Divorces in any family situation will lead to conflict and involve some degree of financial risk. High-asset families often have much more complex divorce proceedings because they have more property to discuss and a different standard of living that they have come to expect.
The unique challenges inherent in a complex or high-asset divorce require a careful and planned approach. Avoiding the five common mistakes below will reduce how much personal risk you have in a high-asset divorce situation.
1. Hiding assets or lying about their value
One of the most dangerous things you can do during a divorce is to intentionally misrepresent your financial circumstances to your spouse or the courts. If you get caught, the chances of a massive financial penalty are high. Honest disclosure is legally required and also key to your own protection.
2. Expecting the same lifestyle after divorce
Whether you are the higher-earning spouse or a dependent stay-at-home parent, your standard of living will inevitably change after a divorce. After all, you will need to divide the property acquired during the marriage and possibly to pay or live off of support. The same resources will now have to support two households instead of one, requiring some degree of compromise.
3. Feeling trapped due to a lack of a prenuptial agreement
People frequently think that if they didn’t negotiate a prenuptial agreement, then they have no choice but to stay in a miserable, unhealthy marriage. Yes, divorce can be more unpredictable when you do not have a marital agreement. However, you could either negotiate a post-nuptial agreement before you file for divorce or attempt a collaborative divorce where you keep control over much of the process.
4. Putting off estate planning updates
You likely have a complex estate plan that includes living documents in addition to testamentary documents for after you die. You need to look at everything from your will and trusts to your paperwork filed with your life insurance company and your power of attorney documents.
5. Expecting a simple solution for child support or alimony
While everyone in the family may need to adjust their expectations related to the family’s standard of living, there can still be very contentious proceedings in your future related to child support or spousal support requests. The more complex your property is and the higher your household standard of living has become, the more contentious and difficult support negotiations or litigation can be.
Properly addressing the unique issues that arise in high-asset divorces will help you prepare for the future during an unpredictable stage in your life.