Divorce is almost always an emotionally and financially draining experience, and high asset divorces come with an increased level of tension and drama. It is because of that emotion that some spouses in high asset divorce settlements make irrational decisions or financial errors that can cost them thousands or millions of dollars in the end. However, there are some areas in a high asset divorce that can be analyzed to ensure that you are getting the most out of the settlement proceedings.
Hiring a Valuation Expert
One way to minimize potential mistakes in a high asset divorce is to hire a valuation expert. This person is an objective professional who is hired to make accurate valuations of all assets for the couple based on specific metrics and methodologies. Many valuation experts are associated with accounting firms and carry special designations for their profession. However, more help may be necessary for the expert if highly specialized assets like a privately held company, holdings in a family business, or other technical investment interests are at stake.
When assets like stock or equity portions of a business are at play all of the contingencies surrounding distributions, transfer of ownership, and sale must also be considered by the valuation expert. A divorce valuation expert with investment management experience who deals regularly with high-value, complex portfolios can help navigate these types of situations.
Review Life Insurance Policies
This is another area where misjudgments are often made in high asset divorces. Many people do not think of life insurance as an asset, but as any other form of insurance like auto or home. It is possible to accumulate a large amount of wealth within a life insurance policy without the other spouse ever knowing.
Even when an insurance review is conducted, life insurance policies can be difficult to valuate. Different policies are structured in different ways depending on the needs of the client, and oftentimes the money in a life insurance policy is held in trust for estate planning purposes. It is important to have someone on your team with knowledge of trusts and insurance that can properly determine the current value of the policy in addition to the best way to equitably divide it.
Looking at Lifestyle
The cost of maintaining a certain lifestyle often comes up in high asset divorce cases, but it is not often treated with the seriousness or financial scrutiny that it deserves. Looking at the lifestyle is especially important when one of the divorcing spouses is a high earner and the other one is not. By thoroughly reviewing the accounting and financials of the couple, knowing how and where the money was spent can help determine a fair split of assets for lifestyle accommodation.
By taking a holistic approach to looking at all potential items of value in a high asset divorce, it ensures that nothing is left on the table for either party. It also safeguards one spouse from making an emotional or irrational decision during the divorce proceedings that could cost one of them or their family dearly.