Living happily ever after is a lofty goal. Unfortunately, not every couple manages to obtain it. When one or both parties are high net worth individuals, a divorce typically presents more complicated issues than otherwise.
High on the list are premarital agreements. “Do you have one?” should be among the first questions an attorney asks a client. For high net worth individuals the answer is usually yes, and if the agreement holds water, the rest of the divorce may be anticlimactic. Enforceable premarital agreements can eliminate spousal support and property issues. If there are no minor children, there’s little left to argue about.
A technically enforceable premarital agreement is not difficult to write. However, whether it holds up in court depends primarily on three factors: active involvement of attorneys on both sides, full disclosure of assets and debts by both sides, and genuine negotiation of the terms. The last one will encourage the judge to conclude that both parties knew what they were doing and reached a fair agreement.
If there is no premarital agreement, or it doesn’t have mutual waivers of spousal support, high net worth individuals encounter the fact that there are no computer guidelines for spousal support when the supporting party is a high net worth individual and the supported party isn’t. Spousal support is anyone’s guess in this case, so a long, difficult, and expensive battle over the issue is almost guaranteed.
Then there’s the identification of all the assets and debts of both parties, their characterization (separate or community?), their valuation, and their equal division. Again, binding premarital agreements also known as prenuptial agreements, can simplify this process, but its elimination is probably impossible because of some unavoidable uncertainty about who owns what,particularly horses. If there isn’t an agreement, the process tends to be a nightmare.
If there are minor children, visitation, custody and child support also impose unusual difficulties in a high net worth divorce. (Again, there are no computer guidelines when the supporting party is wealthy.) More importantly, high net worth individuals with children are likely to be young entrepreneurs or business owners who are constantly on the move.
This poses a problem, because unpredictable travel means that a regular time sharing schedule is impossible. In turn that means never ending arguments over who has the kids when. Furthermore, if only one party travels, the other party (Mom, more often then not), will win primary custody of the kids. High net worth individuals typically don’t like losing, so here we have another high conflict situation.
As someone observed, “Money isn’t everything, but it sure beats the hell out of what’s second best” However, it tends to be something of a draw back when “Happily Ever After” turns into incompatibility.
No one expects divorce, but it happens. So get your premarital agreements ( prenuptial agreements) organized and as detailed as possible, in the event of this unforeseen circumstance.
By Stanley Prowse, Attorney At Law