High Asset Divorce

Some of the most frequent issues that can arise in high net worth divorces include:

Property Division

North Dakota and Minnesota follow the equitable distribution model for property division in divorce. In equitable distribution, a court that divides a couple’s marital estate must split the estate fairly. However, a fair division does not always mean that each spouse receives an equal share. Instead, courts must consider various factors, such as the length of the marriage, the financial resources of each spouse, and each spouse’s contribution to acquiring a marital asset (including contributions as a homemaker), to determine which share of a marital asset each spouse will receive.

Property division can lead to significant legal issues and disputes in high asset divorces.  High-value or complex assets may require expert valuation to help spouses negotiate a property settlement or help the court determine how to divide the asset.

Hidden or Undisclosed Assets

Some high net worth divorces involve a spouse trying to hide assets from the other spouse and the court or failing to disclose various assets, such as separate bank accounts, trusts, or offshore accounts. A spouse may hide or not disclose assets to gain an advantage in property division or alimony/spousal support by preventing the court from dividing an asset or making it seem like they have less income or assets. Hidden or undisclosed assets can complicate a high asset divorce, as the other spouse may need to retain forensic accountants to identify and track down those assets. Furthermore, hidden or undisclosed assets can prolong a divorce litigation as the court must determine how to remedy a spouse’s misconduct in hiding assets or income.

Alimony/Spousal Support

A high asset divorce can involve a spouse filing a claim for alimony/spousal support if a couple has a significant earning disparity or if the spouse seeking support has deferred their educational or professional advancement to support their spouse’s career or business as a homemaker. Spousal support requests can trigger vigorous litigation, as the court must determine the appropriateness of support and what terms to include in a support order, including amount and duration of any support award.

Courts may order temporary support during a high net worth divorce case to ensure a spouse has financial resources to support themselves during the case. Courts may also order long-term or rehabilitative support to ensure that a spouse can afford to support themselves while they pursue education, training, or work experience to increase their earning capacity and become self-sufficient.

Business Ownership Interests

A high asset divorce can involve a spouse’s business ownership interests, triggering complex issues that couples must resolve. For example, dividing a spouse’s business interests that qualify as marital assets will require obtaining a valuation of the spouse’s interest to determine the value of the other spouse’s share. Furthermore, couples and courts may need to navigate a business’s contractual restrictions on transferring ownership interests, which could require unique solutions to ensure each spouse receives their fair share of the marital estate.

Pre/Postnuptial Agreements

Many high net worth couples have prenuptial or postnuptial agreements to settle economic issues in the event of a divorce. Although an enforceable pre/postnuptial agreement can simplify the legal process for a high asset divorce, such agreements can lead to increased litigation if a spouse wishes to challenge the validity of a pre/postnuptial agreement by claiming inadequate financial disclosures, duress, coercion, or a lack of independent counsel.

Tax Consequences

Resolving financial issues in a high net worth divorce can have various tax implications that spouses should consider. For example, transferring or liquidating assets as part of a property division could trigger capital gains taxes. Furthermore, dividing retirement or pension benefits can have tax consequences unless parties divide such assets through qualified domestic relations orders. Working with an attorney who knows whether your specific plan requires additional court orders or other documents to avoid adverse tax consequences is essential.