Understanding the Complexities of a High Net Worth Divorce

The divorce process can be intimidating and complex for families of all sizes and financial means.

Dividing marital property and other assets during a divorce settlement can require a good attorney no matter what, but a high net worth divorce or high asset divorce can be even worse, with complex concerns that can raise tensions, lengthen the process, and ultimately make for an even more disappointing process.

High asset divorces are complex, but competent representation can make a major difference.

Our experienced team has been guiding Minnesota families through the process of dividing marital estates with care for more than a decade, helping to identify the best way to divide high value assets, prepare for tax implications, navigate child support, and more.

If you’re worried about the complex obstacles that come with high net worth divorces, this article is for you. Here, we discuss:

• The definition of a high net worth divorce 

• Factors that make high net worth divorces so difficult 

• What you can expect from a divorce attorney 

• Frequently asked question about wealthy divorces

• And more

What Is a High Net Worth Divorce?

A high net worth divorce refers to divorces that involve a large amount of assets, both liquid or illiquid, and/or high income on behalf of one or both spouses. They tend to be more complex than the average divorce.

In this case, the process of dividing your assets, which is common to all divorces, involves substantial value, often more than a million dollars worth of marital assets, which can have major tax implications and come with dramatic lifestyle changes for divorcees. 

Likewise, when one spouse earns more than the other, spousal maintenance (or alimony) is a major negotiating factor during the divorce. If your spouse make $750,000 a year while you stayed home to raise the kids, you may be entitled to some of their future income after your divorce.

In these cases, a high asset divorce attorney can help to identify the many assets and income sources that will impact your case – and your bank account – and help you protect your best interests.

Why Are High Net Worth Divorces So Complex?

When filing for divorce, you may just want to get the answers you need, split your property, and end your marriage.

That’s rarely so simple in a high net worth divorce.

What makes these types of divorces so complex? Simply put, everyone wants their “fair share”, and dividing assets (and income!) in a way that makes sense to both parties can be challenging for a host of reasons.

One Spouse Feels They’re Entitled to More of the Assets 

Importantly, assets acquired during a marriage in most states are considered marital property, meaning they must be split equitably during a divorce.

A common and complex sticking point for high next worth divorces is simply the fair division of property. Many high net worth divorces involve one spouse who feels they contributed, through effort or their career, in more ways than their spouse. An accomplished executive, for example, may feel that they are the true source of the wealth in the family compared to their stay-at-home spouse.

Likewise when one spouse came to the marriage with more assets from the start, they may feel that the bulk of the accumulated assets should also be theirs.

Because the divison of marital assets can be so complex and emotionally fraught, you may need the help of an experienced divorce attorney to support your claim towards marital assets.

You may also need help from independent third parties that specialize in valuing assets. This can make a big difference when fairly and accurately calculating the assets of both partners for the purposes of property division.

Assets Are Not Liquid

In many marriages with substantial assets, accumulation may be in the form of illiquid assets that cannot be easily or quickly split: real estate, public or private stock or options, ownership of small or large businesses, and even art or collectibles!

When this is the case, one spouse may have to make up the difference in valuation by providing cash to the other spouse.

A business valuation may be necessary for private businesses, which creates another point for potential frustration between parties. Again, a good attorney can help.

One Spouse Suspects Hidden Assets

When spouses aren’t getting along, divorces tend to get ugly. Sometimes, one party will attempt to hide assets from the other spouse so as not to lose them during the divorce.

In this case, a forensic accountant may be necessary during the discovery phase of the process, helping to sniff out hidden or inaccurately valued assets and include them in the marital estate.

Assets Have Been Co-Mingled

When you’re single, your assets belong to you – simple.

In most states, including Minnesota, when you get married, the assets accumulated during marriage are jointly owned. This is called marital property. And, if you mingle your assets from before your marriage with your spouse – by adding them to a joint bank account, for example – this also creates co-owned property.

(Inherited assets are generally one carve-out when it comes to retaining separate property.)

It can be hard to disentangle assets that were once solely “yours” from assets that you own jointly, and this is a common sticking point in wealthy divorces.

Your Divorce May Take More Time 

The more assets involved with your divorce proceedings, the more time your claim will take. When you have assets valued at multimillions of dollars, multiple properties, or businesses to consider, your divorce proceedings can be significantly more effort and thought than other divorces. Because of this, high net worth divorces take more time as you unwind years of building a marital estate.

Your Tax Situation May Get More Complex

When you seek out a divorce as a high net worth individual, you may have certain tax consequences because of your divorce. 

In many cases, a couple are forced to sell assets they may not be ready to, simply to create a “splittable” cash outcome. That can incur significant capital gains tax in an already complicated year. For example, if one spouse has significant stock options, certain types of financial accounts, or other major financial opportunities, they may face a capital gains tax depending on the details of the divorce and property split.

Even if you seek out an equitable distribution of your assets, wealthy couples often still see major hits during tax season. An experienced attorney will understand what to look out for and can help you through this process.

Someone Has Higher Income

When one spouse has much higher income, or one party gave up a career to raise children, spousal maintenance (also called alimony) is a common outcome.

Navigating how much spousal maintenance is fair is a tough process, but there are ways of coming to a fair and equitable outcome.

Find A Divorce Attorney That Knows Complex Divorces

High net worth divorces can be challenging, and working with an experienced attorney from the early stages can help you avoid common pitfalls, come to more fruitful protection of your interests, and ultimately give you peace of mind through the process.

Alithis Family Law has the experience to help you understand your options from the start, setting realistic expectations and goals, valuing your marital assets fairly and accurately, creating a comprehensive balance sheet, and moving your divorce forward with your best interests in mind.

If there’s a lot at stake in your divorce, call today to learn more and get a free consultation for your divorce.

FAQs 

What’s considered high net worth when it comes to a divorce?

Married couples with a high net worth may have large sums of money they bring into the marriage, whether a result of business, inheritance, or the value of their employment. A high asset divorce generally involves one or more of the following:

• over a million dollars of liquid assets

• multiple real estate assets

• businesses that are difficult to value or sell

• one spouse or both who have a very high income

• public stock or stock options that cannot be easily sold

• private stock or business ownership

• child custody disagreements that involve multiple jurisdictions or even international family law

How is child custody handled in high net worth divorces? 

High value divorces involve more than your business or money. You may be concerned about issues of child support and child custody, especially if there is a significant gap in the financial status of the planned custodial and/or non-custodial parents. 

When determining custody, special considerations like parenting time can impact the dissolution of your marriage and create unique challenges for you as you prepare for divorce. If you’re concerned about keeping custody or ensuring you’re not unfairly subject to alimony or other spousal support, reach out for guidance from one of our divorce attorneys. 

Will a high net worth divorce cost me more? 

Because these types of divorce cases are so time- and labor-intensive, and they sometimes require input from outside experts like business valuation professionals or forensic accountants, you may find yourself paying more for your divorce.

However, the outcome of your divorce will likely secure your future, and the costs are generally well worth it for most wealthy individuals. Ask a family law attorney what to expect in terms of the cost of a high net worth divorce.

Reach Out to A High Asset Divorce Attorney Near You

Divorcing a spouse can be a daunting process, even in the best of situations.

When large amounts of cash or investments, businesses, and property are involved, having an experienced team on your side can be invaluable. Call today to learn more with a free conversation about your divorce or situation.