High net worth divorces in Springfield, MO generally take longer than average divorces and involve substantially larger amounts of money. It’s essential for you to do everything you can to ensure your future financial security. One of the most important steps to take toward this goal is to hire a skilled and experienced Springfield, MO divorce attorney. If you and your soon-to-be ex-spouse share a large number of assets and significant wealth, the stakes are much higher than a typical divorce, and both of you have a vested interest in securing as much as possible from your shared marital property.
High asset and high net worth divorce cases are very difficult to navigate. Any divorce case entails a detailed financial review of both spouses and the individual variables in play within the case. However, the financial review process for a high net worth divorce case is highly detailed, extensive, and allows for much more room for difficult financial questions. If you are headed for a high net worth in divorce, be sure to stay vigilant for the following common problems faced in these difficult cases.
Issues With Financial Honesty
Regardless of how much is at stake in your high net worth divorce, or how you may feel about your spouse, it is in your best interest to be honest in every phase of your divorce proceedings. Before you even get into the nitty-gritty of dividing complex assets and navigating Missouri’s equitable distribution laws, remember that any attempts to hide your assets or minimize your financial obligation through obfuscation of the facts will hurt you in the long run. Depending on the amounts you attempt to hide, you may even face prison time. Never hide any of your assets during a high net worth divorce.
Prior to the Tax Reform Act of 1986, tax shelters in the form of limited liability partnerships were popular choices for those who wished to minimize their tax liabilities. Depending on how long your marriage has lasted, you or your spouse may still own one of these limited liability tax shelters. Since the Tax Reform Act of 1986, they may have become significant tax liabilities. Uncovering the tax details of these partnerships typically involves lengthy indemnification processes and cooperation between divorcing spouses.
Venture Capital Investments and Angel Investments
Most venture capital investments function with no active part of the investors. These investors pour funds into the investment account, which is then handled by a team of financial advisors. Typically, these investments come to fruition within five to seven years, but some may take longer. These generally fall under the same categorization as mutual funds when it comes to divorce.
Angel investments, on the other hand, are investments made by high net worth individuals directly into a company that needs funding. An angel investor may or may not ask for a stake in the company’s value in exchange for this investment, and the angel investor may also have some say in the direction of the organization. In the event an angel investment is made by a couple who later divorces, their stake in the company will likely split accordingly.
Stock Options and Taxable Investment Accounts
When an individual or couple purchases stock in a company, they pay the set stock price per share purchased. This is one of the easier types of investments to divide in a divorce. For example, if a couple purchased 1,000 shares of stock in a company while married, they will likely divide this stock portfolio evenly, with each spouse receiving 500 shares after divorcing. If a divorcing couple chooses this option, the IRS will allow them to retain the same cost basis and tax rate based on the original holding period.
Should a couple decide to sell off jointly owned stock instead of dividing and retaining their shares, they must account for the tax implications of the cost basis over the sale price. These variables fluctuate based on how long the investment is held. Investments held for one year or less typically fall under your usual income tax rate, and this rate reduces after one year according to applicable capital gains rates.
IRAs and Retirement Accounts
Regardless of when you opened your IRA or retirement account, you will likely need to split the contents of such accounts in divorce if you made contributions to them during your marriage. IRAs are divided under transfer incident to divorce procedures while 401(k) and similar retirement accounts will fall under the Qualified Domestic Relations Order. When it comes time to divorce, you and your spouse must file the appropriate paperwork and submit the required documentation to ensure the appropriate division method for these accounts.
Hiring a Financial Expert Is a Must
Unless you and your spouse invested all of your money by hiding cash under your mattress, you likely have at least one of the aforementioned types of investments. Divorce proceedings always involve some measure of discovery and financial investigation into the divorcing couple’s time together and records of the money they jointly spent. If you are expecting a high net worth in Springfield, MO, you should expect financial experts to play crucial roles in your proceedings.
Financial analysts can uncover records for key assets and investment accounts of all types and analyze the tax implications that each party will face by divorcing and retaining ownership over some or all of these assets. Your attorney can coordinate with these financial experts to navigate Missouri’s equitable distribution laws. You may wind up splitting most of your invested assets, or you and your spouse may work out an equitable “trade” of some of your assets.
Prepare accordingly for a high net worth divorce in Springfield by hiring a divorce attorney who has solid experience handling high net worth divorce cases. Your attorney will be able to accurately analyze your ownership rights, tax liabilities, and other variables in play, as well as provide you with a breakdown of what you can expect from the forthcoming divorce proceedings. Be prepared for a lengthy divorce negotiation process if you and your spouse possess significant assets and have many complex investments.