquired during the marriage, such as bank accounts, financial investments, real estate, and retirement accounts. Separate assets are defined as those belonging to each spouse prior to, or outside of, the marriage, such as:
- Inheritance collected either before or during the marriage
- Property and real estate owned prior to the marriage
- Property titled only to, and purchased solely by, one spouse, with written agreement to be held separate
There are occasions where assets usually determined to be separate are classified and included in marital property, though this is rare. In high-asset divorces, it is especially important to have proper legal documentation demonstrating whether assets are marital or separate, and not co-mingled during the marriage, to provide the court.
One significant factor in high-asset divorces is determining the value of assets, which typically requires each spouse retaining valuation appraisers to determine worth and overlooked or missing assets, particularly for large and complex estates. Additionally, high-asset divorces often involve a variety of assets in other states or countries that must be located and included in the division of assets.
How Do High-Asset Divorces Differ?
In addition to the vast wealth and property, there are many other factors that sets a high-asset divorce apart from other types of divorces, including:
- Expense: The cost of high-asset divorces is much higher than average divorces due to the number of high worth assets and financial interests.
- Length: High-asset divorces require considerably more time in order to locate and determine all assets and accurately calculate their value, plus the cost of retaining lawyers, accountants, and valuation appraisers.
- Tax implications: Taxes must be paid on marital assets, which are often considerable given the value of high-dollar assets.
- Property division: Whether marital or separate, determining the division of property takes considerable time, especially in high-asset divorces that typically involve numerous financial accounts, real estate, investments, business ownership, and more.
- Mediation: Couples going through high-asset divorces usually prefer to utilize private mediation rather than the court system in order to protect their privacy and the extent of their financial estate. Divorces handled by courts become public record, which can be used to publicize the details of a couple’s holdings and divorce settlement. Mediation is also a faster method to divorcing than using the court system as well.
How Do I Protect My Assets in a Divorce?
Divorces can take emotional and financial tolls on the parties involved. Knowing how to protect your financial interests can help alleviate some of that stress. The following are steps to take in order to protect your assets in a divorce:
- Retain an experienced divorce lawyer: The best way to protect your assets and best interests in a divorce is to hire a skilled and qualified attorney to guide you through the legal proceedings.
- Put accounts in your own name: If you are a non-working spouse, such as a stay-at-home mother, it is important to establish your own credit history. It is good idea to open your own accounts, and also to change car insurance and other policies to reflect your new status.
- Close joint accounts: Depending on your circumstances, it may be wise to freeze or close joint bank or credit card accounts, to prevent you from being responsible for your soon-to-be former spouse’s expenditures.
- Take inventory of assets and debts: With a divorce lawyer’s assistance, request full disclosure of all joint and individually owned financial assets. Make copies of loans and credit card accounts, as well as home equity lines, past tax returns, and business debts.
- Take stock of nonmarital assets: Nonmarital assets are things considered to belong to only one spouse, such as property brought to the marriage, inheritances, and specific gifts. Consider assets you believe to be fully your own, as well as what your spouse may claim.
- Sort out mortgage and rent payments: Mortgage companies and landlords expect payments to be made even during difficult and uncertain times. In some cases, couples are able to work out who keeps the home, while in others it is easier to move or sell the house.
- Consider retirement accounts: Your 401(k) or IRA, as well as your spouse’s, may be considered “marital property” and subject to negotiation. Eventual division of 401(k)s, 403(b)s and pensions are addressed in the divorce decree.
- Adjust your will: As you prepare for a divorce, or immediately upon its settlement, it is important to adjust your will accordingly. You may need to change the executor, trustees, power of attorneys, or beneficiaries in your will and related documents.
The Divorce Attorneys at Tune Law Group Provide Trusted, Personalized Legal Counsel for Divorce Cases.
Each couple is different, and so are their experiences in divorce. The knowledgeable Whitehouse Station divorce attorneys at Tune Law Group are ready to help you navigate the specific complexities of your case. Call us today at 908-434-1061 or contact us online. From our offices in Whitehouse Station, New Jersey, we serve clients throughout Hunterdon County and Monmouth County.