Everyone suffers in a divorce. Rich or poor, there are going to be financial and emotional stressors that cannot be avoided, even with the best legal representation. However, there are certain complications that can be uniquely challenging to resolve when the divorce involves high-net-worth individuals.
Before addressing complications, let’s first define “high-net-worth. According to Investopedia, the classifications are generally as follows.
Liquid assets (in excess of liabilities/debts):
With this in mind, here are 5 of common complications for high-net-worth individuals facing a divorce.
The first complication rarely seen in middle class or lower income divorces is the existence of numerous financial, economic, and legal counselors. A wealthy couple who has more than $1 million saved in liquid assets usually also has a stock broker or financial planner. They may have an estate planning attorney who has worked with their family for years. They may also have business advisors, realtors, property managers, and a host of other specialized advisors on hand.
All of this just means that the attorney in a divorce must be able to communicate carefully with these trusted advisors to ensure that no mistakes are made and that assets are not lost.
Middle class families pay taxes too, but high-net-worth individuals may be more likely to deal with multiple state income taxes (due to financial interests in more than one place). They may also worry about the impact the divorce will have on taxable earnings, capital gains, or real estate taxes on expensive properties.
A high-net-worth individual generally has more flexibility in where and how to invest money. While 401(k) and IRA portfolios are the primary investment tool of the middle class, those with over $1 million in liquid assets often feel the need to be more creative, in search of higher yields. A wealthy couple may have rental properties in other states or even other countries. They may have foreign currency investments, or they may use land trusts to hide ownership of real estate. The options are limitless when the liquid capital is high. A divorce lawyer may need to obtain foreign or out of state subpoena power in order to identify hidden assets before they can be transferred.
Many wealthy Americans earned their wealth in small businesses. A divorce often means severing more than marital ties; it means severing business interests.
High-net-worth couples may also have unique options selected for their children’s education. For instance, the divorcing couple may have different ideas about where to send the children for private school. Options that are not available to everyone may create complications in resolving a custody arrangement.
If you are a high-net-worth individual facing a divorce, you worry about your future, your legacy, and what this will mean for your children. You’ve worked hard to get where you are today, and you want to preserve all your hard work. You need a lawyer who understands your situation and has the broad skills and diversification of experience to work with any challenges that come up. Todd K. Mohink, P.A. represents high-net-worth individuals throughout Howard and Anne Arundel Counties. Contact us today to set up a personalized meeting to discuss your unique needs.
7310 Ritchie Highway, Suite 910
Glen Burnie, MD 21061
30 Corporate Center
10440 Little Patuxent Parkway,
Columbia, MD 21044