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Why high-asset divorces can be very fraught for couples

On Behalf of | May 30, 2023 | Divorce

Divorce is a very difficult and emotional process that changes not only someone’s personal circumstances but also irrevocably alters their finances. California couples preparing for divorce are subject to community property laws unless they settle everything out of court.

Those who have enjoyed a higher standard of living throughout their marriage and higher-than-average income often find the divorce process to be more of a challenge at the end of a marriage. What makes a high-asset divorce so difficult?

Couples have more property to divide

The more that people have earned throughout the marriage, the more they have likely accumulated and saved. There will often be intense disputes about what is a fair and appropriate way to share marital property. People may feel entitled to retain assets that they technically need to include in their pool of marital property, such as deferred income that they will only receive several years after divorce or a retirement account held in the name of one spouse.

The process of locating all assets and determining what is marital and what is not can be far more challenging when people have higher income levels and more complex personal portfolios. Some assets, like real property, business holdings or stock options, may also be a challenge to value.

A higher standard of living can lead to support issues

Higher-income households are more likely to have one spouse give up their career or at least make professional sacrifices to support the other. The dependent spouse and any minor children in the family may have grown accustomed to a relatively high standard of living as well.

Spouses in need of support may have to compromise on their overall standard of living, while spouses paying support may have to compromise about what they feel is fair regarding their income. It can take far longer to work out solutions that are reasonable and appropriate when high-asset couples in California divorce.

They may also require more support during the legal process, such as assistance putting together a qualified domestic relations order to divide a 401(k) without losing some of its balance to taxes and early withdrawal penalties. Recognizing that the positive economic circumstances of a marital relationship may lead to a more challenging divorce can help those who are preparing for a complex California divorce to adjust their expectations and priorities accordingly.

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