In some ways the differences in the potential impact of divorce on the mental health of high net worth individuals as compared to the experiences of their less affluent peers in similar circumstances are often tied to the impacts of high net worth on divorce. While all Tennessee divorces will require decisions on at least some of the same key issues, and any divorce is likely to be shaped to some degree by the shared histories and distinct personalities of the individuals going through the process, often high net worth divorces involve complicated financial considerations that are less common among couples who simply have less property to divide, and fewer options for how to organize their lives going forward.
Even though, on the one hand, having plenty of money to work with can be a tremendous advantage and a source of security, the management of assets – and their division in a divorce – can also cause considerable stress. A Tennessee family law attorney with experience in handling high net worth cases may be able to offer you advice tailored to your unique concerns in a private consultation. Call 888-748-KING to speak with a member of our team.
High Net Worth Divorce Complications
There are a number of factors that are common in high net worth divorces that can complicate the divorce process compared to divorce for people in middle to lower income tiers. How these factors affect the mental health of high net worth individuals going through a divorce can be unpredictable, varying widely from one person to the next. Always seek appropriate medical advice if you are experiencing concerning issues, and consider choosing a family law attorney who is willing to work with you to prioritize case management strategies designed to minimize the stressors associated with your divorce if you think the process is negatively impacting your mental health.
Marital Agreements
Marriages can benefit from the relative certainty afforded by a prenuptial agreement (often called a “prenup”) or even a postnuptial agreement signed after the marriage has been officially registered, regardless of income. Unfortunately, nothing is 100% foolproof, and spouses entering into a divorce process will sometimes try to challenge the terms of a marital agreement they previously signed in good faith. On the other hand, sometimes spouses who years ago signed their agreements in good faith and hope for the future may find themselves going through a divorce, only to discover that their partner failed to exercise that same honesty and integrity along the way.
For all of these reasons, the divorce process for couples with marital agreements not infrequently involves challenges to the validity or enforceability of these contracts. High net worth individuals are more likely, as a general rule, to have these agreements in place than are spouses in less affluent households. As a result, the impact of divorce on mental health due to stressors arising from challenges to marital agreements can be especially common in high-income divorces. A renewed sense of betrayal, as well as awareness of financial uncertainty, can make these challenges stressful for the individuals involved.
Complex Asset Division
When there is no marital agreement – or when the marital agreement is found to be unenforceable or flawed in some way – the Tennessee divorce process for high net worth individuals can often involve considerable complexity in determining the fair distribution of assets between the spouses. The type as well as the number and value of assets owned by high net worth individuals may differ from those held by individuals of more moderate means. In particular, high net worth divorces are much more likely than divorces among the less affluent to involve:
Types of Hard-To-Value Assets
The Office of the Comptroller of the Currency (OCC) provides specific guidelines to financial institutions regarding the management of “unique and hard-to-value assets.” The OCC provides a list of asset types that generally belong in this category, including: Mineral interests, interests in closely held businesses, real estate properties, life insurance policies, tangible assets (a potentially broad subcategory), and collectibles.
Challenges in Dividing Hard-To-Value Assets
Although high net worth individuals seeking to divide these assets in the course of their divorce proceedings may not face all of the regulatory scrutiny the OCC applies to “fiduciaries” responsible for the management of unique or hard-to-value assets, many of the difficulties attendant upon their accurate valuation and the potential complexities involved in separating spouses’ interests without diminishing the total value of the asset in question can greatly complicate the division of property in divorces where the spouses have previously shared ownership of unique and hard-to-value assets. In addition, real estate properties, closely held businesses, and collectible items often hold substantial emotional as well as financial value, so the division of marital property in these cases can take an outsized toll on both parties.
Impacts of Divorce on the Financial Futures of High Net Worth Individuals
High net worth marriages are disproportionately likely to involve a substantial income disparity between the spouses. In fact, many high net worth families are single-income households, in which one partner maintains most or all of the family’s domestic concerns while the other supports the household financially. While this arrangement may make sense during the course of a marriage, it can complicate a high net worth divorce in at least two important ways:
- The division of marital property: Tennessee is what is known as an “equitable division” state, which means that during a divorce the couple’s formerly shared property is distributed fairly, but not necessarily equally, between the spouses. A truly fair distribution of assets can be difficult to calculate, and even more difficult to allocate, in cases where one spouse’s contributions have been significant, but not necessarily financial, over the course of the marriage. Such considerations can be further complicated in situations where substantial portions of the marital property consist of hard-to-value assets that present their own complex issues in valuation and division. A Tennessee divorce attorney with King Law Offices may be able to help you determine how the provisions for the division of both assets and debts outlined in Tenn. Code Ann. § 36-4-121 apply to your situation.
- Alimony awards: Tennessee law explicitly acknowledges the significance one spouse’s non-financial contributions often make to the smooth running of a household in the state’s laws regarding alimony. Tenn. Code Ann. § 36-5-121(c) explicitly provides for the judge overseeing a Tennessee divorce case to take into consideration the importance of homemaking activities in determining whether to award alimony, and how much to award. Particularly in divorces where the earning potential is sharply uneven between the spouses, disputes over arrangements for one spouse’s financial security after the divorce can often become hotly contested issues during the proceedings.
Besides both of these considerations, when one spouse’s work history is significantly shorter or less robust than the other’s, that spouse may be at a disadvantage going forward. This disparity can sometimes have unforeseen consequences on mental health, as the higher-earning spouse may struggle with feeling that they have been used for their money, while the lower-earning spouse may suffer from the feelings of anxiety associated with chronic financial uncertainty, as well as bitterness about potential career opportunities missed along the way.
Call a Tennessee Divorce Lawyer
High net worth individuals approaching the close of their marriages will experience many of the same emotional challenges as their lower-income peers. However, the impacts of divorce may be different in some respects, owing in part to the greater complexity that often attends the division of marital property in these situations. High net worth divorces can also sometimes take longer than those between less affluent couples, owing to the need for complicated financial evaluations and sometimes extended negotiations. An experienced Tennessee divorce attorney may be able to provide you with guidance regarding strategies for minimizing the potential for any negative impact of divorce on your mental health. Call 888-748-KING today to schedule a consultation.