Navigating Property Division in High-Asset Divorces
Feb. 28, 2025
Divorces can be emotionally charged and legally challenging, especially when substantial wealth and assets are involved. High-asset divorces often bring unique hurdles that aren't typically present in cases with more modest financial holdings. That's why it’s essential to get a clear picture of how property division works when there’s a lot on the line.
Ohio follows equitable distribution, meaning the courts aim for a fair — not necessarily equal — division of marital property. But when significant assets are involved, fair can become a hotly debated term, which is where a divorce attorney can help. Douglas A. Ball Attorney at Law in Batavia, Ohio can walk you through key considerations to help you understand the road ahead.
Marital vs. Separate Property
The first step in dividing property during a high-asset divorce is distinguishing between marital and separate property with the guidance of a divorce attorney. Ohio law dictates that only marital property is subject to division.
Marital property includes:
Assets acquired by either spouse during the marriage.
Income and appreciation from marital assets.
Retirement accounts contributed to during the marriage.
Shared debts and financial obligations accumulated during the marriage.
Business interests and earnings generated during the marriage.
Any jointly held financial accounts and investment properties.
Luxury items, including art, jewelry, and high-end vehicles.
Separate property includes:
Assets one spouse owned before marriage.
Inheritances and gifts received by one spouse, as long as they were kept separate.
Personal injury settlements awarded to one spouse.
Business interests that were established prior to the marriage and kept separate.
Funds from personal bank accounts that weren’t commingled with marital funds.
Any assets protected under a legally valid prenuptial or postnuptial agreement.
Certain trust assets that were designated for only one spouse.
Disputes can arise when separate property becomes commingled with marital assets. For example, if one spouse uses an inheritance to improve a jointly owned home, the classification of that inheritance could become disputed. This makes proper documentation and financial planning crucial.
Transitioning from understanding property types to actually identifying and valuing assets is the next logical step. This process is critical, as overlooking or misclassifying assets could have long-lasting financial repercussions.
The Basics of Identifying and Valuing Assets
High-asset divorces often involve a diverse portfolio, from real estate and businesses to investments and luxury items. Accurately identifying and valuing these assets can be challenging but is crucial to achieving a fair outcome.
Common assets to identify:
Real estate holdings, including vacation homes and rental properties.
Business interests, which may require forensic accounting.
Investment portfolios, including stocks, bonds, and mutual funds.
Retirement accounts, like 401(k)s, IRAs, and pensions.
Valuable collectibles, art, or jewelry.
Intellectual property rights, such as patents, copyrights, and trademarks.
Offshore accounts and hidden assets, which may require investigative efforts.
Vehicles, including luxury cars, boats, and private jets.
Stock options and deferred compensation packages.
Cryptocurrency and other digital assets.
Royalties and residual income from entertainment or publishing deals.
Memberships in exclusive clubs or timeshares.
After identifying assets, the next challenge is valuing them correctly. A divorce attorney will often bring in professional appraisers or accountants, especially when dealing with financial instruments or business valuations. For instance, a business valuation might involve reviewing tax records, revenue streams, and market conditions.
Appraising luxury assets also requires the knowledge to gauge market demand and authenticity. With a clear inventory and valuation in hand, it’s time to look at how these assets can be divided.
Methods for Dividing High-Value Assets
Since Ohio aims for equitable — not necessarily equal — distribution, several methods can be used to divide assets in a way that both parties find reasonable.
Buyouts: One spouse keeps a particular asset by buying out the other spouse’s share. This is common when one party wishes to retain ownership of a business, family home, or other significant asset. However, a buyout requires liquid funds or alternative assets to compensate the other spouse fairly.
Selling assets: Liquidating assets and splitting the proceeds can simplify things, though this isn’t always practical or desirable. For example, real estate markets may fluctuate, making it difficult to sell a property for its true value at the time of divorce. Additionally, some assets may not have ready buyers or could lose value if sold too quickly.
Asset trade-offs: Each spouse takes ownership of different assets of roughly equal value. For instance, one might take the family home while the other takes a business interest. This method allows for customized settlements that reflect each spouse’s financial priorities and future plans.
Structured settlements: Payment plans can be set up with a divorce attorney to compensate one spouse over time, which can be useful when dividing significant holdings. This is particularly beneficial in cases where assets aren’t easily liquidated or when one party requires a steady income stream.
Trusts and asset protection structures: In some cases, trusts can be used to preserve wealth and distribute assets. Trusts are useful for high-net-worth individuals looking to protect family wealth. If a trust was established before marriage, it may be considered separate property, but disputes can arise if marital funds were added to it.
Co-ownership arrangements: Some assets may continue to be co-owned by both spouses even after divorce. While this approach can be effective in maintaining the value of a business or real estate property, it requires clear legal agreements and mutual cooperation. If co-ownership isn't properly structured, future conflicts could arise.
Dividing retirement accounts: Depending on the type of account, a qualified domestic relations order (QDRO) may be needed to properly split these funds. A QDRO allows for retirement assets to be divided according to the divorce decree without triggering penalties or tax liabilities.
Choosing the right division method depends on the specific assets involved and the financial goals of each party. Proper legal advice from a divorce attorney can help determine the best course of action to achieve a balanced settlement.
Tax Implications
Tax consequences can significantly impact the fairness of a settlement. Understanding how different assets are taxed can prevent future financial surprises.
Capital gains tax: If you receive assets that have appreciated significantly, you might face hefty taxes when you sell.
Retirement account penalties: Early withdrawal from retirement accounts can trigger penalties and taxes.
Property taxes: Keeping real estate might come with ongoing property tax obligations.
Alimony tax considerations: The taxation of spousal support payments changed under the Tax Cuts and Jobs Act, meaning that alimony payments are no longer deductible for the payer or taxable for the recipient for divorces finalized after 2018.
Business tax consequences: If business interests are divided, tax liabilities might arise from restructuring or ownership transfers.
Stock and investment taxes: Selling or dividing investments may result in capital gains taxes that need to be accounted for in settlement negotiations.
Estate and gift tax considerations: Large asset transfers may be subject to federal and state tax rules.
Taxes may not be the first thing on your mind during a divorce, but it’s an important topic to consider. Fortunately, a divorce attorney will make sure this factor is correctly prioritized.
Contact a Divorce Attorney Today
Dividing property in a high-asset divorce is no small feat. From considering tax implications to planning for the future, there’s a lot to think about. Working closely with a divorce attorney at Douglas A. Ball Attorney at Law can make the difference. Call today for a consultation in Clermont County, Hamilton County, Brown County, Warren County, or Batavia, Ohio.