Divorce can take a great emotional and financial toll on each party, whether you are the filing party or divorce is being filed against you.
A high-net-worth divorce - or a divorce involving assets of at least $1 million - can take an especially high toll, as the higher the number of assets involved, the higher the stakes become for each party.
If you have entered a high-net-worth divorce proceeding, it can be difficult to know where to begin. Here are five crucial steps to consider taking as you navigate this process.
1. Beware of Hidden Assets
Whether you have filed for a divorce or a divorce is being filed against you, you are required to disclose all financial assets.
Unfortunately, some individuals are tempted to hide some of their assets. Hidden assets can take many forms: opening a separate bank account, diverting funds from joint accounts, giving assets to friends or family, and more. Individuals may also hide assets within their businesses or in foreign accounts.
Often, any hidden assets will be uncovered through the use of experts - and once uncovered, failure to disclose can result in serious consequences. These consequences could range from being obliged to pay the other spouse's attorney fees to facing criminal charges. Not to mention, the loss of credibility from uncovered hidden assets can result in losing the chance to reach a reasonable settlement, as well as a loss of trust from the judge in your case.
Regardless of the circumstances of your divorce, it is important not to assume that your spouse has fairly disclosed all their assets, especially in cases where one spouse has more financial knowledge than the other. Make sure to find experts with your attorney that can uncover hidden assets. A forensic accountant, for instance, can assist in tracking down assets and/or bank accounts that have been hidden.
2. Consider the Sentimentality of Assets in your High-Net-Worth Divorce
The division of assets stretches beyond the financial realm. A spouse may have sentimental and emotional connections to items, valuables, and other assets that the proceedings should take into account. In high-net-worth divorces, some of these items may include investment properties, businesses, a house, a boat, and more. Dividing physical assets, especially high-value assets, can be difficult due to the combination of emotional and financial valuations involved.
To ensure an adequate distribution of these items between partners, it is critical to retain an attorney that has experience with high-net-worth divorces and has a practical approach to resolving the issues. Avoid combative attorneys that are more eager to litigate than determining whether the issues can be resolved out of court. I am a founding member of The Collaborative Professionals of Baltimore, which champions the implementation of Collaborative Law - a resolution process dedicated to using financial and mental health professionals to assist divorcing parties resolve conflicts.
3. Consider the Challenges of Child Support in a High-Net-Worth Divorce
Children in high-net-worth divorces are often in a unique position due to potential trusts, high standards of living, and possible high tuition costs for education. As a result, child-related expenses may be higher in a high-net-worth divorce case. Additionally, child support computer programs - such as estimators and calculators may not apply to you because of your high income. Because child support varies from state to state, it is important to learn your state's specific procedures for calculating child support. The best way to do that is by consulting with an experienced family attorney.
4. Contact a Divorce Attorney
A crucial step to any divorce is to get in contact with an attorney quickly. High-net-worth divorces are tricky, complex, and uniquely challenging. You need an attorney that has experience handling such cases. The best equipped attorneys for high-net-worth divorces generally have a broad experience not just in family law, but also experience working with other legal issues that make them uniquely prepared to handle complex financial and custody cases.
5. Contact Other Experts Besides Your Divorce Attorney
A high-net-worth lifestyle often involves the consultation of estate, financial, and business professionals regardless of marital status. Once you are involved in the divorce process, contact these professionals - your business/corporate attorneys, real estate professionals, and tax professionals - to assist you in the divorce. The value of experts is incalculable - they can assist with resolving your case, providing property valuations, uncovering hidden assets, and more.
Any divorce is an extremely complicated and stressful event in a person's life. Due to the higher assets - and higher stakes - of a high-net-worth divorce, these kinds of divorce are uniquely complex.
Originally published July 6, 2022
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
