In the Forbes 2017 ranking of the Top 10 Richest Counties in America, four out of the top ten counties were in Northern Virginia, namely: Loudoun (#1), Falls Church (#2), Fairfax (#3) and Arlington (#8). Many of these high net-worth individuals living in this area are facing a divorce now or in the near future.
If you are one of them, what are the particular challenges and issues you will likely be facing?
Of course, your concerns will be influenced by your point of view. If you are the higher wage earner of the couple, you are concerned with whether you will be paying support, how much, and for how long. If you have a business, you want to know whether you can afford to buy out your spouse, and how you can do so in a way that does not restrict your company’s ability to conduct business.
However, if you are the economically dependent spouse, you are concerned about such issues as whether you will be able to maintain the standard of living that you enjoyed during the marriage, and ensuring that you get everything, to which you are entitled, particularly given the personal and professional sacrifices you may have made to ensure your partner’s financial success.
What both parties often have in common is fear – fear that supporting the other spouse will be burdensome, or fear that you may suffer financially as a result of the divorce.
For both parties, addressing those fears begins with two things: knowledge and guidance. The high net-worth spouse needs to develop a comprehensive picture of all assets and their values. Pursuant to Virginia divorce law, assets are generally valued as of the date of separation. This can create complexities when, for example, the parties have been separated for a significant period of time. The date of valuation in Maryland and the District of Columbia, by contrast, is more nuanced.
Another key issue for the high net-worth individual is the characterization of an asset as marital or separate, or a combination of the two -what is referred to as a hybrid asset in Virginia.
Financial experts will be the key to determining the value of property as well as tracing marital and separate components of certain assets. The tax implications of the various ways of distributing assets are another realm in which an expert can provide invaluable assistance.
The economically-dependent spouse, on the other hand, feels vulnerable, particularly if she or he has not been actively involved in the family finances. As to the support issue, quantifying the standard of living during the marriage requires capturing all relevant expenses, whether it is the monthly cost of boarding the horses or the annual expense of the summer home. Understanding the other spouse’s income can also be complex, due to unusual income components such as bonuses, forgivable income, and loans from closely-held businesses, as well as payment of personal expenses from a business. On the asset side, the economically-dependent spouse may fear that assets have been hidden over a period of time, or that assets which have been characterized as having little worth are, in fact, quite valuable.
It is essential for each spouse to retain an experienced attorney who has a track record of handling high asset divorces and in achieving settlements (as opposed to a resolution dictated by a judge) since litigation is exponentially more expensive and creative options cannot be pursued.
The ability to work effectively with the other professionals likely to become involved in your case, particularly your spouse’s attorney, is also important. And a good sense of humor doesn’t hurt either!