When you think of a divorce, one of the main worries that comes to mind is the loss of income and assets. This is especially true for a high net worth divorce since there are such high stakes in the division of property. The uncertainties that come with this can be stressful, but educating yourself and leaning on the expertise of an experienced divorce attorney can make a world of difference.
It is important to remember that the rules of property division differ by state, and in Pennsylvania, marital property is “equitably distributed” upon divorce. This means there is no 50/50 presumption. Instead, the court determines the most equitable method to divide the marital estate. Below is some additional information about property division to help you through the process:
Types of property. Most high net worth divorces have numerous types of marital property to review, including real estate, retirement accounts, personal property, investments, cash, savings and checking accounts, business interests, and even debt. Marital property is property acquired between the date of marriage and the date of final separation of the parties. Marital property also includes the increase in value of any non-marital property during the marriage. Pennsylvania is a title-blind state, meaning the manner that property is titled (individually or jointly) is irrelevant. Instead, the timing of acquisition of the property is the key factor, unless it was acquired in exchange for pre-marital, gifted, or inherited property (non-marital or separate property).
Factors considered when dividing property. The court seeks to divide marital assets fairly. This can be complicated as there are many factors and assets to review in a high net worth divorce. Some of these factors include the length of your marriage, the amount of marital property, and if and how each of you contributed to the acquisition and improvement of the marital property. In addition, the court will also take into consideration what contributes to becoming self-sufficient after the marriage has ended such as age, health, income sources, debt, separate property, and employability.
Premarital or prenuptial agreements. In Pennsylvania, any agreements created and finalized before the divorce usually take precedence and will become an important factor during a divorce. This means that, if the agreement included terms for property division, those terms in the agreement will most likely be followed. Agreements regarding marriage and divorce will not be set aside simply because they are one-sided or represent a bad bargain, or if one party later regrets having entered the agreement as circumstances change. Full and fair disclosure of assets, liabilities, and incomes are required for a valid agreement.
Tax consequences. Normally, transfers of assets can trigger tax liability, but some special rules apply to transfers incident to a divorce which may allow spouses to divide up their real estate, bank accounts, and personal property without having to pay hefty taxes. There are, however, many non-liquid assets that may have tax and penalty consequences upon a transfer in a divorce such as pensions, 401(K)’s, and IRA’s. Due to the complexity of taxes and the uniqueness of each divorce situation, it is important to consult with an experienced divorce attorney and accountant.
At Wilder Mahood Mckinley & Oglesby, we have decades of experience valuing complex marital estates and working with other experts to accomplish this task. Whether you are the dependent spouse and are concerned with the protection of marital assets, or you are a business-owning spouse concerned with a fair valuation and distribution, we have the expertise to evaluate, litigate, and resolve complex property distribution issues.
To learn more about what we can do to help resolve your distribution of property, contact us online or call our office in Pittsburgh, Pennsylvania at 412-261-4040.