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Unique Challenges of a High Net Worth Divorce

Naperville Family Law Firm

Unique Challenges of a High Net Worth Divorce, divorce, family law, law firmA high net worth divorce comes with unique challenges. These challenges are largely related to the division of the couple's assets, which can be substantially more difficult than it is in divorces among lower-income couples because, in many cases, high net worth individuals have multiple income streams. Assets may also include real estate and investments, further complicating the marital estate.

A high net worth individual is commonly defined as an individual with $1 million or more in liquid assets. Other definitions are sometimes used as well, such as couples who earn a combined $300,000 or more in the last year and expect to earn the same amount in the following year. Talk to your family law attorney about how your net worth may impact your divorce and the issues you need to be aware of before you file your divorce paperwork.

Child or Spousal Maintenance Amounts may Deviate from What Would Normally be Expected

Child support is calculated using an algorithm that takes multiple factors into consideration, such as each parent's income and the children's specific needs. When a parent has an income far outside the average, this algorithm does not necessarily work. The court may order a higher child support amount or a child support amount other than the one it would have reached using the algorithm because of the deviation from the average Illinois net worth.

Net worth can also be considered in spousal maintenance determinations if one is made. The court may consider the lifestyle the parties enjoyed during the course of the marriage when determining a spousal maintenance amount, rather than simply avoiding financial ruin for a former spouse.

Hidden Assets May be an Issue

Often, individuals in high net worth divorces are concerned about their spouses attempting to hide assets. This is especially true in couples where one partner solely managed their finances. An individual may attempt to hide assets in any of the following ways:

  • Moving money into an account held in another party's name, such as a friend or relative;
  • Making cash purchases of expensive items, such as furniture or vehicles; and
  • Delaying promotions or bonuses until after the divorce.

If you suspect your spouse is hiding assets, speak with your attorney. He or she may need to engage in discovery, including issuance of Interrogatories (i.e., a written request for a listing of all assets) and depositions, which would require your spouse to answer questions about the parties' assets while under oath.

Valuing and Dividing Businesses and Professional Practices

Many high net worth individuals are business owners or part of professional practices. Businesses and professional practices, even shares of professional practices, are considered to be marital assets if they developed during the marriage.

Dividing businesses and professional practices can be tricky, because unlike salaried jobs, the trajectories are not always easy to predict. A business can become wildly successful overnight, only to shutter a year later. Debt, operating costs, and projected growth must all be considered when valuing these assets, which can require the aid of a third party business appraiser evaluator.

Valuing Investments' Long-term Growth

Like a with a business, an investment or a portfolio of investments can be difficult to accurately value, because there is no way to know how they will grow, if at all. A financial adviser can play a role in dividing the investment portfolio, giving each spouse an equitable share of risky and conservative investments.

Dividing Real Estate Properties and Retirement Assets

For many couples, the marital home is the only real estate property to be considered in a divorce. If there are multiple real estate properties, they need to be valued and divided equitably during the divorce. A property's current market value, tax burden, and potential for appreciation are all considered when valuing it.

Retirement assets, such as a pension or 401(k), must also be valued and divided equitably. To divide a retirement account, the court may order a Qualified Domestic Relations Order (QDRO), which is a court order, entered as part of a property division in a divorce, that splits a retirement plan or pension plan by recognizing joint marital ownership interests in the plan.

Work with an Experienced Naperville Divorce Lawyer

As a high net worth individual, there are likely to be issues at play in your divorce that do not arise in divorces among less wealthy couples. To learn more about these specific issues and how to handle them as they arise during your divorce, set up your initial consultation with one of the experienced DuPage County divorce lawyers at Pesce Law Group, P.C.

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