Divorces are sometimes messy affairs, even earlier than the division of economic property begins. The method of carving up funds inevitably complicates issues additional, particularly in high-net-worth divorces. The variety and worth of property introduce new complexity ranges, necessitating cautious methods for safeguarding wealth.
Wealth managers convey a novel mixture of experience and expertise that many matrimonial attorneys might 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 purchasers:
Excessive-net-worth divorces are basically completely different. Excessive-net-worth divorces current distinctive challenges that require specialised consideration. In contrast to typical divorces, which frequently contain easy asset divisions, high-net-worth circumstances contain a wide range 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 so on. These property require cautious dealing with to make sure correct valuations and divisions, as errors can have vital 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 consider 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 related however is basically completely different. Equitable division just isn’t 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’s going to possible be an equal break 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 break up gained’t be 50/50 — will probably 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. Throughout 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 lots of of hundreds of {dollars} in authorized charges alone – many years value of statements from dozens of various accounts. If both social gathering just isn’t totally engaged, it may value their consumer considerably in time and costs. Wealth managers convey essential institutional data to the desk, such because the historical past of investments and their functions. For example, 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 house.
Grasp the tax nuances. Taxes are a tremendously vital 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 influence in high-net-worth circumstances 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 personal fairness fund. In these circumstances, artistic approaches to equitable division have to be explored.
Working by a high-net-worth divorce is difficult for all events concerned, however it 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 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 data, go to www.dimolaw.com.
