When a married or common-law couple separates, the division of property is usually quite straightforward. Most assets gained during the marriage are counted as family property and divided equally among both former spouses. In cases where a spouse brings that property into the relationship, that property will usually remain theirs alone, and is counted as excluded property.
In a high-net-worth separation (typically possessing greater than $1,000,000 in liquid assets) the complex personal and joint financial portfolios involved tend to create challenges that simply don’t exist in other divorces. With prenuptial agreements also a factor in some of these divorces, litigation can last for months, incurring costly legal fees and untold stress for every party involved.
With the assistance of expert high net worth divorce lawyers, like the team at Westside Family Law, these challenges can be navigated quicker and with much less stress, resulting in a separation that’s in the best interests of all involved.
Let’s examine some of the common questions involved in this type of divorce.
Why are High Net Worth Separations More Complex?
When a separating couple possess complex financial portfolios, it’s the job of their legal representatives, and specialized professionals like accountants, to sift through reams of documents to ensure an accurate valuation of family property and any debts. These portfolios include the following common items:
- Real estate;
- Business interests, dividends and shareholder accounts;
- Retirement accounts;
- Executive bonuses;
- Asset appreciation/depreciation;
- International assets
As you can see in the above list, high net worth individuals possess many more assets, and ways those assets can potentially be obscured during a separation. It’s crucial to work with an experienced family lawyer that understands these loopholes, and how to ensure you’re receiving an accurate account when compiling family property.
What to Consider Before Pursuing a High Net Worth Divorce?
It’s highly recommended to prepare well for a divorce. In a high-net-worth situation, that need for preparation becomes even more crucial. If you’re considering separating, here are some of the main questions to ask yourself. Before proceeding, you should know the answer to any of these questions that are relevant to your unique situation.
- Do you have a prenuptial agreement in place?
- Do you understand which assets were acquired during the marriage/common-law relationship?
- What are the values of those assets?
- Do some of those assets need to be valued by an expert?
- Is any of your pre-relationship wealth held in a joint name or account?
- What inheritance or gifts were acquired during the marriage?
- Are there corporate or trust issues that need to be resolved?
- If you run a business, what is the plan for the business?
- How do you receive income? (e.g. a salary paid by an employer, a salary paid by a corporation you control, by stocks or RSU’s in a publicly-traded company, etc.)
- Aside from the financial issues, if you have children, what are your parenting arrangements going forward?
How do Courts Assess Spouse’s Financial Needs in a High Net Worth Divorce?
Family law courts in British Columbia have plenty of experience with these kinds of divorces. Our experience has shown that in high net worth divorces, they do not always apply the child support or spousal support guidelines, as the guidelines often lead to situations of exorbitant support amounts that far exceed the needs of the family. When determining a fair amount of support, courts assess factors such as the family’s current standard of living, ongoing financial commitments, and parenting time. They are committed to ensuring no party suffers undue hardship due to a divorce. Again, working with an experienced family law team, like Westside Family Law, will help to ensure the best outcome regardless of whether you find yourself in the position of having to pay support or of needing support.
Is There an Alternative to Court?
While it may be more complicated to resolve, it’s entirely possible to reach an agreement on high net worth divorce without going through costly and long-running litigation. In fact, we encourage our clients, where possible, to discuss these issues amicably and avoid court altogether. Options such as mediation, arbitration and collaborative separation are all extremely viable if the separating couple remains on good terms. Each of these processes deliver a timely and fair solution, while keeping the details out of the public.
Get in Touch
If you have questions or concerns about navigating the divorce process, contact us today to speak with a lawyer. We are hard at work to ensure your best interests are safeguarded during this stressful time.