The Challenges of High Net Worth Divorce
St. Charles IL Divorce Lawyers Serving Clients in Kane County
Every divorce is unique, but divorces that share certain characteristics typically encounter the same challenges and follow similar patterns. For example, divorces between couples without children are often quicker and more straightforward than those between parents because they do not require considerations for child support and the allocation of parenting time and parental responsibilities.
Divorces involving high net worth individuals also tend to share similarities. While definitions can vary, high net worth individuals and couples are generally those with $1 million or more in liquid assets.
There are many issues to consider if you are part of a divorcing high net worth couple. It is important to work closely with your lawyer before you file for divorce so that you can develop an appropriate strategy for navigating the process.
More Assets, More to Divide
The most obvious way high net worth couples differ from couples in other tax brackets is that they have more assets. You might not necessarily have all of the same assets as another high net worth couple, but by the virtue of having a high net worth, the process of dividing marital property will likely be complex. Assets common to high net worth divorces include:
- Real estate holdings;
- A small business or professional partnership;
- Brokerage accounts;
- Retirement savings and pensions; and
- Unique assets, like art and jewelry.
A prenuptial agreement can make your property division easier, but only if the agreement is valid. In some cases, a prenuptial agreement will not be enforced because it is found to be invalid due to fraud, duress, or unconscionability.
The Standard Child Support Formula Might Not Apply to Your High Net Worth Divorce
Illinois recently changed how child support is calculated. Under the previous law, child support was calculated based on a percentage of the paying parent’s income and the number of children being supported. Now, child support is determined by using the income shares model. The parents’ net incomes are combined and the court determines the amount of money a couple with that combined income typically spends monthly on their children, taking into account the number of children they have. This figure is the total amount of support that the children should expect. Then the court determines which percentage of the combined net income came from each parent and applies this percentage to its monthly support figure to reach an appropriate payment amount for the paying parent.
The new standard only provides guidelines up to a monthly gross income of $30,000. For families beyond this threshold, the court may have to make different considerations to determine child support.
Divorced parents may also be required to help their adult children with college expenses. The court may require a parent to contribute to his or her adult child’s educational expenses if it determines that this would have happened if the couple had not divorced. Such orders must also account for each parent’s resources and needs, including their savings for retirement.
Other Issues at Play in High Net Worth Divorces
There are other issues that can arise in a high net worth divorce as well. These include the valuation and division of business interests and other assets that are not easy to value. Investments and brokerage accounts, for example, can fluctuate in value. When dividing these kinds of assets, the court must try to balance risky and conservative investments between the partners to avoid having one with a much less stable profile after the divorce. The tax implications of each asset and how they will impact each partner after the divorce must also be taken into account.
When spousal maintenance is part of a couple’s divorce settlement, the court must determine a fair amount based on the couple’s standard of living established during their marriage.
Attempts to hide assets can happen in any divorce, but it is generally a bigger concern in high net worth divorces because it can have more serious consequences. Hiding assets may be attempted through cash purchases, transfers of assets to friends or relatives, or delays in raises or bonuses until after a divorce. Any individual who suspects his or her spouse is hiding assets should work with their lawyer to determine exactly where all their assets are and what they are worth.
Work with an Experienced Kane County Divorce Law Firm
A high net worth divorce comes with challenges that divorcing couples in other demographic groups simply do not face. If you are part of a couple with a high net worth, work with a lawyer who has specific experience handling divorce cases like yours to ensure that your property is divided properly and that your interests are protected. Contact Bochte, Kuzniar & Navigato PC today to schedule your initial consultation with one of our experienced Kane County divorce lawyers.