The Ultimate Guide to High-Net-Worth Divorce in New York

Are you going through a high-net-worth divorce in New York and looking for guidance? The team at Aiello & DiFalco LLP can help you through this tough time. Our lawyers have extensive experience with high-net-worth divorces and know how to handle the unique considerations they involve. We can help you determine how to split your assets, plan for support payments, and much more. Lastly, we can also represent you in court to get the fair outcome you deserve if necessary.

Understanding your rights and options is the first step toward a fresh start. That’s why Aiello & DiFalco LLP offers a confidential, no-obligation consultation. This meeting is a chance for you to learn how we can help you and to ask any questions you have about the divorce process. Don’t wait to get the support you need. Contact Aiello & DiFalco LLP today to schedule your complimentary consultation and start moving forward.

What Is a High-Net-Worth Divorce?

A high-net-worth divorce is a special type of divorce in which one or both spouses have significant property, assets, and investments. This kind of divorce differs from a typical divorce because of the inherent challenges of dealing with complex, valuable assets. The assets in high-net-worth divorces are often complicated items like businesses, stocks, luxury items, and real estate, which can make the divorce process longer and more complicated.

In a high-net-worth divorce, both spouses must determine how to split their assets fairly. These divorces also often involve large amounts of spousal support or child support. High-net-worth couples must hire knowledgeable attorneys and experts who can accurately value their properties and investments for division. Lawyers who handle high-net-worth divorces have a strong understanding of finance and law, as well as tax issues, which enables them to help their clients navigate these challenges effectively.

High-Net-Worth Divorces in New York

Many wealthy people live and work in or around New York City. The Big Apple has the most affluent people compared to any other city around the globe. A recent financial report revealed that about 345,600 millionaires live in New York. In other words, more than four percent of New York’s 8.38 million people have assets worth more than $1 million. This includes high-value assets like houses, retirement assets, cash, and stocks.

In addition, the city is home to at least 15,470 multi-millionaires with assets over $10 million, 737 centi-millionaires with a wealth of $100 million or more, and 59 billionaires. This makes New York City the world’s top city in terms of wealth. The total amount of money and assets that New Yorkers have is worth more than $3 trillion. This amount exceeds the total private wealth in many G-20 countries – the world’s biggest national economies.

As a result, high-net-worth divorces happen often here. In these divorces, couples must divide considerable wealth, possibly including expensive homes, large savings accounts, and valuable investments. Handling a high-net-worth divorce in New York City requires a good lawyer who knows how to deal with significant assets and complex financial issues.

The Goals of a High-Net-Worth Divorce

When people with lots of money and assets go through a divorce, their goals often include protecting wealth, safeguarding business interests, and maintaining high living standards. Here are some common examples of primary goals in high-net-worth divorce cases:

  • Fair Asset Division: One major goal is to divide marital assets fairly. This involves figuring out the value of everything the couple owns, like houses, businesses, and investments. The aim is to ensure each person gets a fair share based on their contribution to the marriage. This process can be complex, often requiring experts to accurately assess the value of various assets.
  • Appropriate Child Support and Custody Arrangements: Ensuring the well-being of any children involved is another key goal. Parents want to agree on who the children will live with and how they will share parenting time. They must also determine how much money, if any, one parent will pay the other for child support. The goal is to keep the children’s lives as stable as possible, with minimal disruption to their routines and the lifestyles to which they are accustomed.
  • Fair Spousal Support Payments: Sometimes, one person might need financial support from the other after the divorce. This is especially true if one person earned more money or stayed home to care for the family. The goal is to negotiate a spousal support agreement that allows the lower-earning spouse to maintain a similar standard of living until they can support themselves.
  • Privacy Protection: Many high-net-worth individuals value their privacy and want to keep the details of their divorces out of the public eye. They might aim to handle their divorce in a way that carefully protects their personal and financial information. This often involves negotiating settlements out of court and using confidentiality agreements to keep the details private.
  • Preservation of Business Interests: If one or both spouses own a business, they will want to protect it during the divorce. The goal is to ensure the company remains successful and doesn’t lose value because of the divorce. This might involve one spouse buying out the other’s share or making arrangements to co-own the business in a way that doesn’t affect its operations.

