Divorces are sometimes messy affairs, even earlier than the division of monetary property begins. Carving up funds inevitably complicates issues additional, particularly in high-net-worth divorces. The range and worth of property concerned introduce new ranges of complexity, necessitating cautious methods for shielding wealth.
Wealth managers carry a novel mixture of experience and expertise that many matrimonial attorneys could not possess, making their function essential in high-net-worth divorces. Beneath are 4 key insights I’ve gained from collaborating with wealth managers to realize the very best outcomes for our shared shoppers:
Excessive-net-worth divorces are essentially totally different. Excessive-net-worth divorces current distinctive challenges that require specialised consideration. Not like typical divorces, which frequently contain easy asset divisions, high-net-worth instances contain a wide range of advanced asset courses. Wealth managers and divorce attorneys should work collectively to navigate intricate points similar to enterprise valuations, brief 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 vital monetary repercussions for shoppers.
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 method—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 is going to seemingly 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 vital time to elevating kids and managing a house. Then the cut up received’t be 50/50—it will likely be one other share the courtroom deems equitable.
Collaboration throughout discovery is vital. Collaboration between the wealth supervisor and divorce lawyer isn’t simply vital—it’s important. Through 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 a whole bunch 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 could actually price their shopper considerably in time and charges. Wealth managers carry 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 may make clear that these funds had been used to buy a trip residence.
Grasp the tax nuances. Taxes are a tremendously vital situation in high-net-worth divorces and one which wealth managers and attorneys ought to by no means depart to the top. 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 affect in high-net-worth instances can attain thousands and thousands of {dollars}. For instance, pre-tax employment advantages like retirement or deferred compensation property can’t be traded towards 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 non-public fairness fund. In these circumstances, inventive approaches to equitable division have to be explored.
Working by means of a high-net-worth divorce is difficult for all events concerned, but it surely doesn’t need to be overwhelming. With the above methods, wealth managers and divorce legal professionals might be higher outfitted to navigate the complexities and guarantee their shoppers’ pursuits are protected.
Gus Dimopoulos, Esq. is managing accomplice 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 data, go to www.dimolaw.com.
