In this article, our Denver divorce attorneys discuss high asset divorces, and what you need to consider.
If you are thinking about filing for divorce in Denver and you have substantial assets with your spouse, it is important to think about high asset divorce considerations. In high asset divorces, also known as high net worth divorces, spouses may have additional considerations when it comes to property division and spousal maintenance in particular.
For example, you may have assets that are less common and thus more difficult to place a value upon than other assets that are more commonly owned by divorcing spouses in Colorado. When it comes to determining spousal maintenance, also known as alimony or spousal support, high net worth divorces usually will result in a different determination of amount. Under Colorado law, if a couple has a combined gross income of under $75,000 annually, there is a formula for spousal maintenance. However, high net worth couples will not fall within the formula guidelines, and thus the judge will take into account other considerations. To prevent an unpleasant divorce scenario in Denver, a report from CNN News recommends high asset couples avoid common mistakes made in high net worth divorces.
Do Not Hide Your Assets
Whether you do this intentionally or not, it is extremely important to identify all marital assets and ensure that the court properly accounts for them. For instance, if you purchased a very valuable automobile during your marriage and do not want to risk having to sell it, it might sound like a good idea to transfer it to a friend or to a business partner. However, the court can look at such a transfer as fraudulent, and it can impact the ultimately divorce settlement.
In addition to unlawfully transferring marital property, it is also important that both spouses properly account for all marital assets in addition to marital liabilities. Your financial affidavit will require you to list assets and liabilities, and to provide a complete inventory. While it might seem like an unnecessarily tedious task, properly accounting for all valuable possessions and other assets, as well as debts, can help to ensure that property division is indeed equitable.
Always Consider the Tax Consequences of Property Distribution
During property division, possessions and assets sometimes are distributed to the spouses, while in some cases those assets might be sold and the proceeds distributed. For example, if the spouses own a home together, it might make more senses to sell the home and distribute the proceeds from the sale rather than distributing the house to one of the spouses. However, when spouses are awarded particularly valuable assets during property distribution—such as a home or a piece of artwork—there can be significant tax consequences.
Why are tax considerations so important? If we think about a hypothetical case in which a couple is getting divorced and Spouse A was the primary earner during the marriage. Spouse B really wants to keep the family home, which is valued at $1 million. If Spouse B is awarded the house during property distribution, then s/he will likely receive less in liquid assets. When it comes time to pay taxes on the distributed assets, it may be difficult for Spouse B to come up with the money.
If you are considering divorce in Denver or are currently in the process of getting divorced, it is always important to seek advice from an experienced Denver divorce attorney. The dedicated Denver divorce lawyers at our firm can answer your questions today. Contact Robinson & Henry, P.C. to discuss your case.