The High-Net-Worth Divorce Process

Going through a high-net-worth divorce in New York City involves several key steps. This process is often more complex than a regular divorce due to the significant assets involved, and each step must be carefully managed to ensure a fair and equitable outcome. Let’s explore the typical steps in the high-net-worth divorce process:

  • Determining the Grounds for Divorce: In New York, grounds for divorce can range from irreconcilable differences to fault-based reasons. In nearly all cases now, the divorce is based on the marital relationship being irretrievably broken for at least six months, but the parties must resolve all of the financial and custodial issues before they can proceed with a no fault divorce.
  • Filing for Divorce: The next step is when one spouse officially files for divorce. This action starts the legal process. The person filing must serve their spouse the divorce papers. This step is vital because it sets the stage for everything that follows. 
  • Gathering Financial Documents: Next, both spouses must gather and share detailed financial documents. This includes information about all their assets, like bank accounts, investments, properties, and businesses. This step is essential for understanding what the couple owns and how much everything is worth so they can make fair decisions later on.
  • Asset Valuation: After identifying all assets, the next step is determining their value. This often requires hiring experts such as appraisers, accountants, and financial analysts or financial planners. These professionals determine how much complex assets like businesses and investments are worth. Correct valuations are key to dividing assets fairly between high-net-worth spouses. Financial planners may provide lifestyle and budget analyses. 
  • Forensic Accounting: Hiring a forensic accountant might be necessary in some high-net-worth divorces, especially when one spouse suspects the other of hiding assets or underreporting income. These professionals are skilled in examining financial records to uncover hidden assets, valuing complex investments, and ensuring all income gets accurately reported. Their findings can play a key role in the equitable distribution of assets.
  • Business Valuation: If either spouse owns a business or a share of a business, determining its value is vital. This process often requires the skill of valuation experts who can assess the market value of a company, considering its assets, market position, and earning potential. 
  • Tax Implications Analysis: High-net-worth divorces often come with significant tax implications. The transfer of assets, the division of investment accounts, and spousal support payments can all have lasting tax consequences. Consulting tax professionals to analyze and minimize potential tax liabilities for both parties is an important step.
  • Estate Plan and Trust Modifications: For individuals with extensive estate plans or trusts, adjusting these documents is a key step in a high-net-worth divorce. This might involve revising wills, trusts, or beneficiary designations to reflect the new marital status and asset division.
  • Negotiating a Settlement: With all financial information on the table, the spouses can begin trying to negotiate a settlement. This includes deciding how to split assets and any support payments one spouse will make to the other. If negotiations do not result in a mutual agreement, the couple might turn to mediation or alternative dispute resolution methods.
  • Court Proceedings: If the spouses still cannot agree, the divorce could go to court. In court, a judge will hear the case and make decisions about dividing assets, support payments, and child custody arrangements. Court proceedings can be lengthy and costly, but sometimes they are necessary to resolve complex issues.
  • Finalizing the Divorce: The last step involves a judge signing a divorce decree to finalize the divorce. If the spouses settle on their own, the judge usually approves it. If the case goes to court, the decree will reflect the judge’s decisions. Either way, the divorce decree legally ends the marriage and outlines the terms for the couple’s post-divorce future.
Mansion on Long Island New York

The Assets Being Distributed in a High-Net-Worth Divorce

In a high-net-worth divorce, couples often have to divide a wide range of valuable assets. These assets include everything from physical properties to investments and business ownership stakes. The more diverse and complex the assets, the more complicated the divorce process can become. Here’s a list of examples of the types of assets that might be at stake in a high-net-worth divorce:

  • Residential properties
  • Vacation homes
  • Commercial real estate
  • Rental Properties
  • Bank accounts
  • Investment accounts
  • Stocks and bonds
  • Mutual funds
  • Retirement accounts like 401(k)s or IRAs
  • Pensions
  • Life insurance policies
  • Annuities
  • Business ownerships or partnerships
  • Professional practices
  • Capital investments in other businesses 
  • Cryptocurrencies
  • Commodities like gold or silver
  • Offshore accounts
  • Trust funds
  • Patents
  • Stock options 
  • Executive compensation plans
  • Intellectual property rights
  • Art collections
  • Jewelry
  • Luxury vehicles
  • Boats or yachts
  • Collectibles like rare coins
  • Antiques

How Are Assets Usually Split in a Divorce?

