In divorce, your family and your life change drastically. Virtually everything you have must be split up—including time with your children. For couples with a high net worth, the challenges are even more complicated. The task of dividing complex assets, business interests, and collectible property requires particular care and expertise. Both parties deserve a secure financial future and a fair division of assets, so the right legal representation is crucial.
At DiPietro Law Group, PLLC, we are committed to preserving your financial security during divorce. With over 60 years of combined legal experience, our Fairfax high net-worth divorce lawyers have helped countless couples reach divorce agreements tailored to their unique needs. If a peaceful resolution is not possible, we are prepared to advocate tirelessly to reach your objectives.
We invite you to schedule a confidential consultation at your convenience so we can explain how we can protect your interest in a high net-worth divorce.
How Is Property Divided in a High Net-Worth Divorce?
Much like any divorce, one of the biggest tasks in a high net-worth divorce is the distribution of assets. Unless you and your spouse signed a prenuptial agreement or are able to come to your own agreement on asset division, any marital property will be divided by the judge in court. Virginia is not a 50/50 state requiring marital property to be divided equally. Instead, the court will use various factors to determine an “equitable” division of property.
When ruling on the division of property in any divorce, including a high net-worth divorce, the family court judge will look at the following factors:
- Both spouses’ monetary contributions to the marriage, including income, the use of separate funds for mutual benefit/benefit of the marriage, and more
- Both spouses’ non-monetary contributions to the marriage, including household services, child-rearing, and any other relevant unpaid work
- The amount and type of assets, including liquid assets, real estate, businesses, investments, and any debts that may encumber certain properties or result in tax consequences
- Any behavior by either spouse that “wasted” marital assets or depreciated the value of marital assets, including hiding assets, destroying shared property, secretly transferring funds, etc.
When determining how assets will be divided, the court will also typically factor in the length of the marriage, the age and health of each spouse, and each spouses’ education level/earning capacity.
After weighing these and other relevant factors, the court will assign a “current market value” to all real property and divide these and other properties in a manner it deems “fair.” It is essential to make your attorney aware of any factors that should impact the division of assets, such as if you used assets acquired before your marriage to improve the home you lived in together.
Special Factors Involved in High Net-Worth Divorces in Virginia
Though high net-worth divorces are typically treated by the court as equal to other types of divorces when it comes to asset division, we understand that there are often complicating factors that require extra attention and care. Our Fairfax high net-worth divorce lawyers have experience handling the many aspects that make high net-worth divorces more complex.
Our firm can assist you with handling complex assets such as:
- Multiple real properties, such as vacation homes and/or rental properties
- Businesses, business property, profits, and equities
- 401 (k) accounts, pensions, and other retirement accounts
- Stocks and investment interests, such as stock options and private stocks included in employee benefits packages
- Other high-value real and personal property
In every instance, our goal is to help you preserve your assets and work toward a favorable resolution with as little conflict as possible. We understand, however, that collaborative divorce and mediation are not always feasible. When this is the case, we are ready to represent you and your best interests in the courtroom.
Classification of Assets and Debts
One of the most critical steps in a high net-worth divorce is the accurate classification of property and debts. Assets classified as marital are divided in divorce while property treated as separate will be retained by one spouse. Generally speaking, marital property is any property either spouse earned or acquired while they were married, even if the property is listed only in the name of one spouse. The same holds true for debt.
Assets and debt a partner owned before marriage is usually treated as their own separate property or obligation. If, during the marriage, one spouse inherits property, receives a gift, or obtains funds as a result of a personal injury lawsuit, those assets are usually also considered separate assets.
However, when separate assets are co-mingled with marital assets, they can lose their separate characteristic. Moreover, if those assets increased in value during the marriage, the amount of that increase is likely to be treated as marital property.
If a couple entered into a valid prenuptial or postnuptial agreement, the terms of that agreement will usually specify how most property should be classified, and those terms would override general presumptions about the property. Whether or not you have a marital agreement defining property terms, you need to ensure that your divorce lawyer is aware of all the factors that could indicate why certain property should be treated as marital or separate.
Valuation of Property in High Net-Worth Divorce
Some property is very difficult to value accurately. Certain retirement plan assets, for instance, can be valued at the time of separation, the time of divorce, or the time they are expected to be distributed. The value of rare collectible property is based on subjective opinion and can vary widely. And interests in a closely-held business are often the most difficult of all to assess fairly, particularly if the business lacks a thorough plan of succession that specifies valuation issues.
At DiPietro Law Group, PLLC, we work with professionals on a regular basis to ensure that all types of assets are valued appropriately. At the same time, we also factor the emotional element into the equation. If you know that there are certain assets that you really want to keep—or you know that your ex wants to hang onto—we can negotiate to take advantage of all opportunities to achieve the best results for your family.
High Net-Worth Divorce FAQs
Does net worth affect alimony?:
Assuming that the spouses have not entered into a pre- or postnuptial agreement for spousal support, courts are supposed to consider several factors when determining whether to award alimony. Section 20-107.1 of the Virginia Code lists 13 factors that impact the decision and allows courts to consider additional factors. One of the 13 issues listed is the property interests of each party, which would include their net-worth. Another factor is the standard of living during the marriage.
So, courts can certainly take wealth into account when making alimony decisions, and judges have considerable discretion when deciding how much weight to give to that factor. If a high-net worth couple lived a lavish lifestyle, the spouse seeking alimony has additional arguments weighing in support of alimony. It is important for both spouses to work with divorce attorneys who understand how to make the best argument in support of their position regarding alimony.
How is net worth split in a divorce?:
Assets that are considered jointly-owned marital property will be divided in a way the court finds to be equitable, unless a couple reaches their own agreement outside of court.
The first issue is to determine which property and debts belong to spouses individually and which are considered marital property. Generally, assets and liabilities each party held before the marriage are their separate property which they are entitled to keep in a divorce. The tricky aspect to this determination, however, is that if a spouse’s separate property is mixed in with marital property or used for both spouses, it might be treated as marital property. If one partner owns property that increases in value substantially during the marriage, the amount of that increase could also be treated as marital property to be divided.
Property that is inherited or received as a gift during the marriage is subject to similar treatment—it could be viewed as separate or joint property depending on the situation and persuasiveness of the arguments presented to the court.
Once property making up your net worth is classified as either marital or separate, the marital property is divided up in a way that seems fair to the court based on the factors described above.
How are retirement accounts divided during a high-asset divorce?:
Retirement accounts in a high-asset divorce can be challenging to value appropriately and to divide. In many cases, a specialist will need to draw up a Qualified Domestic Relations Order to give the administrators of the plan authority to distribute funds to the spouse who is not the account-holder. It may also be necessary to call in an expert to value the account particularly if a defined benefit plan is involved.
What will happen to my business in a high asset divorce?
Interests in a closely-held business can be treated like any other asset in divorce. However, if you built your business before the start of your marriage, the share of value that is considered marital property could be considerably less, so it is crucial to present evidence to establish the value at the time of the marriage if possible.
One spouse can agree to buy out the other spouse’s interest in the business with cash or by trading other assets as part of the property settlement. Business valuation becomes a critical part of the proceeding so to protect your interests, you may want to get an independent appraisal. Above all, make sure your divorce attorney understands your objectives for the business so your legal advisor can develop the best strategy to protect your interests.
Work with Fairfax Attorneys Who Understand All the Nuances of High Net-Worth Divorce
You’ve worked hard to get where you are, and you shouldn’t have to go back to square one after a divorce. Let the experienced high net-worth divorce attorneys at DiPietro Law Group, PLLC develop a plan to protect your interests so that you can emerge ready to move forward.