California is a community property state which means all assets that a married couple have accumulated during their marriage belong equally to both spouses and must be divided between them 50/50 as much as possible. This is often difficult in high-asset divorces.
Why a High Asset Divorce is Different?
Generally, in a divorce, the couple has a house, a car or two, and maybe a few other assets, but the value of each is easily determined and a property settlement is easy to figure out.
The value of the cars is easily determined with a Blue Book search and the house is easily valued by reviewing comps in the area. Often, each spouse keeps their own car. The house may be sold and the equity equally divided. Or one spouse buys out the interest of the other spouse.
In a high-asset divorce, the couple has accumulated many assets and each one must be valued separately. The division is not so easy. Some examples of assets are:
- Art collection.
- Assets owned in a trust.
- Inheritances (which are often the separate property of the one who inherited the asset).
- Multiple retirement accounts. Each with its own terms about distribution.
- Ownership of a business or professional practice.
- Real estate. Sometimes, this includes real estate in another state which adds another problem to the division decision.
- Savings accounts.
- Stock options and voting rights.
High-asset divorces often involve spouses in long-term marriages who have had years to accumulate property. In addition, there is often separate property that must be considered. If one party challenges the separate property of the other one as being community property, then a forensic accountant may be brought in to trace the funds used to purchase and maintain that asset.
Tax implications must be considered when deciding how and when to divide the assets. Generally, couples involved in a high-asset divorce do not want to release their asset list for public review.
The Benefits of Collaborative Divorce in a High Asset Divorce
In a Collaborative Divorce, the couple works with a neutral financial professional who helps to value the property and works with the couple to make a fair exchange of one asset for another.
All personal financial documents are exchanged between the couple during the collaborative process and do not become part of the public record as occurs during traditional litigation.
Heberger & Company Can Help
For more information about how Collaborative Divorce financial professional can help with valuing your assets and assistance on how the division can be made equally with considering tax implications for each party, contact us at Heberger & Company An Accountancy Corporation.
From the Blog
Pre-Divorce Financial Checklist
It seems that in almost all cases of divorce, one party has been the one who handled the money and can readily provide necessary financial documents to legal counsel handling the divorce. The other party is often left in the dark and should sit down with the CPA who prepared the tax returns and go over the documents in order to discover the true financial situation. Here are some of the items that … [Read More...]
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