High-Net-Worth Divorce – Part 2: Ensuring Your Agreement Effectively Protects Your Wealth

As you navigate negotiations in your high-net-worth divorce and start envisioning your post-divorce life, you must ensure that all of the financial ramifications of the Agreement are comprehensively considered. Here are essential steps to protect your wealth and secure your financial future.

Create Models for Your Post-Divorce Financial Life

After gathering and analyzing all financial data, the next step is to model different scenarios for your post-divorce life. This includes assessing whether you will have enough after-tax cash to sustain the lifestyle that you and your children have enjoyed. Consider various factors, such as:

• Income Allocation: Determine how funds will be distributed between you and your ex-spouse, and who will be responsible for specific expenses related to the children and to assets you may continue to own together for some time (such as the family home).
• Future Income: Plan for future sources of income, such as deferred compensation payouts, Social Security, and required minimum distributions from your retirement plans.
• Lump Sum vs. Installments: Decide whether receiving a lump sum or installments when it comes to spousal support or buyouts of property or other assets is more beneficial for your financial stability.

By modeling these scenarios, you can create a plan that ensures long-term financial security for you and your children.

Draft a Comprehensive Separation Agreement

A well-drafted separation agreement must be clear, concise, and thorough. It must also anticipate various “what-if” scenarios. Here are key elements to consider:

• Realistic Commitments: Make sure any commitments made are feasible. For instance, if agreeing to implement a buyout of the marital home within a specific time-frame, consider how and when the buyout will be paid. If there is not enough cash on hand, what other assets will be used to satisfy the buyout? Will the cash component be paid in a lump sum or in installments? By what date must those installment payments be made?
• Flexibility: Ensure the agreement has room for flexibility to adapt to future changes without leading to violations.
• Legal Expertise: Work with experienced family law attorneys who can draft strong agreements that protect your interests and avoid potential disputes.

Finalize the Divorce and Transfer Assets

Once the separation agreement is signed, the divorce process is not yet complete. Important administrative tasks need to be handled:

• Qualified Domestic Relations Orders (QDROs): Ensure QDROs are filed and tracked correctly for the transfer of retirement assets.
• Property Transfers: Properly transfer property titles and ensure all related documents are filed accurately.
• Mortgage Changes: Update mortgage documents to remove the name of the party who will no longer own the property.

Timely and correct execution of these tasks prevents complications and ensures your assets are secured as intended.

Reevaluate Your Financial Plan

With your new financial landscape, it’s essential to create a post-divorce budget and financial plan. This includes:

• New Financial Advisors: Consider working with new advisors to avoid conflicts of interest if you previously shared advisors with your ex-spouse.
• Estate Planning: Update your estate plan, including wills, trusts, and life insurance policies.
• Beneficiary Changes: Update beneficiaries on all accounts to reflect your new circumstances. This prevents unintended inheritance, as seen in cases where ex-spouses remained beneficiaries on significant accounts.

Contact Vacca Family Law Group

Protecting your wealth in a high-net-worth divorce requires careful planning and guidance from a competent divorce attorney. Vacca Family Law Group has extensive experience managing divorces involving complex finances and can help ensure your financial future is secure. Our team of Collaborative Divorce Attorneys and Mediators can guide you through the divorce process with compassion and expertise. Call us at (646) 798-4603 or contact us online to schedule your free introductory call.

Vacca Family Law Group is located at One Grand Central Place, 60 E. 42nd St., Suite 700, New York, NY 10165.