Traditionally, a high-net-worth divorce was defined as a divorce involving more than one million dollars ($1,000,000.00) in net liquid assets. Today, the amount has substantially increased, and more and more cases involve multiple millions of dollars.
The process for dealing with high-net-worth divorce cases is essentially the same as any other divorce case, but it takes a higher level of expertise in identifying and assigning value and ownership to the various assets.
If you are a high net worth individual and are considering divorce, it is crucial to have a skilled attorney or mediator in your corner throughout the divorce process. High net worth divorce can drastically alter your financial security, in terms of alimony requirements, asset divisions and contentious child custody issues, making it vital that your lawyer or divorce mediator has specialized experience in divorces between high net worth individuals.
High Net Worth Divorce Usually Take Longer And Cost More
If one or both spouses earn a large income, they will typically have many more assets of significant value than the typical average couple. This can cause problems when it comes to divorce, and there may be more contention when it comes to asset division. These types of disputes may result in a longer negotiation process, which in turn will lead to more attorney’s fees or court costs if the case does go to trial.
Considerations In High Net Worth Divorce
While all divorces involve some combination of the same main issues – division of property, child support, spousal support, and child custody – high net worth individuals face many unique considerations when going through the divorce process. For instance, tax planning often takes on heightened importance, and dividing the couple’s marital property can require detailed valuation and forecasting with respect to:
- Real estate assets, including residences, vacation properties, rental properties, and commercial real estate
- High-value personal property, including artwork, boats, cars, furniture, and jewelry
- Privately-held business interests
- Retirement assets, including 401(k) accounts, traditional and Roth IRAs, profit-sharing plans, SERPs, and stock options
- Securities and other passive non-retirement investments
High net worth individuals may also have substantial inherited assets, which will generally need to be segregated as non-distributable separate property. For many couples, a prenuptial or postnup marriage agreement will take on central importance as well since the terms of their agreement may be determinative on issues such as spousal support, ownership and control of a privately-held business, and distribution of other high-value marital property assets.
Common Mistakes In A High Net Worth Divorce
A common mistake made in this type of divorce case is not properly identifying all assets and liabilities. Couples seeking divorce are required by law to complete a financial affidavit and provide certain documentation regarding their finances. This information must be accurate, current, and comprehensive. If it is not, spouses could end up accepting liabilities they are not responsible for or giving away assets that are rightfully theirs.
Another costly mistake is failing to consider tax consequences. Investment accounts, for instance, are taxed on their cost basis, which can be different for each divorcing spouse. Taxes may also affect spousal support payments when couples fail to consider their after-tax income.
How Else Does A High Net Worth Divorce Differ?
High net worth divorces can differ from others in a few significant ways. In certain matters, assets are easy to identify and value. However, in the high asset and high net worth divorce, assets may come in a variety of employment benefits and other means that are not so easily discernible.
There are times when a tax return cannot tell the whole story and it is up to an divorce professional to uncover and understand both the true value of a business and the total income derived from the business.
When a person is self-employed, income from that person’s business may not always be apparent. In some cases, personal expenses may be paid for through the business, and the business may not be paying the earnings to the business owner, instead, retaining those earnings for future use.
When an individual works as an executive at a large company, he or she may also have access to different forms of benefits that are not included in a pay stub. Many executives benefit from alternative forms of compensation such as stock, stock options, stock units, deferred compensation benefits, restricted stock units, pensions, and other retirement plans. In some situations, executives may be eligible for termination benefits and signing bonuses as well. Sometimes, bonuses or other forms of compensation are not immediately available but become available over a period of years or upon the certain events.
This is why it is important to seek the assistance of an experienced divorce mediator or attorney who can help you navigate the complexities of a high net worth divorce. The attorneys at Berner Law & Mediation Group are here to help – call our office today to speak with a high net worth divorce lawyer or divorce mediator.
Call Berner Law & Mediation Group To Learn More About High Net Worth Divorce in New York and New Jersey
For divorce cases that involve substantial assets, large estates, complex business valuations or other “High Net Worth” holdings, it is extremely important that you retain the services of an attorney or mediator that has extensive experience with high net worth or high asset divorce cases. High profile, high stakes divorce cases require special skills and can require complex discovery, investigation, appraisals and valuations for everything from real estate to intellectual property to family heirlooms and art collections. Due to these factors, high net worth divorce cases require expertise to get it done right. Especially because there is a lot of money to spend on professionals, we know that even wealthy individuals do not want to waste their wealth on lawyers.
We specialize in helping in high net worth divorces reach agreements together, in a problem solving way, instead of against each other in an adversarial way.
Call our New Jersey or New York office today to see just how we can help you in your high net worth divorce.
