Why it’s important to have an experienced divorce lawyer on your side
A high-net-worth divorce is one in which the divorcing couple has significant wealth to divide. Such divorces typically involve a wide range of assets, including real estate, investments, businesses, and valuable personal property. Handling these types of cases can pose complex challenges.
For example, property division often has tax implications, as large transfers can trigger significant tax liabilities. Determining fair spousal support is often an issue, with high-income spouses often facing substantial financial obligations. And maintaining the lifestyle to which both parties are accustomed can be complicated.
Divorce proceedings can become very contentious when significant wealth and assets are at stake. In high-net-worth divorces, some people resort to various methods to hide financial assets from their spouse and the court. These tactics can be complex and deceitful, making them difficult to detect.
Methods used to hide assets
When it comes to high-net-worth divorces, hiding or manipulating financial information can complicate the already complex process of asset division and financial disclosure. There are many different tactics used by spouses in an effort to hide wealth:
Investments
A spouse may funnel funds into private investments or complex financial instruments that do not generate typical tax forms. These investments can include startups, real estate ventures, or art collections.
Gifts
Some spouses transfer assets to friends or family members through gifts. There may be an agreement that the recipients will hold the assets temporarily, with the intention that the spouse will regain control post-divorce.
International Travel and Transfer
Some people try to hide assets by moving funds abroad, often to countries with strict banking privacy laws, to conceal wealth from their spouse and the court.
Transferring Assets to Another Person
A spouse may transfer assets to third parties, such as friends, family members, or business associates. This keeps the assets out of the marital estate, making them less accessible for division during divorce proceedings.
Underreporting Income
Deliberate underreporting of income is a tactic aimed at reducing the perceived value of the marital estate, often by misrepresenting earnings, bonuses, or financial assets.
Overstating Debts
Some spouses inflate their debts to offset their total wealth. This may involve exaggerating mortgage obligations, loans, or credit card debts.
Delaying Receipt of Bonuses or Stock Options
In some cases, a spouse may postpone receiving bonuses or stock options until after the divorce is finalized in order to reduce the perceived value of the estate.
Creating Fake Debt
Some spouses may falsify debt obligations by borrowing money from friends or family members with the intent to repay it after the divorce.
Hiding Cash
This involves the physical concealment of cash in various locations, such as safety deposit boxes, home safes, or hidden compartments, to hide it from the other spouse.
Overpaying Taxes
Some spouses may intentionally overpay taxes – with the expectation of receiving a hefty tax refund after the divorce in an attempt to reduce visible wealth.
Selling Assets for Less than Market Value
Another tactic some spouses use is selling valuable assets to friends or family at prices well below their actual market value to reduce their apparent value on financial records.
Using Cryptocurrency
Because of the anonymity involved, by conducting transactions in cryptocurrency, a person can make it challenging for their spouse and the court to trace and accurately account for these hidden digital assets during divorce proceedings.
Uncovering hidden assets
When handling a high-net-worth divorce in which there may be hidden assets, a divorce lawyer typically can use several strategies to uncover any concealed wealth. For example, a lawyer can:
- Carefully review financial disclosure statements – These include tax returns, bank statements, investment accounts, credit card statements, and other financial records. A lawyer can look for inconsistencies or omissions.
- Hire a forensic accountant – This accountant specializes in uncovering hidden assets. They can analyze financial records, trace money flows, and identify discrepancies that may indicate hidden assets or undisclosed income.
- Conduct a lifestyle analysis – This analysis compares reported income with the lifestyle maintained during the marriage. This can help detect any discrepancies between income and expenses.
- Take depositions – The other spouse and any other relevant individuals are asked under oath about their financial affairs, assets, and income sources.
- Scrutinize tax returns – A lawyer may be able to determine whether there was any unreported income or if there are indications that money was moved to an offshore account.
Hiring a lawyer with experience handling high-net-worth divorces is important
Because of the unique challenges of high-net-worth divorces, you need a divorce lawyer who has experience with these types of cases. A lawyer can:
- Identify assets – An attorney can help identify and catalog all marital assets to ensure an accurate valuation.
- Detect hidden assets – High-net-worth individuals may attempt to hide assets or income to minimize their obligations. An experienced attorney will be familiar with the signs of hidden assets and take steps to find them.
- Value assets – Accurate valuation of assets is crucial when dividing the marital estate fairly. Your lawyer can work with appraisers, financial experts, and forensic accountants to determine the true value of assets like businesses, real estate, and investments.
- Fight for fair alimony and spousal support – A skilled lawyer can negotiate favorable terms for their client or defend against excessive support claims.
- Advocate for child custody and support – If children are involved, an attorney can fight for the child’s best interests, working to secure favorable custody and support arrangements while ensuring that financial resources are fairly allocated.
- Navigate pre- and postnuptial agreements – If a prenuptial or postnuptial agreement exists, your lawyer can assess its validity and enforceability, ensuring that the terms are fair and legally sound.
- Reach a settlement through negotiation and mediation – Experienced divorce attorneys are skilled negotiators who can engage in mediation to reach amicable settlements. This can save time, money, and emotional stress compared to taking your case to court.
If you are getting a divorce that involves high net worth, talk to an experienced New Jersey divorce lawyer as soon as possible. An attorney can discuss your situation, determine your needs, and develop a legal strategy that aligns with your goals and leverages your financial position.
