Divorces are often challenging, but their complexity can increase substantially when they involve significant assets, such as real estate portfolios. These divorces, known as high net worth (HNW) divorces, differ from others since they involve more assets of a higher value that require dividing between the spouses as part of the divorce process, and due to asset division having a large impact on each spouse’s financial future, understanding how the divorce courts are likely to split real estate holdings and other valuable assets can be highly beneficial for wealthy individuals considering divorce. Learn about the different real estate considerations in a high net worth divorce, and discover how a knowledgeable South Carolina family law attorney can help with these types of divorces; get in touch with King Law Offices at (888) 748-KING to organize a confidential discussion.
What Is Considered a High Net Worth Divorce?
While no official definition related to an HNW divorce exists, divorces concerning assets worth at least $1 million have traditionally fallen into this category. However, due to inflation, these divorces tend to now involve assets totaling several millions of dollars.
Is Property Split 50/50 in a Divorce?
While community property states tend to divide marital property evenly, Tennessee, South Carolina, North Carolina, and various other states split these assets per the equitable distribution doctrine. According to the Office of Justice Programs, this involves the courts treating each party fairly with regard to asset division but not necessarily equally. Divorce courts consider various factors when determining how to fairly distribute marital assets, including the marriage length, each spouse’s contributions to obtaining the assets, the spouses’ earning capacity and current financials, the assets’ value, the spouses’ health and age, spousal support/alimony awards, and any spousal conduct during the marriage that may have led to the divorce.
What Is the Average Net Worth After Divorce?
According to a study on 9,000 individuals, divorce reduces an individual’s wealth considerably (up to as much as 77%) compared to someone who is single, although a marriage that lasts tends to lead to increased wealth (often beyond merely adding the value of the couple’s assets together due to sharing household responsibilities that allow for more earning opportunities). Additionally, those who experience divorce usually encounter a decrease in their wealth before the end of the legal process; this is a result of many individuals undergoing separation prior to divorce and working less to focus on their marriage difficulties.
What Are Considered Marital Assets?
Marital property refers to assets purchased during the course of a marriage using the money earned while married. Other examples of marital assets include gifts made between spouses, the increase in value of non-marital property during the marriage (including retirement plans), and real estate held by tenants by the entirety.
By contrast, non-marital assets are those that a single spouse owns exclusively, such as assets owned prior to marriage, inheritances left to only one spouse, non-interspousal gifts, assets mentioned in marital agreements, and income from assets acquired outside of the marriage. Generally, the courts only split marital property during a divorce. To understand more about the various real estate considerations in a high net worth divorce, and for general divorce assistance, consider contacting an experienced Tennessee family law attorney; reach out to King Law Offices today to arrange an initial case review.
What Are the Real Estate Factors To Consider in an HNW Divorce?
HNW divorces usually involve complex assets ranging from liquid assets (bonds, stocks, securities, and bank accounts), savings, and retirement and investment funds to tangible items like art, antiques, collectibles, and jewelry. However, real estate holdings are other tangible assets that feature heavily in HNW divorces, usually forming a significant proportion of a married couple’s assets, consisting of vacation and investment properties, land, and the family home. Here are the key factors to consider regarding real estate and other high-value assets in HNW divorces.
Asset Identification and Valuation
An important consideration in HNW divorces involves correctly identifying non-marital and marital property and obtaining precise valuations of these assets, which ensures fair asset division. Wealthy individuals often have a selection of diversified and complex investments that can be challenging to categorize and quantify, particularly when held abroad (due to currency conversions and market fluctuations) or in trusts and offshore accounts (because of a lack of transparency). In terms of real estate holdings, these investments require thorough appraisals to determine their true value, influenced by numerous factors, such as the value of properties of a similar size and location.
Tax Repercussions
High-value assets, including real estate, can have substantial tax implications for each spouse during a divorce, impacting whether the parties decide to retain, divide, or sell these assets. Due to wealthy couples often having complicated financial structures to improve tax efficiency, such as intricate investment vehicles, trusts, and offshore accounts, asset division may precipitate certain tax liabilities that the spouses might want to take into account during settlement negotiations. Some notable real estate considerations include whether the spouses own property abroad, as varied reporting requirements and tax regimes may cause complications, and determining the assets’ net value (after tax); for instance, when splitting appreciated assets, factoring in capital gains taxes.
Privacy Issues
Many HNW individuals prioritize confidentiality to safeguard their privacy during divorce proceedings, such as their personal information and details about their finances, including real estate holdings. Example methods of privacy protection include utilizing confidentiality agreements, which only permit attorneys, accountants, appraisers, and other relevant professionals access to spouses’ private and financial information, and opting to settle outside of court as much as possible, using private divorce resolution avenues, like collaborative divorce or mediation.
Marital Agreements
Marital agreements are particularly common for wealthy couples, outlining the division of liabilities and assets between the spouses should the marriage end, which helps ensure fairness and clarity for both parties. Generally, these agreements minimize divorce costs as they avoid disputes regarding key marital issues, such as the division of high-value assets like real estate. Complications, however, may arise if one of the parties disputes the agreement’s validity, potentially as a result of imprecise terms, highlighting the importance of carefully preparing these documents to improve enforceability.
Continue This Discussion With a Tennessee or South/North Carolina Family Law Attorney To Find Out More
Handling an HNW divorce effectively, such as one with valuable real estate, business interests, and/or complex investments, requires a highly thought-out and tailored strategy. Such an approach takes into account privacy, business protection, and asset valuation, among other factors, helping individuals overcome the challenges of HNW divorces. Gain a more detailed understanding of the real estate considerations in a high net worth divorce, and learn how King Law Offices can support individuals through complicated divorces while safeguarding their personal and financial interests; call (888) 748-KING to discuss your divorce queries with a seasoned North Carolina family law attorney.