How is wealth divided in high net worth divorce?
A high net worth divorce is where one or both parties’ assets exceed their expenses and financial needs. The asset structure is often complex, and each partner’s entitlement might be unclear.
Below are some critical considerations that the courts may take into account when dividing wealth in a high-net-worth divorce.
- The needs of each party
High net-worth couples own wealth that allows them to enjoy high living standards. Therefore, the financial needs of each party are calculated more generously than in ordinary divorce cases. The needs are met from matrimonial assets, but where the matrimonial property is not enough, the non-matrimonial property is included.
2. Valuing financial and property wealth
Financial wealth includes bank accounts, equity funds, pensions, and cash. In high-net-worth divorces, there is a lot of focus on financial contribution during the marriage, usually by one party. Property and land, at home and abroad, may be split between the two partners, even when only one partner contributed to the purchase.
Businesses are the most significant asset, and valuation and distribution can take a while. Although they are not protected, sale or closure may be a last resort because it is not in the best interests of either party.
3. Prenuptial agreements
Prenups are not legally binding, but courts consider them more because they demonstrate the parties’ intention if the marriage collapses. They are an effective way of planning how property, businesses, inheritance, and other assets should be divided in case of a divorce. The court can uphold a prenup if it deems the agreement fair and realistic.
4. Finding Hidden Assets
It is common for spouses to withhold financial information to gain an advantage. It happens due to the number of assets involved, their complex structure, and their value. In some cases, independent Forensic Accountants can evaluate the assets each party discloses to ensure fairness and transparency.
Why is it important to distinguish marital and non-marital assets in a high-net-worth divorce?
It is critical to distinguish marital and non-marital assets in high-net-worth divorces due to the source, value, and the number of assets involved. Non-matrimonial assets include property acquired by one person before the marriage, including wealth from the family.
Marital assets typically include savings, property, and pensions and are considered joint regardless of who purchased the assets. Generally, the court will not share one party’s non-matrimonial property with the other unless the matrimonial assets are insufficient to meet the spouse’s or children’s needs.
Why are high-net-worth divorces more complex?
High-net-worth divorces are complex because they involve extremely high financial stakes. The wealth includes business and personal assets, properties, trusts, pensions, onshore and offshore assets, and inherited wealth. The family’s wealth can span decades and is usually structured for succession and tax efficiency, but rarely contemplates divorce.
Full disclosure can be complicated, especially when some assets are held in offshore trusts. It can also be challenging to distribute businesses and impossible or impractical to sell shares.
Often, jurisdiction impacts financial settlements heavily. For example, a couple may own property and live abroad, but one party has a permanent home in the UK. One party may want to have their divorce proceedings in the UK, where the courts are perceived to have more power and discretion in determining financial awards.
How can GloverPriest help?
Wealth division in a divorce has no standard formula, therefore, it is critical to consult a divorce lawyer.
Our team of specialised family law solicitors is here to provide you with support and advice on your high-net-worth divorce. Start your divorce online by completing this form. Alternatively, call one of our experts on 0121 794 5814 for further advice or use our contact form to request a callback.
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