New York uses an “equitable distribution” rule to divide assets in a divorce. This means the court aims to split assets fairly, which does not always mean an equal 50-50 split. The court looks at many factors to decide what’s fair. These factors include how long the marriage lasted, each person’s relative income and assets, and what each spouse might need in the future. High-net-worth divorce matters may require a more nuanced approach to the proper percentage, which may vary depending on each asset and the overall distribution.

The court first decides which assets are marital property and which are separate property. Marital property includes all assets and debts the couple acquired during their marriage. Separate property includes all assets and debts acquired before the marriage or received as individual gifts or inheritances during the marriage. Only marital property gets divided in divorce.

Each spouse must fully disclose information about all of their assets. Hiring experts like appraisers or financial analysts is sometimes necessary to determine how much these assets are worth. Once the court knows the value, it decides how to split them equitably. This might mean one spouse keeps the shares in a business while the other gets more investments or cash. The goal is to ensure both people can move on with a fair share of the assets from their marriage.

Assigning Value to Assets During a Divorce

Assigning value to assets is vital during a high-net-worth divorce in New York. This process helps everyone understand how much each property, asset, business, or investment is worth. This is not always easy because the value of some things can change over time, like stocks or real estate.

First, both spouses must list all their assets. This includes everything from bank accounts and stocks to cars and artwork. They must also disclose any businesses they own. Once they have accounted for everything, the next step is to determine the current value of each item. This part can get tricky, especially with assets like investments that don’t have a clear price tag.

The couple might need to hire valuation experts for certain assets, like houses or businesses. These experts can include appraisers, accountants, or financial analysts who specialize in determining how much things are worth. They look at many details to determine a fair value for each asset. For example, an appraiser might examine a house’s condition, location, and market to determine its worth.

The values that these experts assign to the assets play a significant role in negotiations about splitting up the property. The valuation process is vital because it allows each spouse to claim a fair share of the wealth they built together during the marriage.

Who Gets the House in a Divorce in New York?

In a high-net-worth divorce in New York, determining who retains the marital home is a matter of careful consideration. These divorces often involve multiple homes, such as vacation properties, city apartments, and country estates. The main objective is still to facilitate a fair division of all marital property. The court looks at factors like the marriage’s length, and each spouse’s financial situation and future needs to determine who should get the marital house. When children are involved, the court will also consider their stability and caregiving needs.

The primary marital home, especially if it’s where children live most of the time, might go to whichever parent is the main caregiver to minimize disruption in the children’s lives. There may be a buy-out or offset against other assets to distribute the equity in the residence. Other real estate, like vacation homes or investment properties, might get divided differently. For instance, the couple might decide to sell some homes and split the proceeds. In some cases, one spouse might “buy out” the interest in specific properties, compensating the other party so they can keep those properties.

What Money Is Untouchable in a Divorce?

Not all of a couple’s money might be up for grabs. Some money is considered separate property, which may be “untouchable” because it legally belongs only to one person. This includes anything one spouse owned before they got married or money they received as a gift or inheritance, just for them, during the marriage. Also, if the couple made a prenuptial agreement before getting married or entered a valid postnuptial agreement after marriage, this contract might protect certain assets or money from being divided in a divorce.

For example, let’s say one spouse had a large bank account before getting married. The money in that account might remain theirs alone if it stayed separate and did not mix with their marital assets. Similarly, if one spouse inherited money from a relative during the marriage, that inheritance can remain their individual property. Clear records and proof that these assets are separate property is essential if you wish to protect such assets in your divorce.

What If My Spouse Hides Assets in Our Divorce?

It’s unfair and against the law to hide assets during a divorce because it can prevent one spouse from claiming their fair share of marital property. If your spouse tries to hide assets in your high-net-worth divorce, there are steps you can take to uncover the truth, starting with checking financial records, bank statements, and tax returns.

During discovery, your lawyer can ask your spouse to provide documents and answer questions about their finances. If necessary, your lawyer can also bring in experts like forensic accountants, who can identify hidden assets by scrutinizing financial records.

