Divorce proceedings are inherently complex and delicate matters, and cases involving high net-worth couples can become exponentially more complicated. Even when amicable, high net-worth divorce cases often carry elevated stakes due to the complexity of diving extensive assets, properties, and possibly other existing business entities. As a result, such cases prescribe specialized knowledge in both family and business law to address the intricate legal issues involved.
This article will examine some of the most common intricacies found in high net-worth divorce cases:
Key Aspects of High Net Worth Divorces
- Determining Marital Assets:
A primary concern in divorce proceedings is the characterization of assets. In most states, marital property is subject to a process called “equitable distribution,” meaning that the court will attempt to divide the property fairly between both spouses. For this reason, knowing what qualifies as marital property is important.
“Marital assets”, meaning those acquired during the marriage, are subject to equitable distribution, while on the other hand “non-marital assets”, those owned prior to the marriage or received as gifts or inheritances, remain with the original owner. Assets with both marital and non-marital components, referred to as “mixed assets,” such as pre-marriage investment accounts funded by marital earnings, require careful evaluation to determine their division.
High net-worth divorces require careful consideration of asset divisions due to a large amount of marital, non-marital and mixed property involved in many cases. It is important for individuals going through a high net-worth divorce to understand what qualifies as marital versus non-marital property to receive a fair settlement under equitable distribution laws.
- Asset Valuation and Desirability:
The assessment of desirability of assets can be a difficult task, especially in high net-worth cases involving assets of various proportions and character. In such cases, it is important to understand which assets have liabilities that may outweigh their benefits and which assets could offer long-term stability and growth. Some of the most common classes of assets are:
- Investment Accounts: These assets offer growth potential and future financial stability but come with inherent market risks and negative tax implications.
- Real Estate: Provide long-term benefits through appreciation and rental income but include liabilities such as property tax expenses and maintenance costs.
- Businesses: Ownership offers control over profits and distributions but also involves responsibility for significant overhead costs. Dividing business interests can impact the operation and control of the business.
When dealing with high net-worth divorces, it’s important to consider all factors when assessing the desirability of assets during those proceedings—including both potential benefits and liabilities associated with each asset type.
- Divorces in Multiple Jurisdictions:
High net-worth households often tend to have assets held out of state or even out of the country. This can create complications during the property division stage. In most instances courts will apply the law of the state where the couple last lived together, but international assets may be subject to different laws. Each country has its own set of laws regarding assets obtained during a marriage, including which assets must be divided upon dissolution and how they should be distributed.
Additionally, any inheritance received by either spouse may also be subject to different rules depending on the country from which it was received; these rules can significantly impact how such inheritance is treated upon dissolution of marriage.
- Business Ownership and Control:
High net-worth divorces can be particularly challenging for business owners. Not only do they have to consider the implications of divorce on their personal lives, but they must also be aware of how it may affect their business.
Divorce can affect the board of directors and control of a business. Couples may need to buy out each other’s stakes to avoid disputes. This can be an expensive endeavor depending on the stake of each spouse in the company. It is important for divorcing couples to consider their financial situation before deciding whether or not to go through with this option.
Third-party ownership and legal documents, including operating and shareholder agreements, may also be impacted. In these situations, it is important to consider how changes in ownership will affect this third party’s rights and responsibilities as part of the company’s leadership structure.
- Importance of Specialized Legal Representation:
These are just some of the intricacies involved in high net-worth divorces. There are other things to consider too, such as the presence of offshore financial accounts and assets, prenuptial agreements, and privacy and publicity concerns.
For those reasons, it is paramount to have an experienced attorney with specialized knowledge that can navigate the complexities of high net-worth divorces, such as the ability to address financial arrangements, tax implications, and cultivate a proper asset division.
High net-worth divorces require careful consideration of asset division, legal jurisdiction, and business implications. For those facing such a situation, seeking an attorney with expertise in both business and family law is crucial for achieving a fair and equitable resolution.
At The Campbell Law Group P.A., we provide tailored legal services to meet the unique needs of high net-worth individuals. Contact us today for guidance and representation in high net-worth divorce cases.
Interested in learning more about the intricacies of high net-worth divorces? Visit our website or contact The Campbell Law Group P.A. for expert legal assistance.