Long Island Family Law and Mediation Blog
No matter the circumstances, a divorce is rarely pleasant or easy, but it can be resolution and a new beginning. In any situation, there are various factors that both parties will need to carefully consider – such as how to split or share assets, who should be responsible for what, arrangements connected to child custody and parenting time or visitation, alimony aka maintenance, and so on. Commonly, divorcing spouses find that they agree on very little, and neither are immediately willing to compromise. When dealing with a high net worth divorce, the issues can become somewhat more intense, as unique nuances present themselves that are likely to occur less frequently in other cases. For instance, the stakes are higher as each side has more resources at stake, including a combination of business interests, assets, tax implications and more. Because of this, certain steps that wouldn’t be considered at other times come into play more frequently and in greater number.
In any divorce, both parties are likely to feel a wide range of emotions, from disappointment and aggravation, to anger and betrayal. Because of this, divorce rarely seems like the best time to make decisions regarding long-term finances, but it is crucial to consider the effect a divorce is going to have on someone’s life moving forward. In a high net worth case it is particularly important not to rush, just to get the divorce done. While a quick resolution may be desired, things need to be carefully considered. It’s worth noting that many of the considerations that must be addressed in high net worth divorce cases are topics that may be relevant in typical divorces. However, since the resources are greater, the incidence of issues within high net worth cases may be more frequent and the consequences greater.
Sometimes, certain individuals attempt to represent themselves in these situations, or go “pro-se” throughout mediation, negotiated settlement, or a litigated case, by relying on representations made by their spouse, who they are divorcing or their attorney. It is important to remember that the other side, so to speak, has different interests at heart than yours. In mediation the step to avoid legal fees may be to simply bypass review attorneys. This is also not advisable since the mediator’s role is not to give legal advice rather to facilitate an agreement. It’s essential to recognize that it is never an advisable course of action – regardless of the process that has been chosen, to dispense with receiving at least some professional legal advice. Without the right guidance, the losses that may be experienced in a high net worth divorce could be great, and the only way someone can take steps to protect themselves is by accessing experienced legal help.
Collaborative law is often a good process solution in cases of high net worth divorce, as it requires a team of professionals to be assembled to work on the matter. In other words, it’s not just lawyers and the parties in question dealing within the case, but also potentially a neutral financial party, mental health professionals (coaches), child specialists, and other experts chosen for the team, as needed, intended to help shape the best agreement for all parties involved. Collaborative law, like mediation, requires an agreement by both sides to participate in the process.
Often, in litigated divorce cases with issues regarding custody, a forensic investigation and report may be ordered by the court. In these instances, a neutral expert with experience in psychology will be appointed to interview and investigate the children, collateral sources, and parents. That individual will then be expected to deliver a report to the court that will assist them in making a decision according to the best interests of the children. Accessing experts is an important part of ensuring a well-informed result within any divorce case be it for children’s issues, tax advice, legal advice, or financial planning.
Being informed and utilizing tools is crucial in a high net worth situation. There are various methods that can be utilized like, examinations before trial (EBTS), financial discovery, subpoenas, depositions, motions for pendent lite relief, and settlement conferences may all be tapped as tools within the course of a litigated proceeding, in order to help the court get a fuller picture of the situation in question. Alternatively, within collaborative and mediated divorce cases, the disclosure of such information is regarded as voluntary, and it is up to the parties to cooperate and reveal the full extent of their financial story.
No matter which process you choose when dealing with your divorce case, it’s important to note that the proper valuation of assets is essential. By valuing assets properly, it should be easier to have a reasonable discussion about the concept of equitable distribution. Frequently, in many high net worth divorce cases, one or both parties could have assets relating to a business or company, such as a shareholding. It’s essential to access accurate business valuation for these items to ensure that the settlement each party achieves properly reflects their level of entitlement. Often, it’s crucial to appoint experts in assessing these financial affairs, as spouses could have over-inflated ideas of what their assets are worth, or may even underplay the value of an asset in some cases.
What’s more, there are likely to be a range of tax implications associated with the assets that each party has. These implications may range from capital gains to future income taxes. As mentioned before, the use of experts may be necessary in any typical divorce, however in high net worth cases, investment experts, financial advisors, and tax professionals may be a more crucial consideration.
Within a high net worth divorce case, it will also be important to address support needs for the spouses and children after the divorce and perhaps during the time wherein the case is ongoing. This could result in motions for relief in litigated cases. Similarly, there may need to be negotiations or court orders made in regards to whether “maintenance” payments should be made. There is an income cap of $175,000.00 that does apply in divorce cases to the new maintenance laws passed in 2015, however in high net worth cases, the court may order that additional maintenance be paid according to considerations of factors that have been listed in the statute. Similarly, in regards to the typical formula for child support, the chances of the court ordering support for a combined parental income above the first 141k (the 2015 initial threshold) is more likely in cases of high net worth divorces.
If you are facing a divorce of any nature, high net worth or otherwise, it’s important to get the right guidance to help you through your case. Remember to consider a confidentiality agreement, and stay off social media when it comes to discussing personal information, as you never know what might be used against you in court. High net worth divorces can be complex and may take a little time.
As usual, please feel free to look at our various web pages and blog entries for information on divorce, family law and more. Please also call for your free consultation at your earliest convenience, it would be our pleasure to speak with you about it.