What Happens When One Spouse Earns More

In many marriages, one spouse may have devoted their time to raising children or managing the household. When this is the case, the other one is often a high-earning spouse. When one spouse makes more than the other, they may have to take steps to protect their assets and ensure a fair settlement.

How To Protect Assets in a Divorce

Divorce can be a challenging process, especially when there is a significant difference in income between spouses. Financial negotiations become more complicated in these situations. With that, the higher-earning spouse may have concerns about asset protection, alimony and a fair division of property. For that reason, high-income earning spouses facing a divorce need to take a strategic approach. Here are a few guidelines to consider during this time:

Understand All Alimony Dynamics

When it comes to divorce, alimony is often a consideration This financial support is separate from child support. The court will determine these payments through several factors, such as:

  • Duration of the marriage
  • Contributions made by a spouse for the other’s career advancement
  • Income needs and employability of the lower-earning spouse
  • Age, health status and support requirements for dependents

If you are in this situation, you will want to talk to a New Jersey family law attorney to make sure you reach a fair resolution.

Consider the Ownership of the Home

High-income earners will also want to carefully consider the long-term financial implications of retaining the family home, even when children are involved. The decision should not be taken lightly.

One primary consideration is the continuous financial responsibility for maintaining the property. Home ownership, especially in the case of an expensive property, often translates to substantial upkeep costs. From routine repairs to unexpected emergencies, the financial burden can be significant. High-income earners need to assess whether allocating resources to the continual maintenance of the home aligns with their overall financial goals.

Become Involved in Financial Management

Anyone earning a substantial salary needs to take charge of their finances. Often, a spouse delegates some of their day-to-day financial management to their spouses. If you are heading toward a divorce, you will want to be proactive.

You may want to contact a financial planner to help make the right decisions and protect your interests. You can better manage your divorce with a clear picture of your finances.

Communicate With All Your Advisors

Spouses with high incomes going through a divorce must approach financial advisors with an executive mindset. They should communicate their priorities and expectations. Along with that, they need to hold advisors accountable for meeting those goals. By seeking help from professionals, you can fully understand your financial situation and confidently plan for a secure future.

Evaluation of Stock Options and Equity

A thorough evaluation of these assets is essential for high-income individuals with stock options or equity in a business. Understanding the tax implications, vesting schedules and potential future value requires experienced assistance. You will want to consult with financial professionals who can devise a strategy to protect and maximize the value of these assets during the divorce proceedings.

Business Ownership Considerations

If either spouse owns a business, its valuation and division become another aspect of the divorce process. High-income earners may enlist the help of forensic accountants or business valuation professionals to accurately determine the business’s worth. With that, it ensures a fair distribution of assets and mitigates potential disputes.

Creation of a Post-Divorce Financial Plan

Looking beyond the final settlement, high-income spouses should focus on creating a post-divorce financial plan. This involves setting new financial goals, revisiting investment strategies and planning for contingencies. When you work with financial advisors, you can create a smooth transition to a financially secure future.

Reach Out To an Experienced New Jersey Family Law Attorney

If you need help navigating the New Jersey divorce process, you should contact our team here at Morgenstern & Rochester. You can reach us by calling the Cherry Hill office at (856) 489-6200. You can also visit our website to schedule a consultation.