What Issues May Arise in a High Net Worth Divorce?
Couples with substantial assets may face several challenges during a divorce. Individuals in high net worth divorces may have diverse compensation structures, including stock options or restricted stock units, carried interest, and perquisites. Individuals employed by hedge funds or private equity firms are generally compensated differently than W-2 employees. Due to these compensation structures, a forensic accountant may help determine such an employee’s actual income available for alimony and child support purposes.
Additionally, high net worth couples often have a variety of assets, such as multiple homes, trusts, stock options or restricted stock, closely-held business or family business interests, retirement benefits, artwork, or antiques. These types of assets may require expert analysis to determine their value. This could be, for example, real estate appraisers or business evaluators.
Do High Net Worth Divorces take Longer to Resolve?
Not necessarily; it depends on numerous factors.
What Types of Documents are Disclosed in a High Net Worth Divorce?
In any Connecticut divorce, discovery is broad. The goal is to achieve full transparency concerning the family’s finances.
Mandatory discovery in Connecticut includes documents related to an individual’s income, including income tax returns, W-2s, K-1s, and 1099s. Additionally, documents related to a party’s financial accounts, such as a bank, brokerage, and retirement accounts, must be produced. When a high net worth divorce involves a trust, the trust instrument, account statements, records related to distributions, and income tax returns are also produced. Finally, in situations where an individual has an interest in a business, related documents are produced. These documents may include vesting schedules, Profit and Loss Statements, General Ledgers, projections, and income tax returns.
Could my Employer be Subpoenaed in a High Net Worth Divorce?
Yes. An employer, in any case, maybe subpoenaed to a Deposition or Trial to testify about compensation components and other job-related issues.
Should I Participate in Mediation in a High Net Worth Divorce?
The Mediation format that typically works most efficiently and effectively for high net worth couples includes each party being represented by counsel and hiring a third party mediator to resolve any issues that remain in dispute after the parties have done their best to negotiate terms with their counsel. This generally occurs once a divorce action has been commenced and documentation has been exchanged. The parties and counsel will first attempt to work through parenting and financial issues. The third-party mediator is usually a retired family law judge or seasoned family law attorney. In this scenario, each party’s divorce lawyer will prepare a factual summary and proposed orders to submit in advance to the Mediator. Mediation is private and confidential as opposed to hearings or trials, which take place in a public courtroom.
Some couples may opt to attend Mediation in a different format, without counsel and generally prior to filing an action. In high net worth cases, this is sometimes less productive than the scenario outlined above, given that the finances may be complicated and beyond the specific understanding of one of the parties. Generally, parties in high net worth divorce cases are more comfortable having the input of experienced counsel to provide context and guidance.