Divorce is a complicated process for anyone, as it can be an emotionally difficult decision, as well as have an impact on your finances, where you live, your relationship with your children, and more. There are also factors that can make a divorce even more complicated, and one such factor is having significant wealth.
If you and your spouse enjoyed wealth during marriage, you likely considered it to be a positive aspect of your life. If you are facing divorce, it is important to take the necessary steps to protect your rights when it comes to financial matters. You want a trusted divorce attorney handling your case who has experience handling high-asset cases.
Community Property Division
In California – and several other states – all the property and assets you amass during your marriage are considered to be community property. The property that you brought into your marriage is separate property, as long as you were able to keep it separate for the duration of your marriage.
The following are some examples of separate versus community property in a high wealth marriage:
- Trust payments in your name only that you keep in a separate account and do not use for marital purposes are separate property
- Trust payments that you deposit into a joint account and use for the family will be community property, even if they are initially in your name only, since you commingled the payments with community funds
- Real estate that your spouse purchased prior to the marriage is separate property, though any appreciation during the marriage will be community property
- Real estate that is purchased in your name only during the marriage is still considered to be community property
- Income earned by your spouse, including bonuses and commissions, during the marriage is community property
- Business interests owned prior to marriage are separate property, but any increase in value during the marriage is community property
As you can see, determining what is community or separate property can be a complicated matter.
In addition, spouses will high wealth often have community property and assets that can be more complex to divide. These can include:
- Investment portfolios
- Primary residence and vacation homes
- Residential and commercial investment properties
- Multiple cars or trucks
- Boats and other recreational vehicles
- Offshore accounts
- Retirement plans
- Business interests
- Art or jewelry collections
- Costly fashion
You will need to make sure that everything is appraised properly, so you know the value of all of your assets and property. Then you will need to determine how to divide all of the community property as evenly as possible. This can require extensive negotiation, and you want a lawyer who can fight for your fair share of the community property.
Often, in wealthy relationships, one spouse is a high earner, which means the other spouse does not need to work. If you forewent a career to care for your children while your spouse built their own career, a divorce can take away all of your financial support. Without recent job experience, you might not have the ability to find employment that is sufficient to support yourself and your children.
California law allows the court to order one spouse to pay spousal support to the other following a divorce. This is often a major issue in high-wealth divorces, and it can be a contentious one. If you need alimony, you should fight for the full amount and duration of support you need. On the other hand, if you would be the payor, you want to make sure that you do not have an unfair order against you.
Some factors that determine spousal support include:
- The length of the marriage
- The standard of living enjoyed during the marriage
- Each spouse’s contributions, including financial and non-financial support, such as household or child care
- One spouse’s support of the other’s education and career
- The employability – including age and health – of each spouse
- The other assets, property, and financial resources that each spouse will have post-divorce
An experienced lawyer can ensure that you get a favorable spousal support determination regardless of which side of the order you are on.
Prenuptial or Postnuptial Agreements
Many wealthy couples have agreements in place that help to dictate how they will resolve certain issues in their divorce. Having these agreements can help to save resources and stress in a divorce – that is unless there are questions or concerns regarding the enforceability of the agreement.
Some issues governed by prenuptial or postnuptial agreements include:
- How much (if any) spousal support one spouse will receive
- Which property will remain separate property instead of getting divided as community property
- Who will get to retain certain residences or community property
An enforceable prenuptial agreement will dictate certain divorce terms. However, what if you have concerns that your agreement was not valid? Your divorce lawyer can review your prenup or postnup and advise whether some or all of it might be unenforceable. Some reasons for this might be:
- The agreement was verbal and not in writing
- You were coerced into signing
- You signed something induced by fraud
- Your spouse failed to disclose the necessary financial information to you prior to signing
- You did not have access to your own attorney who could advise you whether to sign the agreement
- Some of the terms were unconscionable or would leave one spouse destitute
A lawyer can seek to have some or all of the agreement thrown out if needed to protect your rights.
If you have children, it is likely one spouse will be ordered to pay child support to the other until the child is a certain age. California has guidelines for standard child support, but these might not apply to wealthy families. This is because additional child support might be necessary fro the child to maintain their usual standar of living. You can request that the court deviate from the standard child support guidelines and order more support than would normally be available to you.
The above are only some of the many ways that wealth can complicate a divorce. Always work with a lawyer who knows how to represent wealthy clients throughout the divorce process.