For divorcing couples with significant assets, division of property is one of the biggest hurdles they face. In Maryland, assets are distributed equally during a divorce. This means the court systems do not have to divide the assets between the spouses equally so long as the distribution is fair. Judges consider the length of the marriage, what each spouse contributed to the marriage and the economic circumstances of each spouse when dividing assets.
Mistakes with significant consequences
For couples that built their fortune together or couples lacking a prenuptial agreement, the dividing of marital assets can be an emotional and frustrating process. Below are important but often overlooked steps in high assets divorces.
- Failing to complete a lifestyle analysis: Couples facing a high asset divorce are often accustomed to certain lifestyle and maintaining that lifestyle is a key concern. Often a lifestyle analysis is an essential step to determining how and where money was earned and spent during the marriage. This can be especially helpful when one spouse was a higher earner or a non working spouse.
- Hiding assets: There are many ways to hide assets in order to protect them from the other spouse during divorce. Common tactics include transferring money to a third party for safekeeping or purchasing easily undervalued objects that can be resold later. Assets can include jewelry, collectibles and original works of art, all of which should be included in the asset listing.
- Failing to conduct a financial investigation: A financial investigation will cost money upfront, but it just might help you uncover hidden assets. It is in your best interest to make sure your spouse is not hiding assets. Even a life insurance policy can be a valuable asset. For spouses that did not handle most of the marital finances this step is vital to ensure all assets are accounted for.
- Ignoring tax consequences: Tax considerations are a crucial part of high asset divorce cases. Taxes on alimony and other distributions should be considered along with actual after taxes incomes.
- Misunderstanding property designations: Property belonging to a spouse before the marriage or from an inheritance is generally considered separate property and not included in the division. There are situations where the income from the property during the marriage can be included. In most cases, the judge will review when and how property was acquired before making a decision.
Ending a marriage is never easy, but do not fall into the trappings of agreeing to anything just to speed the process along. Failing to invest time and effort in order to secure a fair settlement for yourself puts you at a disadvantage. While it can be difficult to be rational during a period of great emotional upheaval, try to think financially rather than emotionally.