Divorces are often complex and difficult, and can be even more complex when the parties to the marriage have a high net worth. This issue of property division is never easy, but becomes more complicated and important when there are more valuable assets.
Marital vs. Separate Property
In Virginia, a couple’s property upon divorce is classified as marital, separate, or part marital and part separate. Marital property is jointly-owned property and other property (other than separate property) obtained from the date of marriage through separation. Marital property is subject to equitable distribution during a divorce proceeding. Separate property is all property acquired by one spouse prior to marriage and property obtained during marriage by inheritance or gift (other than a gift by a spouse). Gifts from one spouse to another are marital property.
If an asset is part marital and part separate property, special classification rules apply to determine which portion of the asset is marital and which is separate. Only the marital portion of mixed assets are subject to equitable distribution.
When dividing assets during a divorce, many factors are considered, including: the contributions of each spouse to the well-being of the family; the duration of the marriage; the ages and physical and mental conditions of the spouses; how and when assets were acquired; the tax consequences of dividing assets; whether assets are liquid or nonliquid; and the circumstances that contributed to the grounds for divorce. Courts can also consider other factors deemed appropriate to reach an equitable distribution. It’s important to note that “equitable distribution” does not necessarily mean equal. Courts aim to reach a fair division, but not necessarily an equal one.
When a couple has high value assets, there is more at stake financially in the event of a divorce. Determining the value of these assets is an important part of the divorce process. High net divorces often include assets that may be complex to value. Businesses, property, foreign investments, art, and other assets must be properly valued for there to be an equitable distribution. Assets are typically valued by experts and finding and selecting the right professionals are crucial parts of any high net divorce. Real estate appraisals, income tax returns, and other tax assessments may also be used for valuation.
Typically, assets are valued as of the date of the evidentiary hearing or trial during divorce proceedings. However, there are exceptions to this rule and a party may request that a different date be used for valuation. The valuation date used may have a significant impact on the ultimate valuation of an asset. Certain assets may require additional adjustments as a result of market changes after the date of separation.
During high net divorces, one spouse may worry about the other spouse concealing assets or lack of access to financial records. Additionally, spouses may not have the necessary financial information documenting whether assets are separate or marital property. In situations such as these, forensic accountants may be used to help locate accounts and other assets that may not have been disclosed. Forensic accountants can also assist in obtaining necessary financial information to make sure assets are properly classified and valued.
Spousal support is monetary support paid by one spouse to the more financially dependent spouse after a divorce. An award of spousal support is based on many factors, including the obligations, needs and financial resources of the spouses; the duration of the marriage; the earning capacity of the spouses; and the standard of living established during the marriage. The court may also consider circumstances that contributed to the dissolution of the marriage, including any instances of adultery or other grounds for divorce.
High net divorces are complex and can have significant financial consequences. If you are involved in a high net divorce or believe you will be soon, contact our family law attorneys. Our attorneys are experienced in assisting clients involved in high net divorces and can help protect your interests.