How Are Multiple Properties Divided in a High-Asset Divorce?
When a “high-asset” couple divorces, the process to determine which spouse gets certain assets can be complicated. This is especially true for those who own multiple properties. Much depends on whether these assets are considered separate are community property—a distinction that is often a cause of disagreement for many couples.
What Is a High-Asset Divorce?
A high-asset divorce is when a couple with significant wealth and assets seeks to end their marriage. Traditionally, this means couples who have more than $1 million in liquid assets, but that number can vary depending on the state of the market and cost of living where the couple resides.
Unique Challenges of a High-Asset Divorce
“High-asset” or “high net worth” divorces differ from the average divorce in a few key ways. Because there are more assets to report, valuate, and divide, the divorce process often takes longer and costs more for wealthier couples.
Because there is more at stake financially, these divorces can become contentious. Also, hiding assets is not uncommon in high net worth splits. A divorce attorney representing a high-asset client will often hire a forensic accountant to look for assets (and debts) their client’s spouse may be hiding.
Separate vs. Marital Property
In every divorce, the first step is to identify separate and marital property. Property that is only owned by one spouse is considered separate property. Typically, that means a home or land acquired by that spouse before the marriage or after the divorce.
Separate property can also be property one spouse inherited or were gifted by another person during the marriage. While there are some exceptions, most separate property remains with the spouse who owns it.
Marital property refers to assets acquired and debts incurred by the couple during the marriage. These include shore houses, mountain homes, rentals, and other properties. In a divorce, marital property is divided between spouses based on the division system in the state where they reside.
Determining if Property is Separate Property or Marital Property
To determine if a property is a separate or marital asset during high-asset divorce, the courts consider the following factors:
- The value of each property
- If one or both spouses purchased the property
- If the property was gifted to or inherited by one or both spouses
- Where the funds came from to purchase the property
- Who took care of the property maintenance and upkeep
- Who paid the mortgage and any other costs for the property
There is no one-size-fits-all formula to determine who owns property in a marriage. Circumstances can change over the course of the marriage. For example, a spouse who owns a home before getting married can add their spouse to the title, making it a marital asset.
A property can go also from separate to marital property if both spouses contribute to the monthly mortgage payments. These are just two common examples that illustrate why every asset is reviewed on a case-by-case basis when a high-asset couple divorces.
Equitable Distribution in New Jersey
New Jersey is an equitable distribution state. That means, marital property is not split 50-50 between spouses in a divorce. Instead, it is divided in a way that is fair, but not always equal.
The property distribution process has three steps. First, assets are classified as separate or marital property as described above. Second, the value of each asset is determined. The divorce attorney may retain an appraiser for this process.
The third step is the distribution of marital property. In accordance with the New Jersey Equitable Distribution Statute, the courts consider the following when dividing property:
- The length of the marriage
- The age, emotional health, and physical health of both parties
- The property both parties brought to the marriage
- The income acquired by both parties during the marriage
- The standard of living the couple maintained during the marriage
- Any prenuptial or postnuptial agreements concerning property division
- The income and earning capacity of both parties
- Both parties’ contributions to the preservation, appreciation, or depreciation of marital properties
This list is just an overview of the many variables that go into equitable distribution in a high-asset divorce. You can probably see why many high net worth divorces take longer than the average divorce. Some can take two to three years or more to resolve.
How to Protect Your Assets?
One way to keep your high-asset divorce from dragging on for years is to be proactive about protecting your properties. You can do this before getting married with a prenuptial agreement, or after you wed with a postnuptial agreement.
What is a Prenuptial Agreement?
A prenuptial agreement or “prenup” is a legally-binding contract that a couple creates and signs prior to getting married. It stipulates how certain assets and liabilities will be divided if they separate or divorce.
What is a Postnuptial Agreement?
A postnuptial agreement or “postnup” is similar to a prenuptial agreement, except that it is signed after the couple has married.
Pre-and postnuptial agreements are especially beneficial for wealthy couples who enter the union with substantial assets or expect to acquire or inherit property and other assets in the future.
Couples who discuss how these assets will be divided can help reduce conflict and litigation if the marriage ends. Working on a prenup or postnup also opens the door for healthy and productive dialogue about finances, which is one of the leading predictors of divorce.
Whether you are just considering getting married or have already tied the knot, you can always take steps to protect your properties and other assets. Consider meeting with a divorce lawyer to discuss your options.
Marlton Divorce Lawyers at Goldstein & Mignogna, P.A. Represent High-Asset Clients Going Through Divorce
Our experienced Marlton divorce lawyers with Goldstein & Mignogna, P.A., have extensive experience resolving complex divorce matters for clients going through a high-asset divorce. We take the time and care your case deserves to ensure financial security and peace of mind on the other side of divorce. Call us today at 856-890-9400 or contact the firm online to schedule an appointment to discuss your situation. Located in Marlton, we represent clients across Burlington County, Gloucester County, Camden County, South Jersey, and all of New Jersey.