With regard to high net individuals or, you know, high asset cases, those people are going to want to make certain that they have good record keeping and have access to their documentation that that information is going to become necessary for valuation of businesses, forensic accounting purposes, and being able to trace assets as necess through the divorce process. Without that information, it makes my job as an attorney incredibly difficult to ensure that your rights are protected and that you get what you're entitled to receive. Thus, good record keeping is going to be a very important aspect for high net individuals and high asset cases. One thing that we as attorneys can do in divorce cases to ensure a fair asset division and that there's no quote, unquote, funny business going on, is to have the court issue what's called a joint preliminary injunction. We call those JPIs. What a joint preliminary injunction does is ensures that the parties aren't wasting marital assets, acquiring new debts, gifting large sums of money or property away that a spouse is entitled to. Thus, the use of a joint preliminary injunction becomes incredibly necessary as we conduct litigation for divorce to ensure fair and that nobody's hiding anything or destroying anything or wasting anything. A question I get a lot is about tax implications in regard to assets in a divorce. And depending on what the assets are, there can be tax implications. For example, if someone is going to take, you know, the majority of a retirement savings account, whether it be a 401k or something like that, that if a person is not the requisite age, then there's going to be a penalty to draw that fund or money out early and they'll have to pay taxes on it as income. Sometimes there's capital gains tax, depending on the types of assets received in a divorce process. So taxes are a consideration that, you know, when we're negotiating a case or dividing assets in a divorce action, we want to make sure that we're mindful of taxes because we don't want there to be any surprises for our clients that might bite them later if they're not considering those. In my practice, I had the good fortune to represent several public figures, athletes, people of notoriety and fame. One of the questions I often get is, what can you do to protect my confidentiality? I don't want the world to know about this divorce case. The thing that I do quite frequently in my practice is to seal a case with the court clerk's office. By so doing, that particular case is not searchable to the general public. If anyone was searching records at the court, they wouldn't be able to find it. In fact, only the attorneys of record and court staff are capable of seeing that case file. Thus, we do it with anonymity. We do it with the ability to ensure confidentiality and make sure that people's most sensitive and private information is not available to the general public.
Divorce can be a complex and challenging process, especially for high net worth individuals. Proper record keeping, legal safeguards, and an understanding of tax implications are crucial to ensuring a fair and equitable division of assets. In this blog post, we will explore the key aspects of managing high net worth divorce cases, including the importance of documentation, the role of joint preliminary injunctions (JPIs), and the need for confidentiality when representing public figures
For high net worth individuals, meticulous record keeping is essential for several reasons:
1. Business Valuation: Accurate records are necessary to determine the value of business interests, which can be a significant component of the marital estate.
2. Forensic Accounting: Detailed financial records help forensic accountants trace assets and uncover any hidden or undisclosed property.
3. Asset Tracing: In the event of a divorce, comprehensive documentation ensures that all assets are accounted for and fairly divided.
Without proper documentation, protecting one's rights and entitlements in high asset cases becomes significantly more complicated.
Joint Preliminary Injunctions (JPIs)
Attorneys can request a joint preliminary injunction (JPI) to safeguard assets during the divorce process. A JPI serves several critical functions:
1. Preventing Waste: JPIs prohibit either party from wasting or dissipating marital assets.
2. Restricting New Debts: They prevent the acquisition of new debts that could impact the marital estate.
3. Prohibiting Gifting: JPIs stop either party from gifting property, which could reduce the value of the marital estate.
By ensuring fair asset division, JPIs help prevent the hiding, destroying, or wasting of assets, providing a level playing field for both parties.
Tax Implications in Divorce
Divorce can have significant tax implications, and attorneys must consider these to avoid unpleasant surprises for their clients. Some key tax considerations include:
1. Retirement Accounts: Early withdrawals from retirement accounts can incur penalties and taxes.
2. Capital Gains Tax: The division of assets, such as real estate or investments, may trigger capital gains tax.
Understanding and planning for these tax implications is crucial to ensure that the financial settlement is fair and equitable.
Confidentiality for Public Figures
Representing public figures in divorce cases requires a high level of confidentiality. To protect their privacy, attorneys can request that cases be sealed with the court clerk's office. Sealed cases offer several benefits:
1. Anonymity: Sealed cases are not searchable by the public, ensuring that personal details remain confidential.
2. Restricted Access: Only attorneys of record and court staff have access to sealed cases, maintaining the privacy of the individuals involved.
By sealing cases, attorneys can provide public figures with the confidentiality they need during a highly sensitive time.
Managing high asset divorce cases requires a comprehensive approach that includes meticulous record keeping, legal safeguards like JPIs, an understanding of tax implications, and a commitment to confidentiality. By addressing these key areas, attorneys can help ensure a fair and equitable resolution for their clients, even in the most complex and high-stakes situations.
If you are navigating a high asset divorce, it is essential to work with experienced legal professionals who understand the intricacies of these cases and can provide the guidance and support you need.