Divorce can be a complicated event. While money does solve problems to a certain extent, it just makes things more complicated in the event of a divorce. That is because all these assets need to be split when the marriage ends.
High net worth divorces involve money and assets totaling millions of dollars. Many actors, athletes, musicians, and other celebrities and entrepreneurs end up with high asset divorces. Since there is a lot at stake, they can be highly complex because both parties want their fair share.
Property division and alimony are two of the biggest issues in high net worth divorces, although there are undoubtedly many more. Read on to learn more about what to expect if you or your spouse is planning to divorce and there is a lot of money and assets at stake.
The divorce process includes property division, which means the split of all marital assets. These assets include all property acquired during the marriage. Any individual property from before the marriage would not be included. Neither would any gifts or inheritances.
Florida is an equitable distribution state, which means that property is split fairly, but not necessarily equally. It will be based on the contributions each party made to the marriage, as well as each spouse’s legal rights.
However, in the case of a high asset divorce, much more goes into the process of splitting assets. Because of the number of assets and their high value, financial experts will be needed to assign values to all the property. This is different from a typical divorce, in which the couple splits their assets based on bank statements. High asset divorces have a lot more involved than just cash. They may include stocks, bonds, and other financial accounts. There may also be real estate, luxury vehicles, boats, jewelry, artwork, collectibles, high-end furniture, and designer clothing. One party may also own a business or work as a CEO or other high-powered position, meaning there could also be bonuses, profit sharing, stock options, and deferred compensation involved.
In high net worth divorces, it is common for one spouse to be financially dependent on the other. While it is common for two high-earning celebrities to marry each other, it is also common for multimillionaires and other high earners to marry spouses who do not make nearly as much money as them. In some cases, they may not work at all, opting to stay at home and care for children.
In cases where there is a huge discrepancy in income between the spouses, the lower earner may be able to seek alimony, or spousal support, to meet their financial needs once the marriage ends. The amount and time period for spousal support can vary widely. Florida offers five types of alimony — bridge-the-gap, rehabilitative, durational, temporary, and permanent.
- Temporary. Temporary alimony lasts only during the divorce proceedings. It ends when the judge finalizes the divorce.
- Bridge-the-gap. This type of alimony is short-term, lasting no more than two years. It terminates if the paying spouse dies or the recipient spouse remarries.
- Rehabilitative. Rehabilitative alimony is available in cases where one spouse needs time and financial assistance to develop skills or acquire education so they can become self-sufficient. The spouses must create a rehabilitative plan for the court to review before the court awards this type of alimony.
- Durational. While no rehabilitative plan is necessary for this type of alimony. The support cannot last longer than the marriage, so a 10-year marriage would qualify for no more than 10 years of alimony.
- Permanent. This type of alimony is rare and is awarded only to spouses who are unable to become self-supporting in the future. Permanent alimony may be awarded to those who are disabled or are of advanced age.
Hidden assets may be an issue in high net worth divorces. It is common for one spouse to be aware of all the assets they own, while the other may not be as privy to this information. Therefore, it is not uncommon for one spouse to attempt to conceal certain assets so that they will hopefully not have to divide them in a divorce. There are a variety of ways to hide assets. For example, one party might purchase valuable items and misreport their value. They may transfer funds to a family member or friend and claim that they are paying debts.
If one spouse is a business owner, then they can use a business to conceal assets. They can do this in many ways, such as by paying income to a nonexistent employee, undervaluing business assets, or overpaying taxes so they can get a large refund after the divorce.
A forensic accountant can help identify hidden assets and properly value them so spouses can receive their fair share of the marital estate.
Many high asset divorces also involve hefty retirement accounts. Funds in retirement accounts may be divided between spouses, although the process can be complicated. The procedures are different, so it is not like splitting any other asset.
For qualified retirement plans such as a 401(k) or pension, a Qualified Domestic Relations Order (QDRO) should be used to withdraw funds and allocate them to the other spouse.
Seek Legal Help
Every divorce comes with its own complications. High net worth divorces have many more assets involved, and all these elements can result in complications and conflicts.
Broward County divorce attorney Scott J. Stadler can guide you through even the most complex divorce. Get the right advice for your unique situation. To schedule a consultation with our office, fill out the online form or call (954) 398-5712.