Divorce can be difficult for everyone, but it can be especially complex for couples with a high net worth. If mistakes are made in this type of divorce, the financial repercussions can be significant and long-lasting. The Colorado Divorce Law Group understands the legal and financial challenges of a high-net-worth divorce. If you need guidance or advice for your specific situation, consider contacting the experienced and dedicated legal team Colorado Divorce Law Group by calling (720) 593-6442 today.
Never make the mistake of thinking that all of your assets are subject to division in your divorce. Colorado Revised Statutes § 14-10-113 states that marital assets are any property either spouse acquired during the marriage. However, there are exceptions, including:
Therefore, if you had significant assets before your marriage or received property through one of the methods described above, that property may be yours alone to keep. On the other hand, if your spouse is trying to claim property is theirs alone, that property might actually be marital property. Be sure you correctly categorize all assets to avoid an unfair settlement of your property.
Of significance, you may need to trace your separate property assets to prove they are your separate property. This tracing process can be extremely complicated, and it’s important to have counsel who understands the intricacies that are involved in doing so.
For high-net-worth couples, the potential Internal Revenue Service (IRS) tax ramifications of dividing, selling, or transferring property can be significant. Therefore, tax consequences should be carefully considered. There may be various types of taxes you may have to pay upon transfer, when you file your tax return, or on dates tax collectors designate. You may have to pay personal property taxes, real property taxes, capital gains taxes or others.
The following types of transactions may result in more taxes being assessed:
Tax implications can extend well past the divorce date. If you and your spouse filed joint tax returns, you may be liable for any mistakes or omissions made on them. Finally, if you were married most of the year and were taxed jointly, you may wind up owing taxes because your tax status changes to single for the entire year if you were divorced as of December 31st of that year. It is important to know when to consult with a tax professional to ensure you understand the overall financial impact of your divorce.
Colorado Rules of Civil Procedure (C.R.C.P.) 16.2 requires spouses to complete a sworn financial statement and provide a full disclosure of their assets, debts, and income. If a spouse does not disclose information or gives inaccurate information, they can be penalized by the court. This can include receiving a smaller portion of the marital estate or even being jailed for contempt of court. Once a judge determines someone has lied to the court, they are more likely to question their credibility in other aspects of the divorce case.
Even if a spouse is able to conceal assets during the divorce, they are not necessarily permanently safe, because Colorado has a five-year lookback period. If hidden assets are uncovered during this time, the negatively affected spouse can ask the court to revise the property division order.
Brandi Petterson has successfully litigated cases that uncovered significant undisclosed assets in the past and understands this intricate process.
Do not make the mistake of thinking that your spouse will not attempt to hide assets. It is worth the time (and expense) to investigate your finances. High net-worth individuals may have access to more creative ways to hide assets, such as storing them in business holdings or in cryptocurrency.
There are many ways that you may be able to uncover hidden assets. For example, while you are going through a divorce, an experienced Colorado divorce attorney from Colorado Divorce Law Group can make discovery requests to obtain information about your spouse’s assets, debts, income, and expenses. A forensic accountant may also be able to investigate and uncover hidden assets.
Divorce can be grueling, adversarial, and complicated. This can motivate some spouses to simply settle their divorce as quickly as possible, virtually agreeing to anything. However, divorce can have long-lasting effects on your life. In divorce, decisions will be made regarding:
Making a quick agreement may not be in your best interests and can cause you to get less than you deserve. Poorly considered agreements can negatively affect you for years to come.
While you do not want to rush to a resolution, you also do not want to drag out the process. The divorce process does not have to be highly contentious and lead to a bitter, long, drawn-out battle. Every issue that you and your spouse argue over will ultimately result in more time and money spent to resolve the issue. Therefore, if you can agree on some issues, such as child custody or child support, you can make the process easier. Remember, your goal is to preserve your wealth. That is a goal you share with your spouse.
Divorce can be a lonely process. However, one thing not to do in a high-net-worth divorce is to try to do everything yourself. Various professionals who may be able to help with your case include:
Now that you know what not to do in a high-net-worth divorce, you may be wondering what to do in your divorce. An experienced family lawyer from the Colorado Divorce Law Group can review your situation during a confidential consultation and explain how they can help. Consider contacting the firm to schedule your consultation by calling (720) 593-6442.