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How difficult economic times make for difficult divorce processes

On Behalf of | Aug 24, 2023 | Divorce |

High interest rates and a somewhat volatile stock market can have significant implications for the division of assets in a high-asset divorce – and that can make your divorce process more difficult.

The financial complexities can exacerbate the challenges of reaching a fair and equitable settlement between the divorcing parties. Here’s how certain factors can influence the division of assets:

It can make it harder to value assets

Stock market and real estate market volatility can make it difficult to accurately value certain assets, particularly investment portfolios and business interests. Because the market prices can suddenly swing in either direction, spouses may disagree on their actual worth. The couple may also have differing opinions on whether to continue holding certain investments or to sell them, adding a layer of complexity to the negotiations.

It can be tougher to sell assets

It’s common to need to liquidate assets – particularly real estate and investments – to divide them between the parties. If the stock market is volatile, selling stocks or other investments at the wrong time could result in substantial losses. High interest rates also impact the cost of borrowing money, which can make it much harder to offload higher-end properties to willing buyers.

It can increase the weight of debts

In a divorce, marital debts are also divided. Debts that were manageable with a lower interest rate might become burdensome under higher rates, affecting the financial stability of both parties. Deciding how to fairly distribute these debts becomes more complex under such circumstances, especially when refinancing is involved.

It can be more difficult to pay support

High interest rates can impact the ability of the higher-earning spouse to make alimony or child support payments. If a substantial portion of their income is tied up in investments or businesses that are affected by the volatility of the market, that can cause cash flow problems. This can further strain negotiations and court proceedings.

Divorcing couples need to consider the long-term impact of their financial decisions during this process, so it’s always wise to get some experienced legal guidance before committing to any particular approach.