Los Angeles High Net Worth Divorce Attorney

Complex Property Division in High Net-Worth Divorces

In high net-worth divorces, dividing assets can be far more complicated than simply splitting a savings account. Here’s a look at how various unique assets are handled:

• Intellectual Property: Intellectual property (IP) like patents, trademarks, copyrights, and brand names can be challenging to value. IP may represent significant value but isn’t always easy to assess. A professional evaluator is often required to determine its worth.
• Business Equity: If one or both spouses own a business, its value must be determined. This can involve a detailed business valuation, which may include reviewing the company’s financials, market potential, and intangible assets. Deciding how to divide business ownership or buyouts can get complicated.
• Retirement Accounts: Dividing retirement accounts like pensions, 401(k)s, and IRAs often requires a Qualified Domestic Relations Order (QDRO). A QDRO is a legal order that ensures retirement funds are divided fairly between spouses.
• Offshore Assets: Some high-net-worth individuals may have assets stored overseas. These assets may include bank accounts, real estate, or investments. Locating, valuing, and dividing offshore assets can be challenging due to international laws, requiring expert assistance.
• Stock Options and Private Equity: Assets like stock options, restricted stock units (RSUs), and private equity are not straightforward to divide. They may be subject to vesting schedules, restrictions, or may require specific formulas to value them.

Protecting Your Business in a Divorce

If you own or have a stake in a business, it’s crucial to protect its value during a divorce. Here’s how:

• Business Valuations: The value of a business is typically assessed by financial professionals who examine the company’s profits, debts, assets, and liabilities. The business may also be evaluated based on its future earning potential.
• Ownership Interests: Depending on the divorce settlement, one spouse may buy out the other’s interest in the business, or the business may be sold. Protecting the business can involve maintaining clear ownership documentation and having a plan in place for how it will be handled.

Prenuptial and Postnuptial Agreements

Prenuptial and postnuptial agreements can significantly impact the outcome of a high net-worth divorce. Here’s how:

• Prenuptial Agreements: These are legal contracts signed before marriage that outline how assets will be divided in the event of a divorce. They can protect individual wealth, limit spousal support, and clarify asset ownership, ensuring there’s no ambiguity if divorce occurs.
• Postnuptial Agreements: Like prenuptial agreements, postnuptial agreements are created during the marriage. These agreements can be used to clarify financial roles, protect assets, or address changes in financial circumstances. They provide a way for couples to outline how to handle finances during a marriage, reducing conflict in the event of a divorce.

Having either type of agreement in place can provide peace of mind and help protect assets during a high-net-worth divorce.

FAQs About High Net-Worth Divorce

How is the value of a business determined in a high-net-worth divorce? 

• The value of a business is usually determined through a professional business valuation. Experts analyze the company’s financial history, assets, liabilities, market conditions, and potential future earnings to determine its worth. This process can include reviewing tax returns, financial statements, and other relevant documents.

What happens if one spouse hides assets during a high-net-worth divorce? 

• If a spouse is suspected of hiding assets, legal steps can be taken to uncover them. This can involve discovery processes such as subpoenas, depositions, and forensic accounting. The court may also impose penalties for hiding assets, including a less favorable division of property or financial sanctions.

Can spousal support (alimony) be modified after a high-net-worth divorce? 

• Yes, spousal support can be modified after a divorce if there is a significant change in circumstances, such as a change in the paying spouse’s income or the recipient spouse's needs. However, in high-net-worth divorces, support amounts are often substantial, and modifications may require substantial evidence.

What impact does a high-net-worth divorce have on retirement accounts and pensions? 

• Retirement accounts and pensions are considered community property in California. They can be divided through a process called a Qualified Domestic Relations Order (QDRO). The QDRO allows the division of these assets between spouses without incurring tax penalties. It's essential to understand the tax implications and how these assets are divided.

How can I protect my assets during a divorce if I don't have a prenuptial agreement? 

• If you do not have a prenuptial agreement, there are still ways to protect your assets. You can consider creating a postnuptial agreement, or during the divorce process, you may work with your attorney to negotiate asset protection strategies. The courts will look at the community property laws in California, but proper legal representation can help secure your interests.

How does the court determine child custody in a high-net-worth divorce? 

• In a high-net-worth divorce, child custody is determined based on the child's best interests. While financial resources may play a role in ensuring the child’s needs are met, the court will focus primarily on factors such as the child’s emotional well-being, relationship with each parent, and each parent’s ability to care for the child. Financial stability may help in providing the child with the necessary resources but isn't the only factor.

Is mediation an option in a high-net-worth divorce? 

• Yes, mediation is often a preferred option in high-net-worth divorces, as it can help both parties resolve issues amicably without lengthy litigation. Mediation is less adversarial, and it can be particularly beneficial for complex financial issues and child custody matters. Both parties work with a neutral third-party mediator to negotiate a mutually agreeable settlement.