Wealthy finance couple arguing

Pre-Divorce Planning: Tips for Couples in the Finance Sector

By Michael DiFalco

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.

About the Author
I am a partner at Aiello & DiFalco LLP, and my priority for my clients is to guide them through an arduous court case to provide them with the opportunity to write the next chapter in their life. I tailor my approach to each client’s priorities and positions, and to the extent that matters can be predicted, I will always provide a realistic perspective of how the law could be applied to the particular facts and circumstances of a case. Since I thrive on helping people and solving problems, I bring an optimistic and positive approach to practicing in a very difficult area of law. With more than a decade of experience handling hundreds of cases, I have the ability to get results on the issues my clients view as priorities. When cases or certain issues cannot be settled, I have a solid record of success at trials, hearings, and on appeals. Feel free to contact me for a free initial consultation, I am always available to help.