How are high net worth divorce cases different?
How are high net worth divorce cases different?
High net worth divorce cases pose some unique challenges. With so much on the line, it’s common for the divorce process to be more complicated and challenging. All aspects of a divorce from custody to division of assets may be more involved and difficult when there are a large amount of assets in the case.
Finding hidden assets
The first question for dividing assets in high net worth cases is identifying the assets and determining whether they are marital. In high net worth cases, the parties often have a lot to gain by hiding assets. They might try to change the title of an asset in order to keep it from the reach of divorce court. They may try to downplay the value of a closely-held business. They might even give items of personal property away in the months leading up to the divorce.
Your divorce attorney can work to track these assets down. They can issue subpoenas and prepare interrogatory requests in order to identify and document the assets. If a party gets caught trying to hide money or property from the court, the consequences are often steep.
The traditional rules for child support don’t apply in high income cases. The court may continue to apply the standard percentages of a parent’s income in order to determine a child support amount. However, the court is also free to look at the high income of the parents and choose to set a different amount for a support award. The theory is that at some point, a child’s needs are met. While a child has a right to enjoy their share of a parent’s success, they don’t have a right to a flat percentage of a parent’s income that goes beyond their reasonable needs.
In high income cases, it’s up to the parents to make arguments to the court about why a certain child support amount is the most appropriate. You might do this by working with your attorney to present and gather evidence of the children’s expenses. This might include special needs expenses, reasonable extracurricular costs and even costs for private school attendance. The court can consider the lifestyle of the parents when it makes its decision.
Division of the assets and alimony
When the court divides property in a divorce, it’s their job to do what’s equitable. In high net worth cases, a party may need alimony. They may need time to reenter the workforce, or they may not be able to return to work at all. In that case, it’s important to work with your attorney in order to build the case for alimony. Alimony can be temporary while the divorce is pending, it might continue for a short time after the divorce, and in some cases, alimony is permanent.
The court needs to have the right evidence before it in order to make the right decisions in a high net worth divorce case. It’s up to each party to present this evidence. That means carefully taking the time to methodically prepare the case.
What happens to retirement funds and 401(k) plans in a divorce?
Divorces are often complicated and have the potential to get quite messy. When children are involved, you and your spouse will be forced to try to come to an agreement over custody, child support and visitation rights. However, even if you have no children or they are grown up, you will still need to figure out how to divide your property and assets including any retirement funds or 401(k) plans that you or your spouse have. Unfortunately, figuring out exactly how retirements benefits are divided can be tricky, which is why it’s important to look at the subject in greater detail. Having a top divorce lawyer on your team can help make this process easier for you.
State Laws for Division of Property and Assets
Each state has its own specific divorce laws, which means that the way your assets are divided can vary dramatically depending on where you live. The majority of states work under the equitable distribution method, which means that your marital property and assets will be divided in whatever way that the responsible judge deems to be fair or equitable. However, this doesn’t necessarily mean the assets will be divided equally and, in fact, they almost never are.
There are also some states that operate under community property principles. In this case, all assets, property and debts that you accrued as a married couple are considered joint property and divided equally (50:50) between you and your former spouse.
All states also have laws that allow couples to reach their own divorce agreement and this agreement then takes precedent over the other divorce laws. In this way, you and your spouse can come to an agreement over how to divide all of your property or assets, including retirement funds, in a way that makes the most sense.
Dividing Retirement Funds and 401(k) Plans
The majority of couples use mediation to reach an agreement instead of letting the court decide for them how their assets should be divided. This often makes much more sense, especially when retirement funds are involved. The reason is that dividing a 401(k) or other retirement plan tends to be quite costly.
Therefore, instead of simply trying to divide these retirement funds down the middle, it is usually a much better idea to negotiate in an attempt to offset or balance the retirement funds with some other asset. In this way, you can still achieve the same desired outcome in terms of the total division of assets while also avoiding having to go through the process of splitting your 401(k). For instance, if you have other retirement accounts, bank accounts, stocks or other monetary assets, you can attempt to exchange some of these assets to ensure that you remain in sole possession of your personal retirement savings.
Just like marriage, divorce is all about compromise. The problem is that attempting to divide your assets and retirement funds in an equitable manner can be incredibly complex. For this reason, it is essential that you seek the assistance of a skilled divorce attorney to help you navigate through this most complicated time of your life.