Top Considerations for High Asset Divorce
Divorce is often more complicated when one or both spouses have a high net worth or high incomes. This can lead to complex issues involving multi-million dollar community estates comprised of various asset types. Alternatively, if significant assets are separate property or have a separate property component, complex tracings will complicate the case.
With some education and planning, individuals in high net worth and high income marriages can be prepared to navigate a divorce in a way that maximizes their likelihood of success in the case.
What determines what you are entitled to in the divorce?
Premarital or prenuptial agreement: A custom contract entered into before marriage detailing what legal rights spouses will acquire in the marriage.
Community property: Property that belongs to both spouses, usually acquired during marriage.
Separate property: Property that belongs to one spouse, usually acquired under select circumstances or before marriage.
Commingled or mixed assets: Assets that have components of of both community and separate property.
How are assets divided in the divorce?
Community Property Presumption: A presumption in California law that property acquired during marriage is community property.
Moore/Marsden Formula: The formula commonly used to calculate the value of the community property component of real property brought by one spouse into the marriage.
Hug/Nelson Formula: A pair of different formulas commonly used to apportion stock options and other equity awards like RSUs between separate and community property.
In Kind Division: A method of dividing property in which the asset itself is divided between the parties, as opposed to one spouse receiving the asset and another spouse receiving a buyout payment.
Property Buy Out: A method of dividing property in which one spouse receives the asset subject to a buyout of the other spouse’s interest.
Duke or Deferred Sale of Home Order: An order that a divorcing couple may have made providing that the sale of the family home will be deferred until a minor in the home reaches a certain age.
Preparing your Declaration of Disclosure
Declaration of disclosure: A packet of forms required to be exchanged at least once during a divorce case that supplies material information regarding the finances of the parties to the divorce.
Schedule of assets and debts: The form used to disclose all assets and debts that may be in the marital estate and separate estate.
Income and expense declaration: The form used to set forth information regarding income and expenses.
Fiduciary duty: An obligation that a person in a confidential relationship has to treat the other person with good faith, and to not take unfair advantage of that person. This obligation usually comes with duties to disclose material information, including as required by divorcing spouses.
Addressing hidden or devalued assets in a divorce
Discovery: The pre-trial process in a case in which the parties may gather evidence from the other party and third parties to help them make their case in trial or settlement.
Forensic accountant: An accountant with specialized skills in analyzing financial information, who may be engaged in divorce cases for many purposes, including to investigate hidden or devalued assets.
Sanctions: A court-ordered penalty for improper behavior during the case, including failure to comply with discovery or disclosure obligations.
Undisclosed asset: An asset intentionally hidden from the other party in a divorce case.
Omitted asset: An asset unintentionally not divided in a divorce case.
Child & spousal support in high income divorce cases
Guideline child support: The default amount of child support to be paid under the California state uniform guideline formula.
Deviation from guideline child support: An adjustment from the default amount of child support to be paid under the California state uniform guideline formula, which may be made by a judge in appropriate circumstances.
Spousal support: A payment (sometimes called alimony) made by one spouse to the other during or after divorce intended to help make sure both parties can maintain their standard of living post-divorce. This usually entails the higher-earning party paying the other party support.
What to Look for in a High Net Worth Divorce Attorney
If you are looking for a divorce attorney and you have a high net worth estate, you will of course want to engage an attorney with experience with these cases. You will want an attorney who specializes in cases where forensic accounting is likely required to make your best case for property division and support. Look for attorneys and law firms that have good referrals from past clients, especially past clients who were also dealing with a high asset divorce or mediation.