The benefit of a high net worth divorce is there is generally money to divide to allow the divorcing spouses to live a comfortable lifestyle after divorce; however, this type of divorce litigation often presents with the form of complex financial, tax, and legal questions.
If so, these are necessary to be answered with relative precision before and at trial so the parties can best litigate their legal positions and the trial court has sufficient evidence to divide the marital estate in just and reasonable manner.1 This blog covers four of the challenges that routinely occur in a high-asset divorce, although they may appear in any given case:
Inheritance. An inheritance is a part of the marital estate. Generally, the courts divide inheritances relatively consistently with the equal presumption of division (assets – liabilities = net marital estate to divide on an equal presumption). However, skilled advocates can make arguments for an unequal division, particularly where the inherited property has been kept sole and separate and not commingled. On the other side, the argument is such asset is clearly in the marital pot. The larger the estate, depending on the facts, the more latitude that is provided for settlement negotiations or trial theories for an equal or unequal division.
Stock Options. Under the present state of Indiana law, unvested stock options are deemed to be valueless because they are contingent on future events, primarily the party continuing to work at the institution. However, the law is fluid and allows for arguments for change and with the right type of unvested stock options, compelling arguments may be made for some consideration. An example is if a particular company is about to go public with an IPO. While these arguments are not the strongest, seasoned divorce attorneys have all made these arguments with more or less success, as the logical inference is, “If these are valueless, what is the harm in somehow apportioning them.”
Foreign Real Estate. One legally tricky and thorny area involves foreign real estate. The laws between the states create difficult issues in many divorces, but add a foreign parcel of property and the matter can become a legal nightmare, with issues of admitting the foreign law to valuation and translations. In addition, there are places where a United States divorce decree apportioning or otherwise addressing foreign property may not be enforced. All of these questions must be answered before trial in order to properly prepare for and try the case.
Pre- and Post-Nuptial Limitations. Indiana has a uniform premarital agreement act that allows parties contemplating marriage to contract how their estate will be divided in the event of a divorce. Additionally, a post-nuptial—the consideration being staying in the marriage to try to work it out—is also recognized. However, pre- and post-nuptials have many risks, such as the aspect of full disclosure therewith or challenges as simple as language barriers and legal comprehension. Where these are involved in a significant estate, a challenge is likely to be considered, lodged, and litigated, making the litigation last longer and cost more legal resources.
We hope these four key challenges in high-asset divorce provide you with some insights into the legal system, divorce, and high-asset estates. If so, it has met its educational purposes. This blog post was written by attorneys at Dixon & Moseley, P.C. who handle complex and high asset divorce cases throughout the State. This blog is not intended as legal advice or a solicitation for legal services. It is advertising.