High Asset Divorce Attorneys in Birmingham
Divorce is never easy. But when there’s a lot of money and assets involved, it is even more difficult. The more there is to lose, the harder both sides fight to get what they deserve. If you’re a party in a high asset divorce, you likely know how much is at stake for you right now.
High asset divorces require a level of finesse and careful handling. In these situations, there are often family businesses, multiple pieces of real estate, large inheritances, trusts, and other assets that have to be considered. Without the assistance of an attorney, there is a good chance that you will end up with less than you deserve.
You’ve worked hard to get to where you are in life. Don’t lose it all during a divorce. Set up a time with Kirk Drennan Law to discuss your divorce needs by calling us at 205-803-3500.
How to Divorce a Millionaire
Get Your Own Attorney and Financial Advisor
First, don’t assume you can trust your spouse throughout this process. Perhaps they want to keep the divorce amiable and limit expenses, so they suggest going through their own attorney and financial advisor. This is not recommended, no matter how much you want to limit conflict during this time. Your ex-partner’s attorney has your ex-partner’s best interests in mind, not yours. Any agreement you sign is likely to put you at a significant disadvantage.
This part may be tricky if you have never taken a deep look at your finances or kept your options open. You may be starting from square one. It’s important to connect with a high net worth divorce attorney and get a recommendation for a financial advisor who can help you through this process.
Learn More About Executive Compensation
If your spouse is a millionaire and has a high income, it’s likely that executive compensation makes up a substantial part of their income. Executive compensation allows companies to compensate their executives in numerous ways to keep them loyal, even if profits are down.
Your spouse might receive stock options or restricted stock awards, which can increase rapidly in value. They may also receive bonuses based on stock performance or other metrics. If you base your property division requests or alimony requests based only on their base income, rather than their executive compensation, you could be leaving a lot of money on the table.
One of the first topics to come up in almost every high asset divorce case is spousal support. The high earner in the relationship wants to ensure that they don’t spend the rest of their life paying a low-earning ex-partner, and the low earner of the relationship doesn’t want to be left without enough to meet their basic needs.
In this type of divorce, spousal support is likely to be awarded. However, one thing you should know is that permanent alimony, more commonly known as periodic alimony, is not often awarded in Alabama. It is more common for alimony to have a set end date or event, usually cohabitation with another partner or remarriage on the part of the low earner.
Spousal support can also cover expenses that aren’t always immediately obvious. For example, if the lower-earning spouse currently gets health benefits through their partner, spousal support may give them enough to buy their own health insurance via the marketplace.
A number of factors go into determining spousal support amounts and timeframes, including:
- Current Income level of each party
- Earning capacity
- The health of each party
- Sacrifices made to benefit the marriage or marital home
- The length of the marriage
Whether you believe you should receive alimony for your sacrifices to your ex-partner’s career or you want to ensure that all of your spare money doesn’t go to your ex-partner, it is essential to discuss these options and concerns with an attorney.
The Division of Property and Debts
Property and debt division can be messy in any divorce, but there is much more at stake in a high asset divorce. Assets vary widely in value, liquidity, location, and other factors. Under Alabama law, equitable distribution is the standard in a divorce. Assets are not split 50/50. They are split in a way that is fair, based on each party’s circumstances and the marriage as a whole.
Your marital property may include rental property income, bank accounts and cash on hand, retirement accounts, inheritances, royalties, retirement accounts, business shares, intellectual property, and even international assets.
Rather than divvying up each asset between the parties, which is expensive and can leave both parties with partial assets they can’t use, both sides use compromise and leverage to get the assets they want. For example, if the lower-earning spouse wants more alimony than the higher-earning spouse is willing to pay, the higher-earning spouse might give them a rental property to make up for the difference. In exchange, they keep the family business without having to give a share to the ex-partner.
One issue that comes up in some high asset divorces is the hiding or disposal of assets. Legally, both parties must disclose all debts and assets during the divorce process. It is more difficult to prove that both parties have done this when there are countless assets spread across numerous accounts and entities. This is one reason it’s important to work with an attorney who has extensive experience in high asset divorces . If necessary, they can retain the assistance of a forensic accountant to ensure that all assets are accounted for and disclosed.
If there is debt to be divided in a divorce, other factors often come into play. The court may look at how much money each party has every month to cover debt payments. If one party receives the lion’s share of assets, they may also be required to take on the majority of the debt. Again, this is something that can be used to negotiate an agreement that better meets your needs.
Dealing with the Tax Consequences of a High Asset Divorce
In a standard divorce, tax consequences might just be a blip on the radar. In many divorces, the only tax effect is the change from “married filing jointly” to “single.” However, that all changes when the divorcing couple has significant assets. When so much property and money is changing hands, there are definitely going to be tax implications. If you don’t plan appropriately for them, you could be left with an unpleasant surprise next April.
Capital Gains Tax
One of the most common tax consequences of a high asset divorce is the capital gains tax. This is the tax you pay on the profit you receive after the sale of stock or real estate property. Consider, for example, a vacation time you keep with the divorce. Over time, the property increases substantially in value and you decide to sell it. At that point, you will be hit with a capital gains tax based on the appreciation of the property from its initial purchase date.
In many situations, the capital gains tax is more than outweighed by the other assets received during a divorce. However, it is still something that should be discussed with your attorney and CPA as it can be very expensive when tax time comes around.
Recent changes to spousal support have led to changes in the way these payments are taxed. Previously, alimony payments were tax-deductible. The recipient would then claim their alimony as taxable income and pay taxes on it. As of 2019, alimony payments are no longer tax-deductible, and they are not considered taxable income. This is important to know if you’re in a position where you could be required to pay alimony.
Retirement funds are often divvied up in a divorce to allow each partner the chance to enjoy a stress-free retirement. This does come with potential tax issues. If retirement funds are transferred in a specific way, you won’t incur tax consequences. If you withdraw early and transfer to different retirement accounts, you may have to pay taxes and penalties on the amount withdrawn early.
The Sale of Investments
Many high asset divorces include a wide variety of investments, and the complex nature of investments has the potential for massive tax consequences. Income earned from selling stocks, bonds, or cryptocurrency could be taxed. Furthermore, the amount paid will depend on how long you held the asset before selling it. Stocks sold after at least one year have a much lower tax rate than stocks held for a shorter time period.
Protect Your Assets and Your Privacy
Not only can high asset divorces be time-consuming because of the amount of assets to be divided they can also be very high profile. For example, if one party in the divorce is a well known entertainer, business professional, or other public figure, details of the divorce are in high demand. A skilled high asset divorce attorney can work toward a settlement that protects both parties’ privacy and future financial well-being.
In a high asset divorce, going without an attorney should not be an option that is even on the table. An attorney is recommended for every divorce, but it should be non-negotiable when you have significant assets at stake. We are here to help. We know that divorce is a difficult time and that you want the best start possible for this next chapter of your life. Our goal, at all times, is to protect your best interests while keeping your private matters out of the public eye.
Get the Help You Deserve in a Complex Divorce Case
Wherever you are in the divorce process, we are here to guide you through this challenging and stressful time. Our extensive experience in high asset divorce cases allows us to handle your case professionally, quickly, and discreetly. To set up a consultation and further discuss your needs, call Kirk Drennan Law at 205-803-3500 or get in touch with us