Everything You Need to Know About High Net Worth Divorce
Divorce is difficult for anyone. No matter your situation, dissolving a marriage can be a challenging and painful process. That being said, high net worth divorces can be even more complex. When more assets and income are involved, the process can quickly become tricky to navigate.
Attorney Daniel Dower is an expert when it comes to high net worth divorce proceedings. After graduating with a business degree at University of Texas at Dallas, Daniel completed a Master of Business Administration and Juris Doctor from Southern Methodist University. He has served as Chief Financial Officer of CHI Investment Corporation, a local real estate syndicator that sponsored partnerships in over $150M of multifamily and commercial real estate. He has also served as an executive and Director for multiple small businesses, and he remains licensed as an investment advisor in Texas. He is uniquely equipped to assist in high net worth divorces with complex financial situations. Daniel has worked as an attorney in multi-million dollar estate divisions, and his corporate experience helps him guide clients with business savvy. We spoke with Daniel about everything you need to know to prepare for, and navigate, a successful high net worth divorce.
What is considered “high net worth?”
A high net worth estate is over two million dollars. There is no particular formula to get to that conclusion, however when the estate is over two million dollars, there is more incentive to negotiate shrewdly.
What makes high net worth divorce so different from other divorces?
When it comes to dividing assets in a divorce, the courts begin with a 50/50 split. However, the parties may negotiate to change this arrangement. High net worth divorces make the stakes of these negotiations much higher. Awarding just one percent to either side accounts for tens of thousands of dollars. For example, for a $10M estate, each additional percent is $100,000. A thorough understanding of accounting, finance, and business valuations may be critical. This justifies having an expert attorney to keep the division of property equitable.
How should I approach a high net worth divorce?
If a high net worth divorce involves only the division of property and debt, then it should be treated as a business deal, plain and simple. Expect that the other side will be operating in that same mindset, keeping emotion out of the equation. If either side operates with emotional thinking rather than rational thinking, the cost of the divorce will rise due to additional legal work and court proceedings.
What can I do to prepare for a high net worth divorce?
Nail down experts from the very beginning. If you are valuing assets such as a business, be sure to meet with an expert as soon as possible. You need to get a baseline to know what value to negotiate in the overall case. In addition, make sure that the expert has experience testifying in the court assigned to the case. This way, if a trial becomes necessary, you have an advantage by having a familiar expert in front of your judge.
Second, make copies of any and all documents that you and your attorney deem relevant. Documents have a tendency to grow legs and walk off during a divorce. Tax returns, bank statements, financial statements, ledgers, and formation documents are some of the typical documents that need to be protected and copied.
What do I need to know about child custody and child support?
Child support is a calculation based upon income. That being said, the income is capped at the first $9,200 per month. So even though a party may make considerably more than $9,200 per month, the court will typically only factor that amount in setting child support.
For one child, support is 20% of that number, with another 5% for each additional child. If you have other children from a different relationship that you support, that will be a part of the equation as well.
Often, one party will want custody of the child on a primary basis, requiring child support from the other party. This can be a litigating factor that has a tendency to cause court proceedings when the non-primary party does not want to pay child support. The non-primary may seek a 50/50 custody arrangement for the child in an effort to lessen child support.
How can I protect my children from the stress of high net worth divorce?
Remember that children are like sponges and they absorb what is going on around them. Avoid making disparaging remarks about the other parent, and do not bring out your frustrations with the other party to the child. Not only is that harmful to your child, but the court will take that into consideration when awarding primary custody.
What is your number one piece of advice regarding a high net worth divorce?
Be nice. It is that simple. The nicer you are to your spouse, the easier it will be to navigate the divorce rationally. If you are constantly accusing or fighting with the other side, you will have more trouble maintaining a smooth process and reaching a fair agreement. Furthermore, you will ultimately pay significantly more for the divorce than may be necessary because of your actions.
If your spouse is unable to be nice, be nice anyway. I promise you it pays off, even if through testimony at court. The judge does not want to see immature behavior from either side. Cases can be “won” or “lost” due to behavior of the parties.
Finally, treat divorce as a business decision rather than an emotional roller coaster. If you approach divorce in this way, you will have much more success staying mentally sane, saving money, not affecting your children negatively, and looking better in the eyes of the court. Rational thinking and kindness are the key elements to executing a seamless, amicable, and successful divorce.
If you are in need of legal counsel or representation regarding a high net worth divorce, contact us. Our expert team is ready to help you. Schedule a consultation today.