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High Net Worth Divorce

Family Law Attorneys in Foley

Divorce is always emotional and stressful but when significant assets have been accumulated over the course of the marriage, the process of divorce can be especially challenging and costly. Dissolving the marriage does not have to result in financial ruin and there are steps that can be taken to protect against and plan for the complex issues a divorce presents to high net worth individuals.

Some areas that complicate high net worth divorces are:

  • Dividing ownership in closely held businesses
  • Dealing with pensions and 401K’s
  • Resolving alimony and child support

Navigating these complex issues requires a keen understanding of multiple legal disciplines, including property law, business law, and tax law. Furthermore, all divorces involving minor children require a resolution of how custody and parenting time will be divided between the parents and a calculation of child support.

There are many ways to mitigate the risks associated with divorce by addressing the complex property division issues prior to marriage. The most common way this is done is through a prenuptial agreement. Some people may find this to be a distasteful topic when planning a wedding but it is important to understand that in addition to being a relationship of mutual love and respect, marriages are financial partnerships. Accordingly, just like a partnership agreement, operating agreement, or corporate bylaws, you should contemplate the division of assets upon dissolution.

Generally, prenuptial agreements are enforceable in Alabama provided that:

  • The agreement must be in writing and signed by the parties
  • Both parties must disclose debts and assets
  • The attorney drafting the agreement cannot represent both parties so the other spouse must have the opportunity to meet with an attorney

The prenuptial agreement is beneficial because it spells out how assets will be divided in the event of divorce. It can cover not only assets that each party brings to the marriage but also assets accumulated during the marriage. A fair and thorough prenuptial agreement can save time and money in the event of divorce because it spells out what happens to the property interests of the parties, thereby eliminating the need for a court to make that determination.

Division of Property

In an Alabama divorce, the property of the marriage must be divided equitably. This means that the division must be fair but not necessarily equal. In determining the fair division of property, the court may consider the length of the marriage, the age and health of each spouse, the custodial arrangement with respect to the children, any fault of a party in contributing to the dissolution of the marriage, and the standard of living during the marriage. Not all property is subject to division. Typically, property that was brought to the marriage or was inherited or received as a gift during the marriage is considered separate property and not subject to division. The court may make an exception for separate property used for the benefit of the marriage.

High net worth divorces often involve property interests that are uncommon in the average case. Holdings in closely held business entities, pension plans, and 401K’s could be subject to division if the court finds them to be marital property. Accordingly, in addition to a prenuptial agreement, when contemplating marriage, it is important to consider how intangible property, such as membership in an LLC or stock in a corporation will be valued in the event of a dissolution of the marriage. There are a variety of ways to approach these issues but the valuation method should be part of the organization’s governing documents. It may be necessary to consult with tax and business appraisal specialists but an experienced attorney should develop and facilitate the overall prenuptial plan. There are also federal laws with respect to certain retirement plans that must be complied with by separate court orders known as Qualified Domestic Relations Orders or QDRO. An experienced Foley divorce lawyer can determine whether your property division will require such an order.

Alimony & Child Support

Like most other divorces, high net worth divorces will involve an analysis of alimony and child support. There are two types of alimony in Alabama: Periodic alimony and alimony in gross. Periodic alimony is an allowance for the maintenance and support of the recipient spouse and is awarded on a periodic basis such as weekly, bi-weekly, or monthly and is modifiable by the court.

The court will consider the following factors in determining periodic alimony:

  • The length of the marriage
  • The age and health of the parties
  • The future employment prospects of the parties
  • The standard of living of the parties during marriage
  • The relative fault of the parties for the breakdown of the marriage

Alimony in gross, on the other hand, is typically a one-time property settlement, which is not modifiable by the court. Child support is awarded according to specific guidelines that are published by the state and is based on the needs of the children and the ability of the parents to provide for the child. The calculation is formulaic, based on tables in the guidelines for most cases, but in high net worth cases, the court uses guidelines and evidence presented with respect to the child’s needs and the parents’ means to determine the appropriate amount.

Not all, but many of the above issues can be dealt with pre-marriage. Having a prenuptial agreement protects not only yourself but your business partners and other family members. Likewise, it requires future mates to have a serious and honest conversation about net worth and other financial issues that are sure to arise during the course of the marriage. A fair agreement should provide peace of mind to both parties and hopefully makes the marriage stronger. Without proper planning, a divorce involving significant assets can result in financial stress on both parties.

Hiring a Daphne Family Lawyer

Regardless of whether you are considering a prenuptial agreement or contemplating a divorce, it is important to have an experienced family law attorney in Foley to provide sound counsel. Let your attorney worry about these complex property issues. At Caldwell Wenzel & Asthana, we will protect you from the perils associated with a high net worth divorce and fight for fair property distribution in court. Likewise, we can assist you in evaluating your assets prior to marriage in order to draft fair and thorough prenuptial agreements and business dissolution plans before marriage.

To schedule your complimentary consultation, please either contact us online or call us today at (251) 444-7000.

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