Wealthy families often concentrate on inheritance or estate taxes, but divorce is now becoming a significant threat to the preservation of family funds. Affluent families may also face the challenge of accurately distributing funds to family members or assets in different countries, which can include adhering to different regulations and legal systems. Understanding how a high-asset divorce can have an impact on a family’s financial resources can make the process easier for New York residents.
Understand asset titling and ownership
Families with overseas assets often do not realize that titling is treated differently in different countries until a high-asset divorce occurs. Some U.S. states allow married couples to title real estate or intangible property as “tenants by the entireties” (TBE).
TBE is often used as a substitute for a will since it is not subject to probate. TBE also keeps the creditors of one spouse from resolving a debt by claiming the property. If a couple’s net worth is significantly lower than the level that would trigger inheritance or estate tax, a TBE is ideal. Once the divorce is final, the property is divided in half between the ex-spouses, and they are classified as a tenant in common.
Asset structure can be another challenge in a high-asset divorce. The Brussels II Regulation dictates the courts that should be utilized while the Rome III Regulation determines the regulations that can be used in a divorce that involves relatives in more than one country.
The courts in one country can enforce the laws of another country, but there has to be a significant connection. The results of the ruling also have to be in keeping with public policy. This can lead to financial uncertainty for a family, which is why legal counsel is essential.
It may be in your best interest to speak to an experienced family law attorney to assist you through your divorce proceedings. Having a skilled legal professional on your side could ensure that your assets are properly divided.