In a high net worth divorce, there are many issues that can turn an otherwise simple divorce into complex litigation. There are several high net worth financial aspects that need to be identified, examined and thoroughly addressed before a resolution can be accomplished. In a high net worth divorce, there are many issues that can turn an otherwise simple divorce into complex litigation. There are several high net worth financial aspects that need to be identified, examined and thoroughly addressed before a resolution can be accomplished. For example, the following may be applicable to your case:
Prenuptial Agreements:
If a prenuptial agreement was signed prior to your marriage, Robin will review it in detail and discuss with you the impact that this will have on the resolution of your divorce matter. Many Family Law attorneys do not handle complex divorce matters. They may not know how ERISA rules relate to a prenuptial agreement and may not override the distribution of an ERISA plan. This means that even if you waived your rights to your spouse’s employer-sponsored retirement plan as part of the prenuptial agreement prior to marriage, you may still be entitled to a spousal percentage share interest of that very retirement plan. However, if you signed an ERISA form waiving your right to future retirement benefits once the marriage occurs, then you would not be able to collect under the plan. There are other business related and financial considerations that may be contained in a prenuptial agreement that may or may not be enforceable. Robin Gray understands businesses, financial documents, and retirement plans to discuss your rights under the Pre-Nuptial Agreement and who practices complex divorce matters.
Real Estate:
Real estate is usually one of the largest assets in a marital estate. Real estate could include the marital home, investment property, commercial property or a vacation home. Depending on when the property was married, (either prior to or during the marriage), will determine what part of the property or increase in value of the property is subject to equitable distribution and what, if any portion is exempt from inclusion of the distribution calculation of the marital estate. Robin can review your real estate holdings and the timing of when you purchased the real estate to determine what, if any part of the value would be included in marital estate for equitable distribution purposes. If there is an increase of the value of a property brought into the marriage (that was not obtained by inheritance), she can also assist with calculating the increase of value of such property.
Closely Held Business, Partnership and Professional Practice Valuations:
It is becoming very common for individuals to operate their own businesses or to be partners in a going concern. When a business owner, partner in a business or professional is involved in the divorce process, businesses and/or partnerships need to be valued, including assets, liability and good will. Forensic accountants are needed and possibly actuarial experts need to be involved to provide the most accurate business valuations. The valuation process will typically include a thorough inspection of the business site, records, books, general ledgers, payroll registers, receivables, machinery, inventory, real estate, client lists, partnership interests, enterprise and goodwill. Also, if you owned the business prior to the marriage, it will need to be determined if the business is a marital asset. If it is, then there also needs to be a calculation of your spouse’s share interest in the business.
Stock Options:
Stock options are also a common part of employment compensation. Stock options create complexities in distributing the assets during a divorce. Your stock options will be analyzed to identify the grant date and vesting schedule to determine which assets are subject to equitable distribution. A settlement agreement may include a constructive trust to address the tax effects of your stock option distribution. It can also safeguard all post-judgment options while still protecting your pre-distribution interests and rights.
Retirement Assets
If you have acquired retirement assets such as a 401k, 403B, IRA, etc., before or during your marriage then these accounts may be subject to equitable distribution in your divorce. A common misconception when going through a divorce is that if the account is maintained in your exclusive name then your spouse has no right to claim a share. Generally, the value of your retirement account accumulated from the date of the marriage to the date of separation is filed will be subject to equitable division. If the distribution of these retirement accounts occurs while actively contributing to the account after separation, a calculation also needs to be made to determine the value of the retirement account while deducting the post separation contributions. After the values are determined and distribution needs to be made, Robin Gray is able to assist with the Qualified Domestic Relations Order (QDRO), as well as connect you with tax advisors, financial specialists and other experts to prepare the QDRO and help you manage your finances, whether you are departing with part of your retirement or acquiring money from the retirement as part of the divorce settlement.
Common Financial Mistakes To Consider During And After Divorce
Divorce is a very emotional and often, long process with many considerations, the most important being children and finances.
Many factors need to be taken into consideration when determining your financial status after a divorce, including tax consequences of low cost basis securities, considering the six-year rule for federal income taxes on property transferred to a spouse, failing to create a realistic budget for purchasing a new home and living expenses and most importantly, failing to obtain financial advice before, during and after a divorce.
- The tax consequences of low-cost basis securities can affect you if you decide to take a greater proportion of the low-cost basis stock than your ex. It is possible that you may owe future taxes on the unrealized gain of these securities. The tax considerations, especially in light of the new tax law, need to be explored and considered when determining equitable distribution of stocks.
- Property transferred to an ex-spouse more than six years after a divorce may be subject to federal tax. All transfers between spouses during marriage are covered by Section 1041 and transfers "incident to divorce" are covered, too. A transfer is incident to divorce if it occurs within one year after the marriage ceases, or if it is "related" to cessation of the marriage. Any transfer more than one year after the end of the marriage is open to scrutiny by the Internal Revenue Service, but if the divorce or separation instrument requires that transfer, it is probably covered. Any transfer more than six years after the end of the marriage is presumed to be outside Section 1041, but this presumption can be rebutted with documentation, which should be prepared with the assistance of an attorney and financial advisor.
- When people get divorced, they forget that their lifestyle they were used to was based on either two incomes or a large income. Now, the same or less money is available for two households. Budgets need to be made and a realistic view of lifestyle and new homes need to be in the plan.
- The most important part in a divorce is the use of an experienced and knowledgeable attorney and financial advisor. It is imperative to have the assistance of a financial advisor early on the in the process to examine assets and liabilities, tax implications of distributing assets and financial planning for the future. The Law Office of Robin Gray works with highly trained and knowledgeable financial planners and advisors with whom we consult to help implement equitable distribution strategies as well as to assist our clients in preparing for the future.
EXPERIENCE OF ROBIN J. GRAY
Along with a law degree, Robin also acquired a business degree in finance and international marketing and finance from Villanova University. While in law school, she focused attention on tax, securities law and corporate law, to supplement her studies in the family law area. Unlike some other family law attorneys, Robin is able to review and understand financial statements, tax returns and reports, securities filings, balance sheets, business contracts, partnership agreements and the like. She understands the complexities of business valuations and knows the experts needed to accomplish the valuation and analysis of businesses and retirement valuations. Robin began her legal career in Philadelphia and was a managing attorney of a Philadelphia law firm. Robin has over 27 years of experience representing individuals in complex divorces and can assist you with your complex divorce issues. Please call Robin J. Gray at (610) 777-1431 or Click Here to contact me by email.
