Top Financial Priorities After a High-Net-Worth Divorce in North Carolina

After a high-net-worth divorce in North Carolina, you may feel overwhelmed by a range of financial issues. A divorce of this nature can dramatically decrease your assets while confronting you with new support obligations. It makes sense to create a list of top priorities and focus on achieving these goals in the immediate aftermath of a divorce. If you are approaching a divorce or you are in the middle of one, you can implement strategies that help you address potential issues before they arise. Consider discussing your unique goals and priorities with an experienced divorce attorney.

Beating inflation should be a top priority for many high-net-worth spouses. Generally speaking, high-net-worth spouses are less likely to be negatively affected by rising rates of inflation. This is because wealthier families tend to own considerable assets, which appreciate in value due to inflation. In other words, high-net-worth families tend to benefit from inflation rather than being impoverished by it.

That said, divorce can significantly decrease or even eliminate the assets held by spouses. When a spouse emerges from a divorce with little or no assets, they may need to focus on reacquiring assets in order to keep pace with inflation.

It is all too easy to assume that a cash payout will be enough to cover your standard of living for the foreseeable future. However, inflation has a habit of slowly but surely destroying your cash savings. Soon enough, you might find that your multi-million-dollar divorce settlement has vanished, and you still have bills to pay.

Spouses should implement strategies to fight post-divorce inflation sooner rather than later, ideally during ADR negotiations. For example, a high-net-worth spouse might have a choice of whether to accept a cash “buyout” or the second home. If the focus is on retaining assets, real estate might be a preferable option. Preferable alternatives to cash buyouts may also include stocks, retirement accounts, collectibles, fine art, or any other asset that will likely appreciate in value.

That being said, cash buyouts are not always the enemy if the goal is to beat inflation. For example, a spouse might have a choice between lump-sum alimony and periodic alimony. In this case, a lump-sum payment may be advantageous because it allows the receiving spouse to immediately invest that money in an asset. This asset might be stocks, treasuries, or real estate.

Many spouses exit divorce with considerable inherited property. These assets might exist within trusts, and it makes sense to protect them from the threat of divorce. Fortunately, North Carolina makes all inherited assets “separate property,” which means that they are not eligible for the equitable distribution process in North Carolina.

That being said, it may be necessary to prove that you inherited certain properties. This might be more challenging than you realize, especially if assets have become “commingled.” In other words, you might have property that contains both marital assets and separate inherited assets. Forensic accountants and experienced lawyers can help you “unravel” these commingled assets to protect your inheritance.

Spouses may need to focus on regaining financial independence after high-net-worth divorces. This goal could be particularly important for younger spouses who relied on their exes for financial support during their marriages. The classic example is a young homemaker or stay-at-home parent who did not work during their marriage.

In this type of situation, it might be tempting to simply sit back and rely on child support and spousal support. However, these support funds may quickly dwindle, especially if the recipient is still many decades away from retirement.

A spouse of this type might want to focus on rehabilitative alimony that covers education and work credentials. For example, a spouse might receive enough alimony to finish their college degree and get a relatively high-paying job. Financial independence ensures long-term financial stability rather than the short-term “safety net” of alimony and child support.

A divorce lawyer in North Carolina may be able to help you assess potential priorities after your marriage ends. These priorities might include beating inflation, protecting inherited assets, and regaining financial independence. That being said, each divorce is slightly different. Priorities and goals can be particularly varied and complex for high-net-worth individuals, especially when one considers the near-endless possibilities for different investments and asset protection strategies. Consider a more in-depth conversation with Arnold & Smith Law, PLLC.