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As many Texans know, going through a divorce can be complicated. Issues that often must be dealt with include the division of property, spousal support, and child custody. In a high net worth divorce, money tends to take on an extraordinary level of importance and complexity. Assets may include such things as business partnerships or venture capital funds. According to one divorce specialist, some of those assets are illiquid, making it hard to split them down the middle. Calculating the future value of an asset can be tricky. If the asset is a business, for example, its future success may be hard to predict.

According to one divorce mediator, individuals in an HNW divorce will sometimes attempt to hide assets. However, this doesn’t necessarily mean moving money to an offshore account. Hiding assets typically involves finding a way to move assets from one spouse to the other in a manner that does not show up on financial documents. Examples would include interest-free loans to family members or large purchases made with the spouse’s money.

One way to make sure that assets are divided in an equitable fashion is to create an agreement setting forth a procedure for dividing present and future assets. The agreement might name an advisor that has access to financial records and has to approve of the division. If the couple jointly owns a business, the agreement might establish criteria for determining the number of shares each party will own.

Individuals contemplating divorce often rely on an attorney early in the process to help them look for hidden assets and to create a plan for an equitable distribution of assets, especially in a high net worth divorce. The attorney may also be helpful in resolving issues not related to money or assets.

Source: Financial Planning, “Finding Hidden Assets: Digging Deep in HNW Divorce”, Andrew Pavia, March 24, 2014

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