In the Pennsylvania divorce process, couples must equitably distribute the marital property before the court will enter a divorce decree. In addition, alimony may play a role. Most lower to middle income couples have a home, modest retirement accounts and other savings to equitably divide. This presents a relatively easy situation for the couples to negotiate amongst themselves how the assets will be divided up. Things that couples must consider is which spouse wants to keep living in the home, whether the spouses will each take a 50% share of the marital property or should one spouse receive more, and whether a spouse should receive alimony from the other. Alimony is generally only available as a remedy after the assets are distributed and the economic situation of one or both spouses requires alimony. In many cases, alimony is not necessary. However, for high net worth couples, there are many challenges in resolving the matters of equitable distribution and alimony.
Determining the actual value and the marital value of the assets is extremely important when the values are not readily apparent or the values are very high. For instance, if one spouse has a 401K worth $60,000.00 and a question arises as to what the marital portion of that 401K is, it is easier for both spouses to simplify the process and estimate the marital value. This is because an estimation may only result in a few hundred or a few thousand dollars that one spouse may give up during the negotiation. The spouse may not care too much because he or she may spend a lot more in attorney’s fees in trying to ascertain a more exact value. However, if the 401K is worth $1.5M and a question arises as to what the marital portion is, then both spouses will want to engage in a due diligence process because more is at state, even if this means higher attorney fees.
Hiding assets becomes an issue during high net worth divorces. If one spouse is a business owner for example, he or she may take distributions from the company unbeknownst to the other spouse. Once the distributions are taken, the recipient spouse may hide them in a friend’s bank account, an off-shore account, or buried in the ground. The other spouse should request profit and loss statements and other business financial documents in order to confirm that all of the business income is accounted for and that the business transactions are proper. Whenever a spouse believes that the other spouse is attempting to hide assets, the divorce lawyer should take advantage of the discovery process and make sure that the other spouse is divulging enough information to uncover any hidden assets.
Couples with a high net worth often have assets that must be appraised. Artwork and other tangible personal property can be appraised through an appraisal company that specializes in divorce matters. If one spouse owns a business, then the spouses should have professionals evaluate the value of the company. This can get a bit more complicated because opinions on business valuations can differ greatly. When this occurs, and the difference in valuations is a large amount, the parties often have no choice but to mediate the issues or have the matter determined by a judge.
Alimony is also a big factor. Even when all of the assets are to be equitably divided, the low income spouse will almost always want alimony from the high income spouse. In these cases, alimony is often awarded but the issues that arise are determining the monthly amount of alimony and the duration of the alimony. These matters must be decided on a case by case basis because the courts have to review the situation in light of the factors under the Pennsylvania alimony law. These factors include the length of the marriage, the income of the parties, the lifestyle that the parties are accustomed to, and the list goes on.
In high net worth divorce cases, both spouses should take their time and proceed with caution because there is usually a lot at stake in terms of the financial well-being of both parties after the divorce. Amicable negotiations are still the preferred method of resolving any dispute; however, even when the intentions of both sides are true, both parties in a high net worth divorce still need to be diligent.