A divorce is never an easy process, even for amicable spouses. Even the most straightforward divorce has difficult emotions, so it’s not surprising that more complicated divorces are even more overwhelming. A high net worth divorce has all the complications of any divorce, including spousal support, asset division, and child custody and support. However, all these aspects are heightened by legal and financial challenges unique to a high asset divorce.
Division of Property and Assets
In a high net worth divorce, assets are higher in value and more complex. This makes the division of property more complicated and potentially more contentious. Both parties have a significant interest in their marital property, and it can be hard to find a conclusion to asset division in a reasonable amount of time.
Assets like certain types of stocks are not easy to divide between spouses, and many assets in high net worth divorces are difficult to value accurately. Couples in a high net worth divorce are likely to own or have interests in a business, and this will complicate asset division.
Most states in the Midwest are equitable distribution property division states. The court will divide all marital property equitably. This may end up being an equal division, but it doesn’t have to be. The court will look at several factors to determine what an equitable split is for your divorce. Separate property is retained by each spouse and is not divided. However, the amount of separate property each spouse has may be a factor in determining equitable distribution. Other factors may include:
- The duration of the couple’s marriage
- The financial and non-financial contributions each spouse made to marital property
- Each spouse’s income and potential earning capacity
- Whether one spouse is paying child support or spousal support
You will not be subject to equitable distribution if you and your spouse can settle property division through a separation agreement in mediation or negotiation. You can also avoid equitable distribution by the court if you and your spouse have a legally valid marital agreement. This includes prenuptial and postnuptial agreements. These agreements are made before or during a marriage. They determine the distribution of assets and how certain assets are characterized if the couple divorces.
Spousal support can be complicated in a high net worth divorce if one party has a much greater income or earning capacity than the other. If both parties have similar wealth, then spousal support may not be a consideration. The goal of spousal support is to allow both parties to retain the same standard of living as they did when they were married. In high asset marriages, this standard of living could be very high. Spousal support could mean that a large amount will be paid by the higher-earning spouse and may lead to contention during divorce proceedings.
In a high net worth divorce with children, there are additional complications. Children of high asset marriages often have additional expenses, including:
- Private schooling or boarding school
- Expensive extracurriculars
- Competitive and expensive sports
These expenses are essential considerations in a high net worth divorce that are not often necessary in other divorces. Many states have a child support formula, but these formulas may not apply to your family. In many states, the formula has an income cap. The amount of child support one parent may be paying will have to be determined in a separation agreement, or it will be up to the court’s discretion.
A high net worth divorce will attract more media attention than other divorces. Couples in these divorces likely value their privacy, so additional steps must be taken to protect the proceedings. Privacy is particularly useful if:
- There are children, especially minor children, involved. A public divorce can increase the emotional harm to children.
- The couple owns or has interests in a large business. A divorce can affect a couple’s net worth, and even mentioning this can harm a business.
An attorney experienced with high net worth divorces is equipped to keep your divorce private.
Q: How Is Net Worth Split in a Divorce?
A: Net worth that is gained during a marriage may be considered marital property, meaning it will be split during property division. The court assumes that assets gained during a marriage are marital unless a party can prove otherwise. Separate property includes assets gained prior to a marriage, with some exceptions.
In most Midwest states, marital assets are split through equitable distribution. Rather than being split 50/50, the court reviews several factors to determine what is a fair split of marital property.
Q: What Is a Statement of Net Worth in a Divorce?
A: A statement of net worth is part of the financial disclosure in a divorce in certain states. It includes financial information such as:
Both parties must fill out this affidavit. A spouse who hides or fails to disclose assets during this process can be held in contempt of court.
Q: What Is Considered a High Net Worth Divorce?
A: There is no exact definition for a high net worth divorce. It is often defined as any couple that has more than $1 million in assets combined. This amount doesn’t fit many current divorces. A high asset divorce is likely a higher value. In a high net worth divorce, a couple must deal with a larger amount of assets as well as more complex assets. There are also additional financial considerations for tax implications and support payments.
Q: What Financial Steps Should I Consider in a Divorce?
A: There are several things you can do to protect yourself financially during a divorce:
- Gather financial information and documents. Before a divorce, gather information such as separate and marital accounts, along with statements or deeds for accounts, assets, debts, properties, and expenses.
- Review beneficiaries. After a divorce, the beneficiaries of retirement accounts and other important accounts may change.
- Establish individual accounts. This can be useful for your credit, your independence, and your emotional health.
- Decide what to do with joint accounts. This includes bank accounts and retirement accounts. You and your ex-spouse may want to retain them or close them.
Contact Stange Law Firm
When you need an attorney who can advocate for your interests and navigate the complex aspects of a high net worth divorce, contact Stange Law Firm.