Having significant assets does not make divorce any more or less painful, but it does make it more complicated. Divorce is about closing a chapter in your past, but also about setting the stage for the future, including your financial future. When you and your spouse have significant or complex assets, it is critical to take steps to protect that future. Here are five considerations you may not have thought about.
Your Lawyer Matters (But Not For the Reason You Think)
In any divorce, and especially in a high net worth divorce, it is important to have the best attorney you can afford—but what does that mean? Many people assume you should get a pit bull litigator, but that strategy often backfires. Here’s why.
Division of marital property can be one of the most contentious issues in a high net worth divorce. No matter how much wealth you and your spouse share, that wealth is finite. Think of it as a pie to be divided. But realize that the pie is not being divided just between you and your spouse; a slice of it will go to your lawyers, as well. The more you fight, the larger the lawyers’ slice will be. And the more you have to fight over, the likelier it will be that that aggressive litigator will get dollar signs in their eyes.
That is not to say you shouldn’t have an attorney who is able to advocate on your behalf in court if needed. Just recognize that a truly strong attorney may be able to keep you out of court in the first place, reducing not only your legal fees but the fees you pay other professionals, such as for business valuation. These fees can radically shrink your share of the pie—and it is what you end up with that really matters.
Choose a skilled negotiator with extensive experience in family law, especially high net worth divorces. Your attorney should also have litigation experience. That way, they can help you achieve an optimal settlement that conserves your resources and minimizes your attorney and professional fees. But because of their ability to litigate, you can be confident that they will only advise you to settle if a trial is not in your best interests. Put another way, don’t fight unless you have to—but if you have to, fight to win.
Keep Your Temper, Keep Your Money
In some ways, divorce is a transaction: like business partners dissolving a company, you and your spouse are dividing your assets. But unlike most business deals, divorce is intensely personal and emotional. It is all too easy to allow your emotions to get the better of you, especially if wrongdoing by your spouse led to the divorce. But a desire for revenge can be costly, both in terms of your peace of mind and your finances.
You might have heard the story of the woman who posted an ad in the local paper, advertising a brand new, late model convertible with all the bells and whistles for $50. The first prospective buyer who stopped by couldn’t believe his luck, and asked what was wrong with the car that she was selling it for such a low price. “Nothing,” she replied. “It was my husband’s when we were married, and our divorce decree ordered me to sell it and split the proceeds with him.”
Who knows whether the story is true, but the point is valid: some people are willing to lose a lot of money in their divorce, so long as they can take their ex down with them. Don’t be one of those people. Do your best to maintain a cordial relationship with your spouse during your divorce, and allow your attorney to negotiate on your behalf.
Marriage is a partnership, until it isn’t. When a couple decides to divorce, they may develop very firm ideas of what they are “owed” out of the marriage. A spouse who has built a thriving business empire may believe that they alone deserve the financial benefit, discounting the efforts of their spouse who stayed home, cared for the family, and made it possible for the working spouse to devote so much time to the business. A spouse who has been cheated on may feel that the cheating spouse owes them the lion’s share of marital property as compensation.
This is where it is important to have a lawyer you trust, and to listen to them. Your divorce attorney will be able to tell you how the applicable law applies to the facts of your case. What you feel you are entitled to may not be a realistic expectation; adjusting your expectations to be in line with how a court might rule will make it easier to reach a reasonable, and favorable, settlement.
After discussing with your attorney what you can reasonably expect from your divorce, it will be time to prioritize. You will not get everything you want, but if you are flexible and creative, you may be able to get what is most important to you.
If your divorce attorney regularly handles high net worth divorces, they likely have relationships with knowledgeable financial professionals who can help you and your spouse come up with creative resolutions to your financial issues. Thinking outside the box may result in a win-win scenario that allows you both to walk away from the divorce satisfied, and the help of a financial professional can help you minimize negative tax consequences from your settlement. Working with professionals to settle your divorce also means you are likely to get a result custom-designed for your needs, something a judge might not be able to do.
Hopefully, you will never have to go through a divorce again. If you do, you will surely be wiser the next time around. To protect your interests, and to make sure you and any future spouse are on the same page financially, consider executing a prenuptial agreement before getting married again.
If you are in a high net worth marriage and are contemplating divorce, contact Miami divorce attorney Antonio Jimenez to schedule a consultation to discuss your options.