All divorces are difficult, but divorces involving high-net-worth couples can be particularly challenging. With substantial amounts of money, real estate and other assets to divide, the involved parties have a lot to lose.
Avoiding these common mistakes can help you avoid devastating financial loss.
1. Rushing to a settlement
Divorce can be an arduous process. It is easy to become angry and frustrated and to say yes to anything. However, you will regret the decision to walk away from assets that may rightfully be yours. Seeing the process through to a fair and equitable distribution of assets is the right thing to do.
2. Hiding your assets
If you attempt to hide assets, the court may find you guilty of fraud and face serious charges and penalties. California statutes regarding the dissolution of marriage require full disclosure. Failure to do so may well damage your credibility with the court, and ultimately cost you during the settlement.
Equally important, be sure you have full disclosures from your soon-to-be ex-spouse. You should feel confident that there is no missing information before you negotiate.
3. Failing to consider tax implications
Changes to your financial status due to divorce can result in significant tax implications. Transactions that you make in order to divide assets, such as liquidating retirement accounts, can trigger penalties. Selling shared assets, such as vacation homes, can lead to significant tax consequences. Understanding your tax position can help you make good choices during settlement and avoid unnecessary costs.
Avoiding these three common mistakes during your divorce can save you money, time and regret in the future.