While all divorces are emotionally difficult undertakings, they become far more legally challenging in high-value or high-asset divorce cases. When spouses hold high-value financial assets and have diverse portfolios of property and accounts, navigating Colorado’s requirement for the fair and equitable division of marital assets becomes challenging. When spouses have a combined high net worth, the stakes are high, often leading to a complex and contentious process.
Although the best way to avoid problems in a high asset divorce is to enter the marriage with a pre-nuptial agreement, that isn’t always the case. Instead, divorcing high-asset spouses can take steps to avoid common problems and streamline the high-value divorce process. Our experienced divorce attorneys in Denver can help guide you through the divorce process with ease.
Avoiding Co-mingling Separate Property
During a divorce, each spouse may retain the separate property that belonged solely to them before the marriage, or was inherited by them or gifted to them during the marriage, while they must fairly divide marital assets. While this sounds straightforward, it isn’t as simple as it seems, due to the common occurrence of commingling assets during marriage.
For example, if one spouse owns a vacation home or a business before the marriage, but the other spouse spends time, talent, or money improving the home or business, they have a right to their share of the asset’s increased value.
Allowing a spouse access to bank and investment accounts also makes those accounts marital property.
Avoiding Property Valuation Conflicts
Typically, each spouse in a high-value divorce hires experts to perform valuations on financial holdings, such as businesses, professional practices, executive compensation, trust interests, and cryptocurrency.
Unfortunately, there are several methods for determining the value of these holdings, and each spouse’s financial advisor or chosen valuation consultant selects the method that best suits their client’s interests, resulting in different outcomes.
To avoid an unfair outcome, it’s crucial to partner with experienced, reputable valuation professionals and financial forensics experts who consider the other spouse’s valuation methods when assessing the value of marital assets. If both spouses have widely different value determinations for the same asset, a judge is likely to order a third evaluation by a neutral party and base their decision on the outcome of the neutral party’s assessment.
Consider the Long-Term Cost of Maintaining Assets
During the heat of the divorce conflict, many spouses in high-value divorces focus strongly on retaining as many financial assets as possible without considering the long-term costs of each asset. For example, one spouse may argue strongly to retain the family home.
However, this requires the spouse to refinance the home in their name only. In some cases, problems arise when the spouse has difficulty refinancing the home or faces high mortgage payments, expensive property taxes, and maintenance costs that they aren’t prepared to cover in the long term.
It’s crucial to consider the long-term implications of retaining assets such as real estate property and businesses.
Neglecting to Consider Mediation Over Litigation
Often, spouses of high-value marriages leap to the conclusion that their divorce will require litigation in a heated court battle, with each spouse fighting to retain as many assets as possible.
It’s helpful to remember that Colorado isn’t a 50/50 divorce state but one that requires a “fair and equitable” division of property. Instead of assuming that you’ll need a judge to decide on your asset division after battling over every asset in court, don’t overlook the merits of professional mediation and negotiation with the other spouse.
When divorcing spouses can communicate and compromise with the help of a neutral third party, they may each come away with the assets that mean the most to them. Mediators often have creative solutions, such as one spouse trading an asset that they wish to keep for one of equal value that is more important to the other spouse.
Avoiding court is the best way to prevent problems in a high-asset divorce and move forward under the best possible circumstances after the divorce is finalized.