Partner
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 fairly small.
Issues in the Finance Sector for People Panning for Divorce
Although the divorce rates are similar, married people employed in finance and financial services face some unique issues in their divorces. High income and net worth can complicate property division and spousal support considerations. Similarly, fluctuations in income and cash flow can also lead to difficult issues.
Many of these issues depend on the occupations of the spouses. For example, an accountant or commodities trader might not face any of these problems 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 large portion of their net worth in stock options. Many investment bankers and other financial professionals rely heavily on a bonus or incentive compensation structure which makes their income less predictable.
Tips for Planning a Divorce
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 tips for planning a divorce in the face of the issues faced by couples in the finance sector:
Consider a Prenuptial Agreement
If you are in a situation where work in finance and are concerned about how your income and financial circumstances might be affected by a divorce, consider a prenuptial agreement. New York courts will almost always enforce valid prenuptial agreements.
Prenuptial agreements are valid if they:
- Meet formal requirements such as a written document signed by both parties
- Occurred after full disclosure of the finances of both spouses
- Avoided any coercion or duress
- Contain fair and equitable terms
You should read your prenup if you have one. This agreement will give you a roadmap of how your assets and debts will be divided during a divorce.
Determine What You Own and Owe
It is critical at the start of a divorce to identify and value, or estimate the value, of all assets, including:
- Real estate
- Cash/bank accounts
- Ownership shares of businesses
- Brokerage accounts
- Financial accounts, including offshore accounts
- Bonds
- Stock options
- Retirement accounts
- Amounts due on loans you have made to others
Financiers also know how to use leverage. It is likely that you also have outstanding obligations such as:
- Mortgages
- Vehicle loans and leases
- Real estate leases
- Credit card debt
- Amounts owed on personal loans
As you plan for your divorce, gather as many of your financial records as possible. If you are concerned that your spouse might have hidden away some assets or concealed debts, try to find records for those as well. The court will need a full accounting of your assets and debts to divide the marital estate’s property.
Understand Where Your Income Comes From
Spousal and child support calculations depend on the income you and your spouse earn. However, people in the finance sector often have multiple sources of income. They may even control when they get paid.
Some possible sources of income you should look for and document include:
- Salary
- Commissions
- Bonuses
- Incentive compensation
- Equity awards
- Consulting fees
- Profits from the sale of assets
- Distributions from businesses owned
- Dividends from investments
- Interest income
When you prepare for your divorce, gather tax filings that show all the income you and your spouse receive. Also, look for any undocumented sources of income that might not have been reported to the IRS.
Planning for Your Divorce
Every divorce presents unique issues. As you plan for yours, you may run into financial issues or questions that could affect your divorce decree. To discuss your divorce and how to plan for it, contact Aiello & DiFalco, a family law firm located in Garden City, NY.