Divorcing couples in Massachusetts are right to think that ending their marriage will affect their financial health. But they are often mistaken or unclear about the exact impact the divorce will have on their net worth. If you are the higher-earning spouse, and have been the sole (or major) provider of the household lifestyle, separating from your spouse doesn’t mean that you’re suddenly going to enjoy a massive improvement in your finances.
Similarly, if you are a stay-at-home parent or lower-income spouse, and expect that you’ll continue to live post-divorce on the kind of budget you’ve grown accustomed to during it, you’re equally unrealistic.
The higher earner is usually required to continue to support the household lifestyle, just not in the same house. Obviously, supporting two homes out of the same single income that used to support one is likely to mean some degree of compromise in lifestyle.
Family law attorney Jay Davis is an expert when it comes to helping high-net-worth couples in Massachusetts divorce in a respectful and pragmatic way. If you and your partner are about to enter into a divorce involving substantial assets, Jay can help you prepare for and navigate the proceedings. To make sure your property division, spousal support, and child support agreements are fair, call our office at 617-221-3548 or click here to schedule a free consultation.
Tips for Divorcing a Wealthy Spouse
Be Respectful Towards Your Ex
When ending a relationship, the greatest advantage for you is working towards the most amicable resolution. Here’s why: it’s most cost-effective, the least tough on the emotions, the easiest on the nerves, the least harmful to the kids, and the most likely to prepare you to get on with the next phase of your life.
Think of this way — the cost of your divorce is directly proportional to the bitterness you feel. The fiercer the bitterness, the higher the cost; and, the more courteous the proceedings, the cheaper and quicker the process will be. Where there is resentment, every aspect of the divorce proceedings will become a battlefield; every issue will be grounds for contest. The opposing lawyers are paid to advocate for their client, which means they will keep going over each and every point, prolonging the arguments even more.
Consult with a Tax Accountant
You must consider the tax implications of every major financial move you make during your divorce. Selling your property may seem like a simple business transaction to you, but from the perspective of the IRS, it may be a “taxable event.” Generally speaking, a transfer of property between spouses during a divorce is a nontaxable event. But you may have to face significant tax consequences in the future when that asset is sold. Any asset that you keep as part of your settlement, you alone will be responsible for the taxes due on all profit made from that asset from the time the two of you initially bought it.
At Davis Law Group, attorney Jay Davis works with a team of taxation and financial experts who can help you precisely calculate the tax impact on your property division. We can also help you understand the tax consequences of your support payments and decide how you’ll file tax returns once your divorce is under way. If you’d like to set up a chat with Jay, send us a message online or call us at 617-221-3548.
Talk to a Divorce Financial Analyst
You may have never heard of them before, but due to the growing popularity of assets that can be complicated to value, such as private-equity ventures, stock options, hedge funds, and more, there’s a new crop of financial analysts who specialize in divorce. Previously known as “certified divorce planners,” they can help you navigate through the financial intricacies of property division.
Davis Law Group in Massachusetts works with a network of dedicated divorce financial analysts as well as certified financial planners (CFP) and certified public accountants (CPA) in high-net-worth divorce cases. These professionals can advise on specific complex fiscal issues, such as obtaining health insurance after a divorce, dividing a stock portfolio, avoiding tax blunders, and deciding which assets to fight for and which to give up. If you’ve been married for more than 10 years, have an estate of at least $250,000, and alimony is a major issue, our team of divorce financial analysts can be helpful in your case.
Take the Cash if it Suits Your Goals
If your well-off ex-spouse offers you a retirement plan that promises to pay a suitable sum in 10 years or a luxury car or a house currently valued at hundreds of thousands of dollars or a lump-sum payment of equal amount today — we will likely recommend taking the money.
You may have heard the proverbial saying, “a bird in the hand is worth two in the bush,” and it quite neatly puts our point across. The car will depreciate, the house may need a lot of repairs (not to mention the property tax), and the retirement plan may be riskier than you think.
If your spouse has given you a secured note promising to pay a certain amount for the next few years — note that their financial situation may change in the future. They might lose their job, their business may fail, they may go bankrupt or get injured; there’s a thousand reasons why they may fail to make good on the promised payments.
So, take the cash or cash-equivalent liquid assets and get a clean break. Of course, this doesn’t mean you should accept cash today in exchange for getting less than the full amount to which you are rightfully entitled.
Do You Think Your Ex May Be Hiding Assets in a Divorce? Davis Law Group Can Help Protect Your Rights.
Division of assets is always a complex subject, but it can get particularly messy when one of the spouses is wealthier or it’s a high-asset divorce. With a large amount of assets involved, it can become a game of financial cat-and-mouse where one party makes unethical moves, like hiding assets. The gaps in the financial information could be just a case of honest misunderstanding, or it could be an attempt to switch funds into secret accounts or conceal the true value of a business.
If you’re going through a contentious divorce or think that your spouse might be trying to hide some assets, there are a few ways we can handle the matter. At Davis Law Group, we employ a fantastic forensic accounting team with the skills to comb through financial statements and business accounts to find the tiniest inconsistencies.
If necessary, we can file to gain access to your marital property and bring in a professional appraiser to ensure all the assets are valued properly. To schedule your no-obligation free consultation with divorce attorney Jay Davis, call us at 617-221-3548 or fill out this online form.
James H. (Jay) Davis III
Thank you for reading. Need to talk? 617-221-3548