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With major changes in family wealth, high asset divorce redefined

In the past decade, the U.S. economy has mirrored the Texas economy of yesteryear: rapid booms followed by equally rapid busts. According to a June report from the Federal Reserve, the average American family unit saw a significant drop in its wealth between 2007 and 2010. A 40 percent plunge in family wealth during those years is mirrored in the nearly $50,000 drop in median family net worth during the same period.

With family wealth falling to a level not seen since the early 1990s, the process of rearranging a family via divorce is also entering new territory. In the prosperous years just prior to the recession, high asset divorce involved many of the same issues as traditional divorce cases: property division, child support, custody, visitation and parenting plans. Thanks to new economic realities, however, high asset divorce now comes with even more financial complexities.

When a complex asset, such as a family business, loses a large amount of money in a short amount of time, it can become confusing to determine who owns what, or to whom the wealth originally belonged. What also must be determined is who is entitled to remaining profits and future earnings.

Likewise, residences can pose another challenge in high asset divorces that occur during a downturn. Has a second home lost a significant amount of value? Has a vacation house been maintained the way it should be? How should houses be valued in light of the current housing market?

With changes in income, of course, also come changes in spousal support and child support arrangements. With the recession having already spread itself out over several years, the income of each spouse may have gone up or down every few years or even every few months.

When couples part ways, a high asset divorce can appear overwhelming in today's uncertain world. Formal guidance, particularly from legal and financial professionals, can assist not only in sorting out the countless details, but also in clearing up the bigger picture.

Source: Los Angeles Times, "Average U.S. family's wealth plunged 40% in recession, Fed says," Don Lee, June 11, 2012

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Attorney Christine K. Lincoln

Christine K. Lincoln offers sound counsel and legal services to protect clients and their families facing divorce and other family disputes.

She will take the time to understand your individual needs and develop a comprehensive solution to protect your rights and interests.

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