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Understanding How Investments Are Divided in High Net Worth Divorces

If you are a spouse who is dealing with a high net worth divorce, you are probably wondering how your financial investments will be divided. Whether you are a financial expert or not, most individuals with high net worth have significant sums tied up in various financial products. These may include stocks, dividends, retirement plans, and other financial products. Whether you actually made these investments or not, you might be concerned about whether you will get your fair share of these valuable assets when the divorce is finalized.

If you would like to alleviate these concerns, your best bet is to consult with an experienced divorce attorney in Monroe. Choose a legal advocate who is well-versed in high net worth divorces, and you can ensure that you approach the next few months in an efficient, confident manner. Not only can a qualified divorce attorney in Union County help you with dividing financial investments, but they can also assist you with virtually every other aspect of your high net worth divorce.

Are Financial Investments Classified as Marital Property?

All assets that were accumulated over the course of your marriage are marital property, and this includes any financial investments that were made. Because financial investments are classified as marital property, they are subject to equitable distribution according to North Carolina law. If you made established aspects of your portfolio before your marriage took place, they would be considered separate property and ineligible for equitable distribution.

How are Investments Distributed Equitably?

One of the most common misconceptions about equitable distribution is that each spouse walks away with an equal share of the marital property. While some may believe that “fair” is the same as “equal,” courts in Union County do not share this opinion. Instead, the court will take a number of factors into account when dividing assets like financial investments.

Let’s say you have 100 stocks in a certain company. Instead of each spouse simply receiving 50 stocks, the court may award each spouse more or less stocks depending on a number of potential factors. These factors may include:

  • Contributions: Which spouse contributed more funds to the investment? Who managed the investment, and who is ultimately responsible for its success?
  • Child Custody: If one spouse has primary custody, the court may award them more stocks in order to cover the expenses of raising a child.
  • Criminal History: If one spouse has a history of criminal behavior, they may receive less stock. This is particularly true if the spouse has engaged in fraud, Ponzi schemes, or other examples of economic misconduct. The court will likely conclude that this spouse represents a risk to the overall value of the investment.
Avoiding Taxes

When investments are divided, they may be sold, converted, withdrawn, or otherwise liquidated so that each spouse can receive an equitable share. Unfortunately, this may result in significant taxes and fees. It is always in your best interest to avoid these taxes and penalties, and there are a number of ways in which you can do this.

First of all, you may be hit with a 10% penalty for withdrawing funds from an IRA. You can avoid this penalty by withdrawing funds from a 401(k) instead. Secondly, you can avoid significant taxes by converting funds when market values are low. With this approach, you will pay taxes on lower values, and not on future growth.

Choosing a More Conservative Portfolio

It may be in one spouse’s best interest to immediately convert their investments into a more conservative portfolio after receiving assets during a high net worth divorce. One spouse may be more experienced in the financial world, and they may have a very aggressive portfolio. However, that portfolio may not have the same value in the hands of a less experienced spouse. If you are less experienced and you are left with an aggressive portfolio after assets are distributed, you should choose a more conservative portfolio to minimize any potential losses.

Get Help From a Qualified Divorce Attorney in Monroe Today

If you have been searching for a qualified divorce attorney in Union County, you need look no further than Arnold & Smith, PLLC. We have a wealth of experience with high net worth divorces in North Carolina, and we can help you approach even the most complex issues with relative ease. We understand that keeping hold of your assets is often a top priority, and we can guide you through the process. Reach out today, and we can start working on an action plan.