High Net Worth Divorce: What to Expect
If you are a high-net-worth individual going through a divorce, it’s important to be aware of what to expect. Your divorce will likely include more factors that affect the outcome than people in lower tax brackets due to the complexity of your assets and finances.
In this guide to high net worth divorce, we are going to cover what you can expect during proceedings and how a wealth management team can help you not only survive the process but thrive afterward.
Common Factors to Consider in a High Net Worth Divorce
1: Division of Assets
One of the most difficult aspects of dissolving a high net worth marriage is dividing assets. This can prove significantly more complicated if there are family businesses or other unique assets involved. You’ll need to determine the value of all assets and then agree on a fair split. This is often where hiring a financial expert can be helpful, as they can provide an unbiased assessment of your entire portfolio.
Common assets that could be subjected to division include, but are not limited to: Real estate holdings, stocks and bonds, accounts (checking, savings, retirement, etc.), business ownership percentages, vehicles, and high-value luxury items like jewelry and art.
In some cases, the division of assets can be conducted collaboratively. For example, if a couple’s portfolio contains two residential properties, they might agree to each take one for themselves without needing further negotiation.
2: Spousal and Child Support
For parents that have minor children, child support will be one of the first financial obligations determined in your divorce. High net worth parents are often ordered to pay more child support than lower-income earners because they have the ability to do so.
The primary earner in the family may also be ordered to pay spousal support to their former partner. The amount of spousal support is typically based on a number of factors, including the length of the marriage, each spouse’s earning potential, and the standard of living during the marriage. However, in certain cases, this number can also be influenced by the number of assets the lower-earning spouse received as compensation.
3: Tax Liabilities
Another factor to consider in a high net worth divorce is how your taxes will be affected. Dividing assets can trigger significant tax implications, especially if you own a business or other taxable investments. You’ll need to speak with an accountant or financial advisor to understand how the division of assets will impact your taxes both in the short and long term. You will also be changing your filing status from “married” to “single” on IRS forms, which can affect how much you owe.
How a Wealth Management Team Can Assist You During a High Net Worth Divorce
A wealth management team can provide you with the financial consulting needed to make informed decisions during your divorce. This includes helping you understand the tax implications of different asset division scenarios, valuing assets, and more.
Legal Team Consulting:
Additionally, a wealth management team can also provide financial advice to your legal team as they prepare to represent you in divorce proceedings. This could include services such as serving as an expert witness, providing financial documents with your consent, and advising during out-of-court negotiations.
Your wealth management team can also help you prepare for your divorce case by organizing your financial documents and providing valuable resources like the valuation of specific assets. We want you to have peace of mind knowing that everything is in order as you work with your legal team to prepare for court proceedings.
Expert Witness Testimony:
In some cases, a wealth manager may also be asked to provide expert witness testimony related to your divorce. This could include testifying about the value of certain assets, providing analysis of financial documents, and more.
Support After Your High Net Worth Divorce
After your divorce is finalized, you’ll likely need to make some changes to your financial portfolio. This might include updating your will and estate planning documents, changing the beneficiaries on your accounts, calculating projected tax obligations, and more. A wealth management team can assist you with all of these tasks and help you develop a financial plan for your new life post-divorce.
Get Assistance with Your High-Net-Worth Divorce Today
Preparing to enter divorce proceedings is stressful enough. When you factor in high-value assets and a complex portfolio, it can feel overwhelming.
At Hutchinson Family Office, our team dedicates itself to providing the most complete and comprehensive high net worth divorce assistance to our clients as possible. If you are preparing for a divorce and need assistance from a team of experienced wealth management professionals, please contact us today to learn more about how we can assist you.
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