Understanding the true value of assets in a high net worth divorce

This article looks at high net-worth divorces and how valuing assets can affect the final divorce settlement.

Fairly dividing property can be a complicated process even for couples going through an otherwise straightforward divorce. However, as Forbes points out, in a high net worth divorce those complications tend to become all the more pressing. Couples who have accumulated a large marital estate will almost always need a variety of specialists, including divorce attorneys, tax specialists, and accountants, in order to make sure they are getting a fair divorce settlement. Key to achieving such a settlement is understanding what their marital assets are really worth and how they should be divided.

Valuation experts

Couples who have complex financial portfolios will often want to bring in a valuation expert who can give an accurate assessment of the overall value of their estate. Having assets valued accurately is especially important if a family business is part of a couple's marital estate. If only one spouse owns and operates the business, then it is especially important for the other spouse to get his or her own valuation expert involved to make sure the business' assets are being valued accurately.

Another advantage of bringing in a valuation expert is that he or she can bring attention to significant assets that otherwise often get overlooked by couples. Life insurance policies, for example, can be major assets, especially among high-wealth couples, but people going through a divorce are often more focused on more tangible items, such as the family home, rather than on insurance policies. Overlooking a life insurance policy in the final settlement could lead to one party missing out on a major portion of his or her marital estate.

After-tax value

Taxes are an important factor to consider for any divorcing couple, but especially so in high net worth divorces. Stocks, real estate, retirement funds, and other assets are all treated very differently for tax purposes. As CNBC points out, two assets that appear to be of equal value on paper may ultimately end up leaving one spouse with substantially less than the other in the long run. For example, liquidating a $500,000 401(k) would result in a large tax penalty while a house with $500,000 in equity typically would not.

Generally speaking, liquidating assets will lead to those assets being taxed, while merely transferring them from one spouse to the other often will not. By understanding how asset-liquidation and tax rules can affect one's overall financial portfolio, it will be much easier to make sensible decisions that will result in a divorce settlement that offers the most long-term benefits.

Family law

For couples who have a complex marital estate that needs to be divided, a team of specialists will often prove a high-value investment. One of the most important people a person going through a divorce can have on such a team is an experienced divorce attorney. An attorney who has dealt with the complexities of high net worth divorces in the past will be a in a unique position to offer clients the best advice possible on how to ultimately attain a fair divorce settlement that will prepare them for the future.