‘High net worth’ divorce cases are typically more complicated than the majority of divorce cases, and require specialist experience to reach a successful conclusion. Paul Austin, litigation and divorce specialist at DMA Law, explains.
High net worth divorce cases are often substantially more complex due to the combination of assets, business interests, tax liabilities and pensions that are likely to be involved.
The divorce team at DMA Law has a number of specialists in private children, high net worth financial remedy and financial provision. We also have trained mediators and collaborative lawyers, which are crucial to make smooth progress and to reach a successful resolution.
DMA Law’s outstanding reputation has enabled it to attract as clients high-net-worth individuals, who are looking for advice from a very experienced and efficient team. Although this represents a very narrow field of work, the benefit to us in doing so is that we can provide high-quality service to a relatively small number of clients at any one time.
Open and reasonable Family Law
Family law should always focus on being open and reasonable, with both parties being open to sensible negotiation. However, that is not always possible, occasionally one party will be unreasonable and uncooperative, on these occasions there is no alternative other than swift, decisive action, including court action where necessary.
Business assets in divorce
Frequently in a high net worth divorce one or both of the parties may have assets relating to a business including a shareholding. Accurate business valuation will be crucial to ensure that your settlement properly reflects your entitlement. In many instances, it is necessary to appoint experts to assess these financial affairs.
There are likely to be a number of tax implications associated with the assets, which may arise when assessing your properties, employee contracts and benefits and other assets with financial value, which will require specialist knowledge.
If a pension portfolio exists it is necessary to look at whether the split is fair and you may consider taking independent advice on future investment.
There may also need to be negotiations regarding whether ‘maintenance’ payments need to be made to either yourself or your spouse over the coming years and whether risk exposure exists for either party.
Getting these aspects right is critical, in order to ensure your assets and interests are protected. High net worth divorces can be long and complex and you need to ensure you work with a solicitor with a proven track record in this field with access to the appropriate experts.
Will divorce affect my business?
It is common for partners to be part of a family business. Family enterprises can be structured in a variety of ways which include sole traders, partnerships or limited liability companies. A divorce will potentially impact upon the business, emotionally and/or financially. A business within a family cannot be ignored or shielded from the divorce process simply because one partner has no involvement in it.
A business can suffer irreparable damage if couples working together use it as a battleground. On the other hand, couples can remain working within the business after their divorce, particularly in amicable separations, although they will always be advised to ensure that there are clear boundaries around their continuing in the business roles
All the assets held by the couple, whether separately or together, need to be valued as part of the divorce – which includes the business interest. Every case is different. Courts have wide ranging powers but a family business will normally be treated as an asset of the marriage and a Court has to decide on an appropriate and reasonable way to divide those assets based on a number of factors.
This does not mean that a business will need to be sold, particularly if it is a successful enterprise. However, valuing a business can be one of the most contentious areas of the divorce process. There needs to be an understanding of who owns what and how much their interest is worth in that business?
Disputes between a couple can concern one’s contribution to the business and its success. These situations have resulted in high profile celebrity settlements and require detailed analysis of the history of the business. One simple solution is for one partner to buy out the other’s interest in the business and / or the business interest off-set against the value of other family assets. For example, the family home may be transferred to one party on the basis of the other retaining the family business. This possibility depends on the valuation of the assets generally and whether such transfers would result in fair settlements for both.
Sometimes a buy out or offset is not possible because a price cannot be agreed, or there is a lack of available funding, or each party is integral to the company’s continuing success. In these situations there needs to be alternate resolution. One could remain within the business working alone on the basis that the other continues to receive a fair portion of the income. These alternate business solutions require clear and concisely drafted agreements.
Anyone with a business interest who is considering divorcing needs to seek legal advice at the earliest opportunity. Advice can be given around the availability of protective measures although these need to be put in place long before separation is on the cards, if you would like to speak to a divorce solicitor call us for a free initial discussion call our divorce solicitors.