High-asset divorces can be incredibly contentious – and unfortunately, when there’s a lot of back-and-forth, people make mistakes. But making a mistake in a high-asset divorce can cost you for the rest of your life, so it’s important that you’re aware of the potential pitfalls and that you know how to steer clear to protect your assets.
Check out these five high-asset divorce mistakes so you know how to protect yourself – and your future.
5 High-Asset Divorce Mistakes: What NOT to Do
The most common high-asset divorce mistakes we see in our offices include things like:
- Letting emotions rule over logic
- Making rush decisions just to get the divorce over with
- Hiding assets from one spouse
- Failing to consider tax consequences
- Going straight to litigation rather than negotiation
Here’s what you need to know about each of these high-asset divorce mistakes.
High-Asset Divorce Mistake #1: Letting Emotions Rule Over Logic
Divorce is an emotional process, whether it’s due to infidelity or anything else – and that can make it tough to make logical decisions. However, now is the most important time to focus on what’s most important: your future.
It’s not uncommon for one party in a divorce to feel guilty about what’s happening, but it’s a big mistake to let that guilt guide the decision-making process. For example, if you feel bad and agree to give your spouse double the spousal support he or she would ordinarily receive, or you decide to hand over more than half your marital assets, you’re cutting into your own future.
On the other side of the coin, you can’t use the court system to exact revenge on your spouse. Divorce is a legal process, and if you try to use the legal system to get back at your ex for what he or she has done, it’s more than likely going to backfire on you.
High-Asset Divorce Mistake #2: Making Rush Decisions
In many cases, both parties just want the divorce to end – and they’re willing to make less-than-informed decisions in an effort to wrap things up quickly. There are several reasons people want to rush through divorce, such as hoping the divorce will attract less media attention or simply wanting to be done with a spouse they can’t stand any longer.
Unfortunately, though, you can’t rush through a divorce and cover all your bases. You need to take the time to avoid making serious mistakes that will cost you long after your divorce is final.
High-Asset Divorce Mistake #3: Hiding Assets
In some cases, one spouse hides assets from the court so he or she doesn’t have to split them. California is a community property state, which means the assets you accumulate during your marriage – in most cases, anyway – belong to both spouses.
Hiding assets can get you into serious hot water with the courts – and in addition to the court finding out about those assets and dividing them anyway, you’ll lose your credibility. The majority of hidden assets are eventually discovered during the divorce process.
High-Asset Divorce Mistake #4: Failing to Consider Tax Consequences
Divorce changes your financial situation – sometimes drastically. Most of the financial transactions that take place during divorce have tax consequences, including the division of retirement accounts and the sale of homes, vehicles and other property.
Your attorney may suggest that you hire a tax professional or another financial expert to help you understand the tax consequences of the financial decisions you make now.
High-Asset Divorce Mistake #5: Going Straight to Litigation
For most people – even in high-asset divorces – negotiation is the way to go. You may not mind spending money on attorney’s fees through litigation, particularly if it means you’re going to “win,” but the vast majority of people who negotiate their own settlements end up being far more satisfied with the outcome than those who litigated in court.
When you and your spouse reach agreements on the major issues surrounding your divorce, including child custody and property division, your divorce will go faster and be less stressful for everyone involved. If you and your spouse can’t reach agreements on your own, your attorney might suggest that you work with a mediator who can help.
Related: What is divorce mediation?