All divorces are emotionally difficult and create a financial strain on the parties involved. As it pertains to dividing assets, it is often more challenging to settle a divorce involving high-net-worth individuals (HNWI) because there are more assets to fight over – more battles that can hold up proceedings. The financial assets of HNWI also tend to be more complex. HNWI also tend to have more expensive, talented divorce attorneys.

Potential Financial Issues for High-Net-Worth Divorces

Perhaps the most complicated scenarios involve family businesses. If the soon-to-be ex-spouses are both involved in running a family business, each side needs to have its interests valuated. This requires the business to be valuated, its assets examined and the assessment of the proportional value of each spouse's contribution, among other factors.

Other potentially complicating issues include valuing non-family partnerships, jointly shared retirement assets (such as IRAs, 401(k) plans, pensions or stock options), trusts, real estate holdings or other properties.

Common Mistakes in High-Net-Worth Divorces

The financial stakes are higher in a high-net-worth divorce. The proceedings also tend to take longer to unfold and may be more high-profile. This magnifies the potential for mistakes on either side.

One mistake – and illegal act – involves the hiding of assets from the other party. Transferring valuable assets to third parties or neglecting to share information are fraudulent and can cause the perpetrator to lose credibility with the court.

The opposite side of the coin is a failure to investigate the other party for possible hidden assets. Another mistake includes failing to consider tax consequences of divorce. Distributions from accounts or forced alimony payments are crucial components of post-divorce tax liability.

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  1. Institute For Divorce Financial Analysts - IDFA

    An organization committed to educating financial professionals ...
  2. IRS Publication 504

    A document published by the Internal Revenue Service that provides ...
  3. Academy Of Financial Divorce Practitioners

    An organization dedicated to the development of financial expertise ...
  4. High Net Worth Individual - HNWI

    A classification used by the financial services industry to denote ...
  5. Joint Credit

    Credit issued to two or more people based on their combined incomes, ...
  6. Business Valuation

    The process of determining the economic value of a business or ...
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