Married couples accumulate a lot of material possessions, even if they have not been together long. Finances can also become intertwined, and the more assets they share, the more complicated it becomes if they split up.
The wealthiest couple in the world, Amazon’s Jeff Bezos and his soon-to-be-ex MacKenzie, recently revealed their impending divorce, and many are speculating about the outcome.
Most couples, even very affluent ones, are not in this stratosphere; but divorcing can certainly be challenging. Once separation and divorce are on the table, certain steps should be taken to ensure a fair distribution after the divorce.
Preparation and Organization
Many spouses are blindsided when they discover that their partner was accumulating credit card or other debt. This is the time to get a credit report. Joint credit cards should be paid off and closed. This is also true for other joint holdings, like investments and bank accounts.
Another important task is to clean-up the computers and filing systems. Both parties should have copies of all financial data. All e-mail accounts and social media connections should also be separated.
Many couples have trusts, limited partnerships, and other components to their estate plans. Irrevocable trusts can be tricky, since they generally cannot be revised once established. Taxes are also a big consideration. Spouses may leave their assets to one another and avoid estate taxes, but if these assets are left to family members, future taxes can come into play.
New Jersey is an equitable distribution state. This means that courts divide marital assets equitably, though not necessarily equally. One spouse may receive more shared assets, instead of an equal division. The length of a marriage, children, and other factors can influence this.
Assets that were obtained before the marriage, like investments, personal property, and real estate, may be considered as separate property. This can also include life insurance, pensions, and IRAs. This is why it is important for affluent couples to look into getting a prenuptial agreement before they get married.
The Family Home and Business
Affluent couples who own expensive homes may wish to sell them. It can make financial sense to do this before a high asset divorce, as it may allow the gains to be sheltered easier via the $500,000 exclusion that applies to capital gains. If the home is awarded to one of the ex-spouses after the divorce, they will get a one-time $250,000 exclusion.
It is not uncommon for a couple to own businesses together. If they decide to keep the business, decisions will need to be made about its operation, compensation for each person, and long-term plans. Some separated couples decide to sell their businesses, and this must also be planned out carefully.
Couples in the public eye must keep their reputations in mind when divorcing, but this is also something to keep in mind for any divorcing couple. Making unflattering statements about your ex could damage your image and hurt family members, especially children. A judge could frown upon this behavior, resulting in unfavorable decisions and penalties.
When divorcing couples make efforts to reach amicable agreements, it can lead to the most equitable settlements possible.
If you need legal guidance with any type of divorce matters, contact us. We will advocate for what is best for you and your family. Our offices are in Marlton and Somers Point, New Jersey, and we represent clients in Camden County, Burlington County, Atlantic County, and across South Jersey. Complete an online form or call 856-751-5505 today for a free case evaluation.