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 shielding wealth.
Wealth managers deliver a singular mixture of experience and expertise that many matrimonial attorneys might 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 attain the absolute best outcomes for our shared shoppers:
Excessive-net-worth divorces are essentially completely different. Excessive-net-worth divorces current distinctive challenges that require specialised consideration. Not like typical divorces, which regularly contain simple asset divisions, high-net-worth circumstances contain quite a lot of advanced asset courses. Wealth managers and divorce attorneys should work collectively to navigate intricate points reminiscent of 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 shoppers.
Equitable doesn’t imply equal. As a matrimonial legal professional primarily based in New York, I’ve encountered many purchasers who mistakenly imagine that New York is a 50/50 state the place all property are break up equally in a divorce. In actuality, New York follows an equitable division method—which sounds comparable however is essentially completely different. Equitable division will not be at all times a 50/50 break 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 should doubtless be an equal break up of most property. However say it’s a second marriage, each events have grownup youngsters, 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 youngsters and managing a house. Then the break up gained’t be 50/50—it is going to be one other proportion the court docket 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 have to be actively engaged. In high-net-worth divorces, this course of can run tons of of 1000’s of {dollars} in authorized charges alone—a long time value of statements from dozens of various accounts. If both get together will not be totally engaged, it could actually price their consumer considerably in time and costs. Wealth managers deliver essential institutional data 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 might make clear that these funds have been used to buy a trip residence.
Grasp the tax nuances. Taxes are a tremendously necessary concern in high-net-worth divorces and one which wealth managers and attorneys ought to by no means depart to the tip. Each asset distributed in a divorce carries tax implications. Wealth managers and attorneys should totally perceive the implications for each asset class earlier than settlement negotiations start, because the tax affect 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 usually are not liquid and can’t readily be transferred—for instance, restricted inventory or an curiosity in a personal fairness fund. In these circumstances, inventive approaches to equitable division have to be explored.
Working via a high-net-worth divorce is difficult for all events concerned, but it surely doesn’t should be overwhelming. With the above methods, wealth managers and divorce attorneys might be higher geared up to navigate the complexities and guarantee their shoppers’ pursuits are protected.
Gus Dimopoulos, Esq. is managing companion of Dimopoulos Bruggemann P.C., a matrimonial and household legislation agency primarily based in Westchester County, N.Y. that focuses on high-net-worth divorces. For extra info, go to www.dimolaw.com.
