Preparing for a High-Net-Worth Divorce in New Jersey
While divorce can be stressful for any couple, divorcing with substantial assets can be especially daunting for spouses in New Jersey. In the case of a high-net-worth divorce, hiring experienced representation from a high-asset divorce attorney is imperative to protect what’s rightfully yours.
In New Jersey, high-asset divorces come with their own set of unique challenges and complexities. In this blog, we’ll explore what a high-asset divorce means in New Jersey and identify several key challenges that divorcing couples can face.
What Is a High-Net-Worth Divorce?
In New Jersey, a high-net-worth divorce (“high-asset divorce”) is best defined as a dissolution of marriage between spouses with significant wealth or assets. While there is no exact monetary threshold for high-asset divorces, the combined wealth of spouses in high-net-worth divorces generally totals $1 million or more.
In New Jersey, divorcing couples with substantial wealth or assets are considered separately by family courts due to the complexities of asset and property division, as it can be exceedingly more difficult to determine an equitable distribution in high-net-worth divorces that is fair to both parties.
3 Unique Challenges of High-Asset Divorces
It’s imperative for New Jersey couples with significant wealth to adequately prepare for their upcoming divorce proceedings to retain their hard-earned assets.
Various challenges can arise during high-asset divorces, including (but not limited to):
1. Complex Property Division
Complex property division is a common challenge in high-net-worth divorces due to the vast amount and diverse nature of assets involved. In these cases, couples have accumulated substantial wealth through various means, such as businesses, investments, real estate properties, retirement accounts, stock options, intellectual property, and more. Complexities can arise from the need to identify, classify, value, and distribute these assets in a fair and equitable manner.
2. Hidden Assets
Another common challenge of high-net-worth divorces is hidden assets. These are undisclosed or intentionally concealed marital assets that one spouse attempts to keep hidden from the other party during divorce proceedings. Hiding assets is often a challenge in high-asset divorces due to various factors, such as:
- Complex financial structures: High-net-worth individuals often have complex financial structures, such as multiple bank accounts, offshore accounts, trusts, investments, and business holdings. These intricate financial arrangements can provide opportunities for one spouse to obscure the existence of certain assets.
- The desire of one spouse to gain an unfair advantage over the other: One spouse may attempt to hide assets to gain an unfair advantage during property division. By concealing assets, they may hope to retain a larger share of the marital estate or reduce their financial obligations.
- Financial control and knowledge disparity: In some cases, one spouse may have significant control over the finances and possess a greater knowledge of the couple's assets. This knowledge disparity can make it easier for the financially dominant spouse to hide assets without the other party's awareness.
- Preemptive planning: Some high-net-worth individuals may strategically conceal assets well before divorce proceedings begin. They could transfer assets to third parties, create complex financial arrangements, or undervalue assets in anticipation of the divorce, making it more challenging to uncover hidden assets during the legal process.
- Lack of transparency: Lack of transparency between spouses can also contribute to hidden assets. In marriages where financial discussions are limited or one spouse manages all financial matters, the other spouse may have limited knowledge or access to comprehensive financial records.
- Use of offshore accounts and international holdings: High-net-worth individuals may utilize offshore accounts and international holdings to shield assets from scrutiny. These accounts and investments can complicate the process of identifying and valuing assets during divorce proceedings.
3. Alimony & Spousal Support
Alimony, also known as spousal support, is the financial support provided by one spouse to the other after divorce to help maintain a similar standard of living. In high-net-worth divorces, alimony and spousal support can be especially tricky to navigate.
In New Jersey, determining the appropriate amount and duration of alimony in high-asset divorces can be complicated by various factors, such as:
- Maintaining a standard of living: Alimony aims to help the recipient spouse maintain a similar standard of living enjoyed during the marriage. However, in high-asset divorces, the lifestyle and expenses of the couple may have been significantly elevated, making it challenging to determine what constitutes an appropriate level of support.
- Income discrepancies: High-asset divorces often involve significant income disparities between spouses. One spouse may have substantial earnings from investments, businesses, or professional practices, while the other may have a lower income or no independent income at all. Calculating an equitable amount of alimony requires careful consideration of these income discrepancies.
- Complex income sources: High-net-worth individuals may have diverse income sources, including investment returns, stock options, bonuses, and other non-traditional forms of compensation. Determining the appropriate amount of alimony requires a comprehensive understanding of these complex income structures.
- Long-term financial planning: High-net-worth individuals often have long-term financial plans, including retirement strategies, investment portfolios, and estate planning. Alimony calculations need to consider these long-term financial goals to ensure that the recipient spouse's needs are adequately addressed while allowing the paying spouse to maintain their financial plans.
- Changing financial circumstances: In high-asset divorces, the financial circumstances of both parties can be dynamic. Investments may fluctuate, businesses may grow or decline, and financial markets can be unpredictable. These changing financial circumstances further complicate the determination of alimony amounts and duration.
- Tax implications: Alimony payments can have significant tax implications for both the paying and receiving spouses. The tax treatment of alimony is subject to complex laws, and in high-asset divorces, the tax consequences can be substantial, making it especially critical to consider these implications when determining alimony.
Contact a High-Asset Divorce Lawyer in NJ
At DeTommaso Law Group, LLC, our compassionate family lawyers have over 125 years of combined experience representing couples and families in Somerset County and beyond. Whether you’re preparing for a divorce, child custody battle, or child support dispute, our award-winning family law firm has the in-depth knowledge and diverse skillset to prioritize your family’s unique needs from start to finish in New Jersey family courts.
Preparing for a high-asset divorce? Our compassionate family lawyers can help protect what’s yours. Call (908) 274-3028 to schedule a consultation.