Disclaimer: This article aims to provide educational information surrounding divorce. It is not intended to serve as legal advice. Consult with a lawyer and exercise your discretion before taking action based on the information provided in the blog.
While every divorce has challenges, a high-net-worth divorce may involve more: more businesses, properties, investments, and luxury items.
In this article, we will look at the challenges of high-asset divorces, including asset division, alternative dispute resolution options. If you are considering a separation and divorce, we will also outline the key considerations before meeting with an experienced divorce lawyer.
What is considered a high net worth divorce?
Generally speaking, a high-net-worth divorce involves a couple with combined assets valued at over $5 million (CAD).
While no divorce is simple, a wealthy couple faces specific issues when dividing assets and calculating child support. Simply put, greater assets lead to greater challenges.
What unique challenges come with a high net worth divorce in Ontario?
These divorces involve more complex issues than a typical divorce. When large amounts of money, property, and investments are involved, it takes more time to be sure that they are divided fairly.
Asset Valuations in High Net Worth Divorce
Figuring out the value of your assets is one of the biggest challenges. You are dividing not only more substantial assets but also a wider range of assets. These assets can include:
- More than one property, such as vacation homes or investment properties
- Investments, including stocks and bonds
- Business ownership or partnerships
- Retirement savings
- Items, such as jewelry, art, or collectibles
Because we are dealing with these kinds of assets, high-asset divorces tend to involve working with experts like appraisers, business valuation professionals and forensic accountants. Together, we will need to review corporate financial statements, shareholder agreements, and pension statements. This process gives us a clear and accurate picture of your family’s assets.
Hiding Assets in the Divorce
When there’s a lot of money or property at stake, sometimes one spouse may try to hide money or assets to avoid sharing them. (We discussed this challenge in this article). This could include:
- Making a business look less valuable than it is or reporting less income than they earned
- Moving money to friends or family
- Using hidden bank accounts, possibly even overseas
Courts take this seriously. If assets are deliberately hidden, legal penalties may apply.
Child and Spousal Support Considerations
Support payments can look different when the support payor has a higher income.
For an average divorce, spousal and child support guidelines would be mainly determined following the Federal Child Support Guidelines table or the Spousal Support Advisory Guidelines. However, for high earners (over $150,000), the court has the option to deviate from those guidelines to ensure children or spouses maintain a lifestyle similar to what they had prior to the divorce.
Section 4 of the Child Support guidelines outlines two options the courts have when the support payor earns over $150,000:
- Option A: The court can award the applicable table amount, regardless of how high it is.
- Option B: The court can use the table amount for the first $150,000. For the balance, it has broad discretion in adding an appropriate amount, considering the “condition, means, needs and other circumstances of the children who are entitled to support and the financial ability of each spouse to contribute to the support of the children.”
For spousal support, the courts will consider factors such as:
- The lifestyle during the marriage
- The recipient’s financial needs
- The paying spouse’s ability to afford payments
Tax Implications Following Your Separation and Divorce
These types of separations and divorces can trigger unique tax implications that aren’t typically an issue in average divorces. Selling or transferring assets—such as real estate, investments, or business interests—may result in capital gains taxes.
It’s vital to understand the tax consequences of your proposed settlement before moving forward. This ensures you’re making informed decisions and protecting your financial future. At Plat Simionati LLP, we collaborate with trusted tax experts to minimize unnecessary taxes during the divorce process.
Should you consider alternative dispute resolution methods, such as mediation/arbitration or collaborative family law?
Absolutely! We always encourage our clients to consider pursuing alternative dispute resolution (ADR) methods, such as mediation or collaborative family law. It is especially more advisable at this level where privacy, flexibility, and efficiency are often a high priority. (We discussed some of the many benefits of mediation in this article.)
Protect Your Privacy: Court proceedings are public, meaning your financial details, personal matters, and the outcome of your case can become part of the public record. Mediation and collaborative family law offer a private, more discreet setting where sensitive information stays confidential.
Save Time and Money: Litigating can be time-consuming and expensive. ADR methods are often quicker and less costly than going to court.
More Control Over the Outcome: When you go to court, the judge must follow strict guidelines outlined in legislation like the Divorce Act and the Family Law Act, which can limit creative solutions. With alternative dispute resolution methods, you and your spouse have more freedom to design a settlement that fits your family’s dynamic.
In short? If you value privacy, flexibility, and efficiency, mediation or collaborative family law could be your best option.
Questions to Ask Before You Contact a High Net-Worth Divorce Lawyer
We highly recommend preparing well before your first meeting with a family lawyer. Before beginning divorce proceedings, you should ask yourself these questions:
- Do you have a domestic contract (e.g., a marriage contract or cohabitation agreement)?
- Do you know which assets you brought into the marriage and which were acquired during your relationship?
- Do you know what these values are worth? Should they be appraised or valued by an expert?
- If there is a business involved, how is it structured? How do you receive income?
- If you have children, how do you envision co-parenting moving forward?
Plat Simionati LLP: Ontario family law lawyers you can trust with your high-asset divorce
High net worth divorces come with unique challenges that require skilled legal guidance. Whether you’re navigating complex asset valuations, addressing child and spousal support as a high-income earner, or working toward a fair divorce settlement, having an experienced lawyer on your side is key.
At Plat Simionati LLP, we specialize in family law and offer traditional family law advice, mediation and collaborative family law services. Our team handles high net worth family law cases across the Greater Toronto Area.
Don’t navigate your high net worth divorce alone. Contact Plat Simionati LLP today to speak with our team!