How to Divide Investments in a North Carolina High Net Worth Divorce

In the case of high net worth divorces, many spouses have significant investments. If these investments were made during the course of the marriage, they count as marital property and are subject to equitable distribution. Unlike many other types of assets, financial investments may be difficult to distribute in an equitable manner. The process of dividing assets often becomes a significant hurdle for many spouses in high net worth divorces.

If you are searching for a divorce attorney in Charlotte who can help you with this potentially complex matter, you need to hire a dependable legal professional. A high net worth divorce is a completely different ball game compared to any other divorce, and this is why you need a divorce attorney who is specifically experienced with these cases. Not only can a divorce attorney in Mecklenburg County help you with dividing investments, but they can also assist you with various other issues related to high net worth divorces in North Carolina.

Investments Are Still Counted as Marital Property

The first thing you need to know about financial investments is that they are counted as marital property. If you made certain investments during your marriage, they are eligible for equitable distribution. In many high net worth divorces in North Carolina, spouses have significant investment portfolios before they actually get married. These investments may be counted as separate property. That being said, financial investments are counted as marital property when a spouse actively contributes to the investment during the marriage.

Understanding Equitable Distribution in the Context of Investments

It is important to understand that “equitable” does not necessarily mean “fair” or “equal.” An “equal” split would be a 50/50 split, regardless of any additional circumstances. When dealing with 40,000 stocks in a particular company, this would mean that one spouse receives 20,000 stocks of a certain company, while the other spouse receives the other 20,000.

On the other hand, equitable distribution might change things significantly. The court may take a number of factors into account when dividing financial assets in an equitable manner. If you have contributed significantly to the property and most of the funds invested came from your side, then the court may be more inclined to grant you more stocks. However, you may also receive more stocks simply because you have primary custody of the child(ren).

The court may even look at the criminal history of each spouse when dividing financial assets, especially in regards to white collar crime. For example, if one spouse has a history of fraudulent investments, ponzi schemes, or similar activities, they would likely receive a lower amount of stock simply because their economic misconduct threatens the value of the asset.

Avoiding Taxes and Fees

One of the key considerations when dividing financial assets in a high net worth divorce is avoiding taxes whenever possible. If you are dividing investments in a retirement account like an IRA, you could be hit with a 10% penalty for early cash withdrawals. On the other hand, if you cash funds out of a 401(k) or another ERISA-governed group retirement plan, you can avoid this 10% penalty. It is best to obtain a Qualified Domestic Relations Order (QDRO) if you want to avoid these penalties.

For all financial investments, you should determine when it is the best time to convert your funds or withdraw them based on the changing values of the markets. This will help you pay tax on lower values, and not on future growth. This is especially important when markets are volatile.

Taking Stock Market Risk Tolerance Into Account

In many high net worth divorces, one spouse may be particularly adept at dealing with finances and investments. The other spouse may not be quite as knowledgeable in this regard. Because of this, it is important to take stock market risk tolerance into account when dividing assets.

In other words, it may be unwise for non-experienced spouses to take on extremely aggressive portfolios. These spouses may want to immediately convert their portfolios into more conservative, stable investments that they can easily manage, particularly during market volatility. If these steps are not taken, a non-experienced spouse may lose significant amounts of money after the divorce.

Enlist the Help of a Qualified Divorce Attorney Today

If you are dealing with a high net worth divorce in Charlotte, you need to team up with a qualified divorce attorney who is experienced with these cases in Mecklenburg County. Reach out to Arnold & Smith, PLLC, and we can make sure that your financial investments are distributed in a fair, equitable manner. There is no sense in losing high-value assets to which you are rightfully entitled. With the help of a legal expert, you can approach this potentially complicated scenario in an efficient, stress-free manner.