When it comes to divorce, more money really can cause more problems.
Although divorce is rarely simple, the most straightforward cases usually involve couples with little to no assets or debts. They simply do not have as much property to fight over.
Meanwhile in high net worth divorces where one or both spouses own assets of significant value, millions of dollars could be at stake. Most high-net-worth divorces involve a couple’s net worth of at least $1 million – creating many more opportunities for conflict. Your assets could come in the form of cash, real estate, personal property such as art, antiques, collectibles, or vehicles, business shares or stock options, or even assets located overseas.
High-net-worth assets can complicate other aspects of your divorce, as well. For example, if you and your spouse own real estate together, selling your property to split the appreciated value could have capital gains and tax repercussions. This could severely impact your finances. The standard of living you enjoy can affect both child support and spousal support orders.
Too much conflict can drag out a divorce case to the detriment of both you, your spouse, as well as any children you have. You don’t want to waste a large portion of your net worth fighting a battle that could leave your whole family worse off, financially and emotionally.
If you’re facing a high net worth divorce, the right approach can save you and your family from a complicated, costly, and emotionally difficult ordeal. It’s important to find a family law attorney or divorce lawyer who has the knowledge and expertise to handle high-net-worth cases specific to industry leaders and high earners in the San Francisco Bay Area.
How Does Divorce Property Division Work in California?
When it comes to divorce, California works on community property rules. One of the most important parts of divorce property division involves classifying each asset as either:
- Separate property belonging to an individual spouse, or
- Community property shared equally and divided 50/50 between spouses.
Assets are classified by how and when they’re acquired, earned, or gifted.
Anything classified as separate property belongs 100% to the individual spouse who owns it. All property classified as community property gets split evenly with each spouse owning 50%.
In California, assets do not need to be split in kind. For example, if you and your spouse own a vacation home, one spouse can buy out the other’s equity in the house for cash.
Whether you’re negotiating a high-net-worth divorce settlement or litigating the terms of your separation in court, property classification will play a huge role in the outcome of your case.
How Does Net Worth Get Calculated in a Divorce?
High-net-worth divorces take longer to resolve for a couple of reasons:
- You have more property over which to negotiate terms, and
- You need to accurately appraise the value of your assets.
The process of actually figuring out your net worth and valuing each individual asset can take time. You will likely need to hire professionals who have experience appraising the price of real estate and other unique, valuable types of property you own.
California courts require divorcing spouses to submit financial declarations of disclosure. This includes a Schedule of Assets and Debts that covers everything of value you own. You and your spouse are both required to report your holdings fully and honestly.
To complicate the property division process, you and your spouse may disagree on:
- Whether an asset is classified as separate property or community property, or
- The actual value of how much an asset is worth.
In some cases, your spouse may try to hide assets in order to keep the entire value instead of splitting it with you. Assets could be hidden in shell companies, offshore accounts, or even expensive personal property, such as art, antiques, collectibles, or jewelry.
Failing to honestly disclose every asset will ultimately hurt their case, as a good family law attorney will uncover any hidden assets with a thorough investigation. Expertise is critical here – the best divorce lawyers will know where to look to find your spouse’s hidden assets, sometimes with the help of other financial professionals like forensic accountants.
The Best Approach to High-Net-Worth Divorce
The more proactive you are about appraising and disclosing your assets, the more prepared you’ll be at the negotiation table or on the other side of a courtroom. That means the earlier you get started with a divorce or family lawyer on your case, the better.
In order to finalize your divorce, you and your spouse must resolve all of your property division, spousal support, and child support issues. These are all tied to your net worth.
Your divorce attorney can help you take the approach that’s best for your unique situation:
- Negotiating a settlement agreement might be the best option for you if you and your spouse can communicate openly and come to the negotiation table in good faith.
- An experienced and neutral third-party mediator can help you and your spouse work together on an agreement to split your assets.
- A collaborative divorce involves a team of professions tailored to your needs to support your family through the entire divorce process.
- Any issues you cannot resolve will be decided by courts in litigation. Litigation could lengthen your case – but when negotiations break down, it may be your only choice.
The only way to know which approach is best for you is to talk with a family law attorney who handles high-net-worth divorce about the unique circumstances of your case.
An experienced high-net-worth divorce lawyer will have the experts you need on call for a successful resolution of your property issues. That could involve business or startup valuation experts, wealth management experts, trained art and collectibles appraisers, actuaries, and other financial specialists.
With the right team, you could get through your high-net-worth divorce with the least amount of headache possible – and a favorable resolution that keeps your personal interests, financial goals, and retirement plan intact.