One of the benefits of being married to a high-income person is the freedom it affords you in your own career. Many spouses of high earners choose to pursue lower-paid but rewarding careers or to stay home and care for the household instead of working. That’s an excellent way to structure your life while you’re married, but it can make the thought of divorce particularly intimidating.
You may feel trapped in your marriage if you’re the dependent spouse of a high-income entrepreneur, artist, or athlete. You don’t have to be, though. Proper preparation and help can allow you to end your marriage without sacrificing financial security. Here’s what you should expect from a high-asset divorce and how to approach your split to achieve the best possible outcome.
Complications of High-Asset Divorces for Dependent Spouses
If your spouse earns significantly more than you, your divorce is likely to involve unique complications. Common issues facing dependent spouses in high-asset divorces include:
- Identifying how you’ll provide for yourself after your split. Many partners of high-income people rely on their spouse’s income. After your divorce, you’ll need a new source of support, whether that’s a spousal support order, income from your share of the marital assets, or a job of your own.
- Receiving your fair share of the marital assets. High-income people are more likely to own unique assets such as restricted stock units (RSUs), intellectual property, and businesses. Under California law, all assets acquired during a marriage are community property and must be split equally in a divorce unless a prenuptial or postnuptial agreement states otherwise. You’ll need to determine which of your assets are joint property and how they should be divided.
- Protecting your retirement. You may have relied on your spouse’s retirement funds to pay for your own golden years. In high-asset divorces, it becomes necessary to determine if and how these funds should be divided to cover both parties.
- Determining the tax implications of your split. Divorce always affects taxes, but the impact is particularly significant in high-asset splits. You should evaluate how your separation will affect your projected taxes in advance, so you know what to expect come April 15th.
How to End Your Marriage Without Risking Your Security
With all of these potential complications, dissolving your marriage can seem overwhelming. However, with the right approach, you can get the divorce you need while protecting your financial security. Here’s how to prepare for your split regardless of whether you’re divorcing an athlete, entertainer, entrepreneur, or another high-income person.
1. Determine Your Priorities
High net worth divorces involve a lot of moving parts. The process could take years to resolve if you try to negotiate every single asset and account. In most cases, it’s best to identify your priorities before starting the process to avoid getting caught up in the details.
First, determine your needs. What do you need to support yourself at the standard of living to which you’re accustomed? You need a place to live or the funds to pay for one. You also need funds to pay for other living expenses and bills until you become self-sufficient.
Next, identify what you want most. Do you care more about keeping a house or a retirement fund? Create a list of the assets that matter to you most to know what’s worth fighting for.
2. Know Your Rights
Regardless of how much you or your spouse earns, California grants you specific legal rights during a divorce. Unless you have a prenuptial or postnuptial agreement in place that states otherwise, you have the right to:
- Receive half of all communal property accumulated during your marriage, including liquid assets, retirements funds and pensions, real estate, and intellectual property
- Request spousal support (alimony) to help you support yourself until you’re able to become self-sufficient
- Retain independent legal counsel to represent you throughout the divorce
When you understand your rights, you’re much less likely to accept unfair or inadequate divorce settlements out of anxiety that you won’t get anything better.
3. Get Professional Help
High-asset divorces often require the assistance of a team of professionals to ensure you receive a fair settlement. Your attorney will help you build this team, which may include:
- A private judge or mediator to have your case resolved quickly outside of the public court system
- Forensic accountants to track down all assets that should be considered communal property
- Appraisers to determine the precise value of unique assets like businesses, collections, and real estate
Having these experts on your side reduces the risk that your spouse convinces you or a judge to divide your communal property unfairly.
4. Consider a Settlement Offer
Once you’ve discussed your case with your attorney, you can make a settlement offer to your spouse or consider their initial offer. Settling your divorce may be quicker and easier than going to court if you and your spouse can negotiate. However, the first settlement offer is rarely the one to be accepted. This is the opening move in the negotiation. If your spouse’s offer is unreasonable, you can return a counteroffer you believe is fairer.
5. Negotiate, Mediate, or Litigate
Depending on how the initial settlement offer and counteroffer are received, you will better understand whether you want to negotiate, mediate, or litigate your split. Negotiation allows amicable spouses to come to an equitable agreement on how to split assets and handle other concerns. Mediation adds a neutral third-party mediator to the talks to help keep the process organized and on track.
Finally, litigation puts your case in front of a judge, who will issue a legally binding decision regarding any issues you and your spouse cannot negotiate. Your attorney will help you determine which approach will accomplish the best results.
Protect Yourself in Your Divorce With Expert California Legal Counsel
California has specific protections in place to protect dependent spouses during and after divorces. If you’re considering divorcing your high-income partner, you can ensure you benefit from these protections by consulting a high-asset divorce attorney like the experts at Kaspar & Lugay, LLP.
Our attorneys have backgrounds in both family and business law, granting them insight into the complexities involved in high-asset divorces. We will work on your behalf to ensure you receive a fair settlement without sacrificing your rights or assets. You can learn more about how we can effectively represent you by scheduling your consultation today. Call (858) 295-3146 or reach out online to get started.