If you find out your spouse has hidden assets, the court can take action on your behalf. For example, the judge might give you a larger share of the other assets or order your spouse to pay penalties. Your spouse might even face criminal charges if their attempts to hide wealth are especially egregious. Hiding assets is a serious issue, and the law has ways to deal with it to ensure fairness.

How Much Does a High-Net-Worth Divorce Cost?

The costs of high-net-worth divorces in New York can vary widely but are often substantial. The total cost depends on how complex the divorce is, how long it takes, and how much the lawyers and experts charge. In high-net-worth divorces, there’s often a lot of money, property, and investments to sort out. This means hiring financial experts, appraisers, and sometimes investigators, which adds to the cost.

If the divorce goes to court and involves a lot of negotiations or disputes, the legal fees alone can add up quickly. Other expenses might include court fees, the cost of valuing assets like businesses or real estate, and possibly therapy or counseling fees. The price could be lower if the couple can agree on how to split their assets without a long legal battle. However, if they can’t agree and need the court to decide, the cost can be very high, possibly reaching tens of thousands of dollars or more.

This is not to say that all high-net-worth divorces are expensive. Moreover, the cost of hiring the right lawyer is likely to be far less than the cost of going into negotiation or litigation without high-quality legal counsel on your side.

Should You Settle Your High-Net-Worth Divorce? 

Settling a divorce case means both spouses agree on splitting their assets and handling other issues like support payments without going to trial. This can be an attractive option for several reasons.

First, settling saves time and reduces costs. Court battles can take a long time and cost a lot of money in terms of legal fees. If you can agree with your spouse on the key issues, you can avoid some of these expenses.

Second, settling gives you more control. You and your spouse can make decisions that work best for you rather than having a judge decide for you. This can lead to a fairer and more amicable outcome.

Lastly, settling is often less stressful and more private. Court cases can be emotionally draining and make your private matters public. By settling, you can keep things confidential and move on sooner.

So, settling your high-net-worth divorce is an intelligent choice in many (though not all) scenarios. It can save you time, money, and stress, allowing you to start your new life on a more positive note.

Separation Agreements for High-Net-Worth Couples

Separation agreements are important prerequisites in many high-net-worth divorces. These agreements are formal plans that both spouses agree to follow. They cover how to handle money and property and even how to care for children while the spouses are separated.

Creating a separation agreement can prevent arguments and confusion. In a separation agreement, the couple decides who will pay for living expenses, who will stay in the family home, and how to divide their money. They can also agree on who cares for the children and when the other parent can visit them.

Separation agreements can be particularly useful for couples with a lot of assets. They allow both people to understand and agree on managing their wealth during the separation. This can make the eventual divorce process smoother and faster because many details get managed in advance.

Once the spouses have abided by the terms of the separation agreement for a year, they can use the document as grounds for a divorce.

Prenuptial Agreements for High-Net-Worth Couples

A prenuptial agreement is a legal contract that two people sign before marriage. It explains how they will divide their money and property if they ever decide to divorce. It might also say what happens with any debts. This can significantly reduce stress and arguments in the event of a divorce.

People use prenuptial agreements to protect the assets they own before marriage, like houses, cash, or businesses. A prenuptial agreement can make divorce simpler and faster because the couple has already agreed on the big decisions regarding asset and debt division.

To be valid, the agreement must be acknowledged properly and generally it must be fair and equitable, having been entered into without duress or coercion and with disclosure of the assets owned by each party.

New York state law also allows for postnuptial agreements. Similar in their goal and scope to prenuptial agreements, the primary distinction is that the spouses were already married when they signed the document. As such, they are common among couples who married without expecting to become wealthy and earned their fortunes at a later date. The court should recognize a postnuptial agreement as valid so long as it is in writing and was agreed to by both parties with a full understanding of its terms.

The Importance of Prenuptial Agreements in High-Net-Worth Divorce Cases

Prenuptial agreements are quite common in high-net-worth divorce cases. Individuals with significant assets, businesses, real estate investments, or substantial inheritances often use prenuptial agreements to protect their wealth in the event of a divorce. These agreements can bring clarity and fairness to the division of complex financial portfolios.

