Divorce affects couples in all industries and all income levels. Couples in the finance sector tend to divorce at a lower rate than many other professionals, like lawyers and business managers, but the differences are relatively small.
Financial Issues to Consider Before Divorce in the Finance Sector
Although divorce rates are similar across professions, married people employed in finance and financial services face some unique challenges during divorce. High income and net worth can complicate property division and spousal support. Similarly, income fluctuations and irregular cash flow can lead to complex issues when it comes to support calculations and asset distribution.
Many of these issues depend on the specific role or compensation structure in place. For example, an accountant or commodities trader might not face the same concerns because they draw a regular salary.
Conversely, a hedge fund manager might have an enormous net worth, but it’s all tied up in illiquid assets. Even a chief financial officer might have a significant portion of their wealth tied to stock options. Many investment bankers and other financial professionals rely heavily on a bonus or incentive compensation structure, which makes their income less predictable and more difficult to assess during pre-divorce financial planning.
Pre-Divorce Planning Tips for Finance Professionals
Just as the solution to an irretrievably broken business might be liquidation, the solution to an irretrievably broken marriage may be dissolution. By dissolving your marriage, many of the disputes between you and your spouse go away. If you have children, your relationship might even improve as you can focus on raising them instead of fighting.
Here are some pre-divorce planning tips for couples in the finance industry:
Review or Consider a Prenuptial Agreement
If you work in finance and are concerned about how your income and assets might be affected by divorce, consider creating a prenuptial agreement or reviewing one you already have. New York courts generally enforce valid prenuptial agreements.
Prenuptial agreements are enforceable if they:
- Meet formal requirements, such as a written document signed by both parties
- Are created after full financial disclosure
- Were not signed under coercion or duress
- Contain terms that are fair and equitable
If you already have a prenuptial agreement, review it carefully, as it should provide a roadmap for how your marital property and debts will be handled. Reviewing this is an important step in pre-divorce financial planning.
Inventory What You Own and What You Owe
An essential early step in planning for divorce is identifying and valuing all assets and liabilities. Assets may include:
- Real estate
- Bank accounts
- Business interests
- Brokerage and investment accounts
- Offshore accounts
- Bonds and stock options
- Retirement accounts
- Outstanding loans you’ve made to others
Because financial professionals often leverage debt, it’s also essential to list all obligations, such as:
- Mortgages
- Car loans and leases
- Credit card debt
- Personal loans
- Real estate leases
As you plan your divorce, gather as many financial documents as possible. If you suspect that your spouse may be hiding assets or debts, look for documentation that can support your concerns. The court will require a full accounting of marital assets and liabilities as part of the pre-divorce planning process.
Understand Your Income Streams and Timing
Support obligations—like spousal and child support—are based on income. However, in the finance sector, income can come from various sources and may fluctuate significantly from year to year. Identifying and documenting those streams is critical.
Income sources may include:
- Salary
- Commissions and bonuses
- Incentive compensation or equity awards
- Consulting income
- Business profits
- Investment dividends or distributions
- Capital gains from asset sales
- Interest income
As part of your pre-divorce financial planning, gather tax returns and supporting documents that show income for both you and your spouse. Watch for deferred revenue, unreported earnings, or one-time windfalls that could impact a fair outcome.
Planning for Your Divorce in Garden City
Every divorce presents unique issues—especially for individuals working in high-income, variable-compensation industries, such as finance. Thoughtful pre-divorce planning can help you avoid costly surprises, streamline the process, and better protect your financial future. To discuss your divorce and how to prepare, contact Aiello & DiFalco, the experienced choice in matrimonial law.