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High-net-worth divorces are much more complex than other divorces. In particular, the division of assets is more complicated, as it can be difficult to ascertain the value of estates and investments. Many high-net-worth divorces also involve prenuptial or postnuptial agreements that can complicate matters further.
Because of these and other issues, it is very important to have specialized legal representation in high-net-worth divorces. Rosenblum Law has divorce attorneys with experience in high-net-worth divorces who can navigate the complexities of these cases.
This brief guide will help those facing a high-net-worth divorce understand the complexities and challenges that they may experience during the divorce process.
Understanding High-Net-Worth Divorce in New Jersey
A high-net-worth divorce in New Jersey is generally defined as a divorce that involves assets totaling $1 million or more. There are several other characteristics of high-net-worth divorces, including those involving:
- High-value and complex assets
- Separate property that may not be divided in divorce, such as inheritances and property owned before marriage
- Complicated tax consequences of asset division
- Business interests in one or more businesses
High-net-worth divorces differ from others because forensic accountants are often needed to identify and value all of the assets, investments, businesses, and other financial complexities of high-net-worth households. There are also often high-value assets that are considered separate property not to be divided in the divorce. New Jersey law clearly defines separate property, but when that property grows in value during the marriage, it can complicate the division of those assets and investments.
There are other key issues that come up in high-net-worth divorces. For example, there often are prenuptial and postnuptial agreements, which are legal contracts signed by couples who agree to certain financial rights and responsibilities in divorce or death. Asset division is more complex in these matters, as it can be difficult to value assets and determine a fair and equitable distribution as required by New Jersey law. In addition, alimony is common in high-net-worth divorces, and child support can also be an issue if the couple has children.
How are the Division of Assets and Alimony Determined in High-Net-Worth Divorces
Investments and assets are valued by experts and divided equitably. New Jersey follows an “equitable distribution” of assets law, meaning marital assets, or property or assets acquired by either spouse during the marriage, are divided equitably. This does not necessarily mean the assets will be split evenly. It takes an attorney highly experienced in high-net-worth divorce cases to determine how a couple’s investments and assets should be divided.
Alimony, or the financial support that the court orders a person to pay to their spouse, is determined under Section 2A:34-23 of the New Jersey divorce laws. The factors that go into determining alimony include the:
- Earning capacity of both spouses,
- Duration of the marriage
- Age, physical, and emotional health of the parties,
- Length of absence from the job market by the party asking for spousal support,
- Time and expense of preparing to enter the job market
- Spouses’ current parental responsibilities
The goal of alimony is to ensure that both parties are able to maintain the standard of living as they did during the marriage.
Common Mistakes and Challenges in High-Net-Worth Divorces
The biggest mistake someone can make in a high-net-worth divorce is to hire an attorney without the proper experience and resources. Experienced high-net-worth divorce attorneys work with forensic accountants and valuation experts to determine assets and their value for asset division.
Another common challenge in high-net-worth divorces is when one or both spouses try to hide assets by shifting them to off-shore accounts, undervaluing them, or overpaying debts. The purpose of doing so is usually to keep those assets from being divided as marital property. This is a mistake because the assets will eventually be found by an experienced attorney and their forensic accountant. Hiding assets can work against the individual who hid them, such as fines paid to the other spouse or losing larger portions of shared property.
Finally, it is a mistake to try to get a high-net-worth divorce case over with too quickly. These divorces are complex and take longer than others to finalize. Although the emotional toll can be significant, rushing through the process could result in the parties agreeing to things that they regret later. Rushing a divorce can also mean that assets are missed in the asset valuation and division process.
The Role of a High-Net-Worth Divorce Attorney in New Jersey
The first thing an experienced attorney will do is provide an initial consultation and case assessment. This first interaction relies on honesty in assessing the potential value of assets. The attorney will then be able to provide strategic legal advice and representation based on the facts of the case.
Identifying and valuing marital assets is another big part of what an attorney can do during a high-net-worth divorce. This may involve utilizing financial experts for asset valuation and forensic accounting to locate all assets. The attorney can also handle complex financial issues such as tax implications, retirement accounts, and stock options. Only an experienced high-net-worth divorce attorney can effectively negotiate property settlements and spousal support, advocate for a fair and equitable distribution of assets, provide representation in court, and otherwise protect their client’s best interests.
FAQs
A high-net-worth divorce is one in which the total household assets total $1 million or more.
A high-net-worth divorce attorney can protect your assets by ensuring they are valued appropriately and that separate, nonmarital property remains in your name. Only an experienced attorney can identify what assets are protected from being divided in equitable distribution.
Look for an attorney who has successfully represented other clients in high-net-worth divorces. Ask for testimonials and look online for reviews. You should also ask attorneys about their partnerships with experts and forensic accountants for the purpose of identifying and valuing marital assets.
Such valuations are complex and vary depending on the circumstances. In many cases, an individual’s business or professional practice can remain intact and in their possession, while other assets are given to the other spouse to ensure fair and equitable distribution.
Debt is divided in a similar way as assets, using the equitable distribution standard. Typically debt attached to an asset will be assigned to the individual keeping the asset. For example, if there is a mortgage, the mortgage loan would go to the spouse that kept the home for which the loan was taken out. One or more other assets and associated debt would go to the other spouse for an equitable distribution.
Forensic accountants are able to discover and value assets. Although ill-advised, it is common for one or both spouses to attempt to hide assets. The forensic accountant ensures that all assets are discovered and fairly valued so that they can be equitably distributed.
Yes. Grounds for contesting these agreements vary, but often they are challenged because the spouse was coerced into signing. These agreements can also be challenged if they are grossly unfair to one spouse.
Divorce settlements can be modified in the future if circumstances change. Typically the modified terms include child support and alimony. Child custody arrangements may also have to be modified if one spouse needs to move for work, for example. The equitable distribution of assets is rarely modified after the fact, unless one can prove that the agreement is not equitable at all.
Title 9 Sections 2-4 of the New Jersey Statutes outline all of the factors involved in determining child custody matters. Factors that often come into play in high-net-worth divorces are the employment responsibilities of the spouses, how much time was spent with the children prior to and after separation, and the home environment. Child support is calculated based on the income shares method, in which the income of both parents is totaled and a percentage of that total is used to determine each parent’s share of the support amount.
Your spouse can be required to pay for private school in some cases. It takes an experienced attorney to negotiate for added expenses such as private school for children of the divorce.
Certain assets may be taxed, while others are not. For example, investments and real estate are taxed. These taxes can add up, and must be accommodated for in the fair and equitable distribution of property. Consult your attorney or accountant for specific tax advice.
Forensic accountants use a variety of tools and methods to discover and value assets. These include financial records, lifestyle analysis, loan and credit card applications, and real estate records. Valuation experts assess these assets to determine their intrinsic worth.
Contact Rosenblum Law for a Free Consultation
High-net-worth divorces are extremely complex and take more time to resolve than other divorce cases. It is extremely important to have specialized legal representation in a high-net-worth divorce.
Rosenblum Law divorce attorneys specialize in high-net-worth divorce cases. We work with valuation experts and forensic accountants to ensure fair and equitable distribution amidst the complex considerations that arise in high-net-worth divorces. Our attorneys who are highly experienced in high-net-worth cases will negotiate with the other spouse and their attorney, and litigate contested matters in court to obtain the best possible outcome for our client. If you are facing a high-net-worth divorce, contact us today for a free initial consultation and case evaluation.
Last updated: May 30, 2024