A prenuptial agreement can streamline the division of assets and liabilities by providing clear guidelines that are agreed upon before the complexities of a divorce arises. This clarity is helpful in high-stakes divorces, where the potential for contentious disputes over substantial assets is high. A good prenup can outline the division of complex assets like real estate and business interests, making the process more straightforward and less prone to lengthy legal battles.

By adhering to the terms set out in a prenuptial agreement, couples can avoid the uncertainties of court decisions and ensure a fair distribution of assets as initially intended. This can save both parties significant time, emotional stress, and financial resources. 

When Is It Time to Take Action on Your Divorce?

Deciding when to take action on your divorce is a big step. It might be appropriate to start the process if you feel sure that your marriage can’t be fixed and you’re ready to move on with your life. This moment is different for everyone, but there are some common signs that it might be time. 

For instance, if you and your spouse can’t get along, have tried counseling without success, or have different goals and values that can’t be reconciled, these are clear indicators. If staying in the marriage is harmful to you or your children, whether emotionally or physically, you should take action immediately.

Taking action means getting your financial documents in order, thinking about what you want your future to look like, and finding a lawyer who can handle your high-net-worth divorce. The right lawyer can guide you through the process, protect your rights, and help you start on the path to a new life.

Common Mistakes in High-Net-Worth Divorce

When there’s a lot of money on the line, making mistakes can be highly expensive and time-consuming. These mistakes often come from not knowing the right steps to take or not getting good advice. Here are some common mistakes to watch out for in high-net-worth divorces:

  • Not Hiring the Right Professionals: One potential mistake is not hiring experienced professionals who understand high-net-worth divorces. These professionals include lawyers, accountants, and appraisers who know how to handle significant assets. Without them, spouses might miss out on what they deserve or pay more than they should.
  • Underestimating the Value of Assets: Sometimes, couples don’t properly value their assets. This mistake can happen with assets like real estate, businesses, or art collections, which have fluid valuations. If you don’t know how much something is worth, you might agree to a deal that’s not fair.
  • Failing to Consider Taxes: Taxes can take a big chunk out of the assets you keep in a high-net-worth divorce. Forgetting about taxes when dividing assets is a common mistake. You need to understand the tax implications of keeping certain assets or getting a lump sum. This could save you lots of money in the long run. There may also be loss carryforwards or other tax considerations, including the right to rely on the portability of the marital deduction for estate tax purposes.
  • Attempting to Hide Assets: Trying to hide assets in divorce is dishonest and illegal. If the court finds out, it can lead to serious penalties and an unfavorable outcome for your high-net-worth divorce. It’s better to be open and honest about what you own from the start and to discuss mitigation options with your attorney.
  • Ignoring Contract Agreements: If you have a prenuptial or postnuptial agreement, refusing to honor its terms is a huge mistake. These agreements often outline how couples will divide assets in the event of divorce. Ignoring these agreements can lead to legal battles and additional expenses.

What Does a High-Net-Worth Divorce Attorney Do?

Having an experienced lawyer by your side can make a huge difference if you’re going through a high-net-worth divorce in New York. Here are some key ways an experienced divorce attorney can help you with your high-net-worth divorce case:

  • Identifying all marital and separate assets
  • Valuing complex assets, like businesses and investments
  • Negotiating fair spousal support arrangements
  • Protecting your interests in child custody discussions
  • Drafting a comprehensive separation agreement
  • Uncovering hidden assets your spouse might not disclose
  • Calculating accurate child support payments
  • Representing you in court confidently and effectively
  • Advising you on the tax implications of a divorce settlement
  • Mediating disputes to avoid court when possible
  • Making sure prenuptial agreements get enforced correctly
  • Protecting your retirement and investment accounts
  • Managing communications with your spouse’s legal team
  • Preparing all necessary legal documents accurately
  • Guiding you through the asset division process
  • Advising you on potential legal strategies for a fair settlement
  • Protecting your privacy and confidentiality throughout the case
  • Challenging asset valuations that are unfair or inaccurate
  • Coordinating with financial experts and appraisers

Contact a High-Net-Worth Divorce Lawyer Now

Ready to take the next step in your high-net-worth divorce case? Aiello & DiFalco LLP is here to help you through this challenging time. Our team understands the unique challenges you face and will work with you to secure the fair outcome you deserve. Contact us today for your complimentary consultation session to learn more.