Connecticut divorce law is the same regardless of a couple’s net worth. However, calculating alimony and child support and dividing property can be more complicated in a high-asset divorce. There are certain issues that spouses should be aware of to help ensure they achieve a fair resolution. These are some of the most common mistakes people make.
Not Hiring a Family Law Attorney with the Right Experience
While there are many qualified divorce lawyers, not all are accustomed to dealing with high-asset divorce. Wealthier couples often have difficult-to-value compensation structures, asset types, and tax concerns. An attorney should have experience addressing these issues in negotiation and litigation so clients can trust the advice they are getting and make well-informed decisions.
Underestimating the Value of Income and Assets
Support and equitable distribution cannot be fairly determined without an accurate valuation of income and assets. Often, a financial expert (business valuator, real estate appraiser, art/jewelry appraiser) must be brought in to conduct a valuation. Income and assets that may need a professional to value include stock options, restricted stock, carried interest, perquisites, hedge funds, private equity, alternative investments, closely held business interests, retirement benefits, artwork, and antiques.
Ignoring Hidden Income or Assets
Both parties in divorce must fully disclose their finances, but they must be vigilant in verifying the information from the other side to ensure that nothing is missed. If a spouse suspects that the other one is concealing information, a forensic expert may be needed to determine whether there is any suspicious activity indicating hidden income or assets. If there is, additional steps can be taken to find it.
Failing to Consider Tax Implications
Taxes should be considered when calculating income and dividing property to avoid one or both parties losing money unnecessarily. For example, 401(k) and pension accounts must be split with a Qualified Domestic Relations Order (commonly referred to as a “QDRO”) to avoid triggering taxes. The sale of the marital home may result in capital gains taxes, some of which could be lessened by selling before the divorce is final. Retirement accounts may be taxed differently depending on whether contributions were made pre-tax or after-tax, affecting their valuation.
Rushing the Divorce Process
Couples should try to resolve differences without litigation, but it is important to take the time to ensure they understand what assets and income exist and how much they are worth. Spouses also need to know their rights and obligations under Connecticut law so they negotiate with full knowledge of what they may be getting and giving up. The goal is to find an appropriate and fair settlement for both parties.
Hiring the right lawyer can help avoid these mistakes if you are considering divorce. Our lawyers have extensive experience serving high earners and high net-worth individuals in divorce. Contact us for a consultation today.
