When facing a high-asset divorce, the financial stakes couldn’t be higher. Your marital estate may include complex investments, retirement accounts, real estate holdings and possibly business interests that require careful valuation and division.
The tax implications alone can significantly impact your financial future for decades. What might seem like a fair 50/50 split on paper could leave you at a serious disadvantage if you don’t understand the after-tax value of different assets.
Additionally, high-income couples often have complicated compensation structures, such as stock options or deferred bonuses, which require specialized knowledge to address properly in divorce proceedings.
Dividing complex assets
Arkansas follows equitable distribution laws, meaning courts divide marital property fairly but not necessarily equally. Judges consider factors like marriage length, each spouse’s financial situation, and contributions to the marriage when determining what’s “equitable.”
High-asset couples typically own assets that are challenging to divide. Complex assets that require special attention include:
- Family businesses or professional practices
- Restricted stock units and stock options
- Investment real estate and vacation properties
- Privately held company interests
- Venture capital or private equity investments
- Art collections, antiques and luxury items
- Intellectual property rights and royalties
- Offshore accounts or international assets
- Cryptocurrency holdings
- Deferred compensation plans
Retirement accounts require specific court orders (QDROs) to divide without triggering penalties, while IRAs follow more straightforward division rules. Family businesses present particular challenges, often requiring decisions about whether one spouse will buy out the other or if selling the company is the best option.
Understanding the liquidity and tax treatment of each asset is crucial. Cash and brokerage accounts offer immediate access with minimal tax impact, while retirement accounts face income tax when withdrawn.
Don’t forget these steps afterward
Once finalizing your divorce, immediately update beneficiary designations on retirement accounts and life insurance policies. Your ex-spouse likely remains the beneficiary until you make these changes. Create a new estate plan with updated wills, trusts and powers of attorney that reflect your current wishes and remove your former spouse from decision-making roles.
Working with an experienced divorce lawyer who understands the nuances of high net worth divorces is essential for protecting your financial future. A skilled attorney will assemble the right team of financial advisors and tax professionals to ensure you receive an equitable settlement that supports your post-divorce life.