Unique Challenges of High Net Worth Divorce
Kane County Family Law Firm
High net worth individuals are frequently defined by financial service providers as individuals with $1 million or more in liquid assets. These individuals often have multiple sources of income and may have substantial investment portfolios. In an Illinois divorce, the couple’s marital assets must be divided equitably, which means that they must be divided in a fair way that provides each partner with a share of their marital assets that suits their contributions to the marriage and their financial and personal needs following the divorce. Determining how to equitably divide a marital estate that includes multiple investments and income streams can be much trickier than dividing a small marital estate belonging to two working individuals.
If you are a high net worth individual, work with a divorce lawyer who has experience handling high net worth divorces. Every couple has unique needs, and if you are part of a high net worth couple, it is important that you work with a lawyer who understands the issues you are facing during your divorce in order to reach a fair settlement. Otherwise, your lawyer might inadvertently overlook certain assets or considerations, causing you to lose money that rightfully belongs to you in the settlement.
Valuing and Dividing Investments and Retirement Accounts
Investments’ values can fluctuate widely, and these fluctuations must be taken into account when dividing a divorcing couple’s investment portfolio. Another issue to consider when dividing investments is the tax burdens that accompany each. The tax burdens, growth potential, and risk level of each investment must be weighed carefully alongside each party’s financial needs in order to determine a fair way to divide the couple’s portfolio.
Retirement accounts may need to be divided through Qualified Domestic Relations Orders (QDROs). This type of order names an alternate payee to receive a share of the money contained within the account.
Deviating from the Standard Formula for Child Support
Following changes to the Illinois child support law that went into effect in July 2017, child support amounts are determined according to both parent’s net incomes and their respective amounts of parental responsibility and parenting time. Specific issues like a child’s special needs or if the parent’s income is substantially higher or lower than average can force the court to deviate from its normal child support determination formula. For a parent with a high net worth, the court will consider the standard of living the child would have enjoyed if the parents had not divorced when determining an appropriate child support amount.
Valuing and Dividing Businesses and Professional Practices
If a small business or a share of a professional practice are part of a couple’s marital estate, the business or professional practice share must be divided alongside their other assets. Professional practices and small businesses both have debts and assets of their own, only some of which are tangible. For example, a business’ reputation with its client base may be considered when determining its market value.
Talk to your spouse about your plan for your business or your role in your professional practice after the divorce. This is particularly important if you both work at the business or professional practice. It might be in your best interest to sell the business and split the profit or to have one party “buy out” the other’s share of its value.
Determining Any Hidden Assets
With multiple financial accounts and sources of income, it can be fairly easy to hide assets during the divorce process. This can be done by transferring assets to business accounts or into partners’ names, making large cash purchases, and “reinvesting” marital funds back into a business or investment in order to keep that money out of a personal account.
Trust and open communication are key to any fair division of property, but if you suspect that your spouse is not being 100 percent truthful about the status of certain assets, work with your lawyer and a forensic accountant to investigate your marital portfolio.
Work with an Experienced St. Charles Family Law Firm
If you are considering filing for divorce, your asset pool and income will play a significant role in how much time and effort needs to go into your divorce. Generally, divorces between high net worth individuals take longer to complete than those for middle and lower income couples because there is simply more to value, more to divide, and in many cases, more variables to consider. To discuss your specific concerns about the divorce process with an experienced divorce lawyer, contact Shaw Family Law, P.C. today to set up your initial consultation with skilled Kane County divorce attorney Matthew G. Shaw.