Divorces are sometimes messy affairs, even earlier than the division of economic property begins. Carving up funds inevitably complicates issues additional, particularly in high-net-worth divorces. The variety and worth of property concerned introduce new ranges of complexity, necessitating cautious methods for safeguarding wealth.
Wealth managers convey a novel mixture of experience and expertise that many matrimonial attorneys could not possess, making their position essential in high-net-worth divorces. Beneath are 4 key insights I’ve gained from collaborating with wealth managers to realize the absolute best outcomes for our shared purchasers:
Excessive-net-worth divorces are essentially totally different. Excessive-net-worth divorces current distinctive challenges that require specialised consideration. In contrast to typical divorces, which regularly contain simple asset divisions, high-net-worth circumstances contain quite a lot of complicated asset lessons. Wealth managers and divorce attorneys should work collectively to navigate intricate points corresponding to enterprise valuations, quick promoting and put choices, cryptocurrency, restricted shares, deferred compensation and extra. These property require cautious dealing with to make sure correct valuations and divisions, as errors can have important monetary repercussions for purchasers.
Equitable doesn’t imply equal. As a matrimonial legal professional based mostly in New York, I’ve encountered many purchasers who mistakenly imagine that New York is a 50/50 state the place all property are cut up equally in a divorce. In actuality, New York follows an equitable division strategy—which sounds related however is essentially totally different. Equitable division will not be all the time a 50/50 cut up. For instance, if a divorcing couple started their marriage with minimal wealth and accrued it collectively over time whereas elevating a household, then sure, it’ll probably be an equal cut up of most property. However say it’s a second marriage, each events have grownup kids, and one of many spouses entered the wedding with $30 million whereas the opposite had no wealth and didn’t dedicate important time to elevating kids and managing a house. Then the cut up received’t be 50/50—it will likely be one other proportion the courtroom deems equitable.
Collaboration throughout discovery is essential. Collaboration between the wealth supervisor and divorce lawyer isn’t simply necessary—it’s important. In the course of the discovery course of, when monetary paperwork are being shared to color a full image, each events must be actively engaged. In high-net-worth divorces, this course of can run lots of of 1000’s of {dollars} in authorized charges alone—a long time value of statements from dozens of various accounts. If both social gathering will not be absolutely engaged, it will probably price their shopper considerably in time and charges. Wealth managers convey essential institutional information to the desk, such because the historical past of investments and their functions. As an illustration, a $2 million withdrawal from a brokerage account a decade in the past may appear suspicious, however an knowledgeable wealth supervisor may make clear that these funds have been used to buy a trip dwelling.
Grasp the tax nuances. Taxes are a tremendously necessary situation in high-net-worth divorces and one which wealth managers and attorneys ought to by no means go away to the tip. Each asset distributed in a divorce carries tax implications. Wealth managers and attorneys should absolutely perceive the implications for each asset class earlier than settlement negotiations start, because the tax influence in high-net-worth circumstances can attain tens of millions of {dollars}. For instance, pre-tax employment advantages like retirement or deferred compensation property can’t be traded in opposition to after-tax {dollars}. It’s not apples to apples. As well as, some property aren’t liquid and can’t readily be transferred—for instance, restricted inventory or an curiosity in a non-public fairness fund. In these circumstances, artistic approaches to equitable division must be explored.
Working by way of a high-net-worth divorce is difficult for all events concerned, however it doesn’t must be overwhelming. With the above methods, wealth managers and divorce legal professionals will be higher geared up to navigate the complexities and guarantee their purchasers’ pursuits are protected.
Gus Dimopoulos, Esq. is managing associate of Dimopoulos Bruggemann P.C., a matrimonial and household regulation agency based mostly in Westchester County, N.Y. that makes a speciality of high-net-worth divorces. For extra info, go to www.dimolaw.com.
