Complexities of Divorce for High-Net-Worth individuals

Co-authored by Grace Jolly

KEY TAKE OUTS:

• High-net-worth divorces involve complex considerations surrounding assets to ensure compliance with FCFCOA rules.
• Binding financial agreements are useful however there are circumstances in which they can be set aside.
• Special consideration should be given to international property and lifestyles when looking at high-net-worth divorces

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Divorce is rarely simple and to make it even more complex being a high-net-worth individual raises more issues. This can be due to a variety of reasons including scale, diversity, and nature of assets as well as tax implications. The difference between a standard divorce and a high-net-worth divorce is often that property divisions is not easy. Which is why the following considerations are key.

 

Consideration 1: Asset Identification

The first consideration in any divorce is identifying all marital assets. As a high-net-worth individual often assets are held in varying places such as offshore accounts, complex self-managed superannuation funds or even international property. Attempting to track this information and value it can prove a tricky challenge.

There are also certain assets such as art, collectors’ items, or intellectual property which can be difficult in valuing appropriately, especially when often their value is highly subjective.

It is mandatory under Rule 6.06 Federal Circuit and Family Court of Australia Rules 2021 to provide full and frank disclosure. This obligation thus will become more difficult when parties hold complex assets. The court expects transparency about these assets and failure to disclose can result in a party being found guilty of contempt and may be ordered to pay costs under Rule 6.17.

 

Consideration 2: Business Interests

Should an individual own or hold interests in private companies. During a divorce, business interests need to be valued and potentially divided. This in and of itself can present several challenges including how does you value a business which isn’t being sold or how do you divide interests within a company without disrupting business operations? Parties may wish to seek confidentiality orders or attend mediation to ensure their business dealings are protected.

 

Consideration 3: Prenuptial and Post-nuptial Agreements

Often many high-net-worth individuals enter into prenuptial or postnuptial agreements to protect their assets. In considering whether there is a prenuptial or postnuptial agreement in place, this may

call for determining whether these are to be negotiated or potentially contested. Part VIIIA of the Family Law Act 1975 deals with binding financial agreements in the event of divorce. The FCFCOA will set aside BFAs under section 90K, especially if:

• The agreement was obtained by fraud or non-disclosure.
• There was duress or unconscionable conduct; or
• It is impractical to enforce due to a significant change in circumstances.

 

Consideration 4: International Property

Handing cross-border financial settlements can be tricky, and often in high-net-worth divorces this occurs. If trying to sell property it can be difficult to deal with tax consequences, currency fluctuations and the cost of obtaining foreign legal or valuation advice. The FCFCOA has jurisdiction to consider overseas property if either party is an Australian citizen, ordinarily resident in Australia or domiciled in Australia (meaning they classify it as their home).

 

Consideration 5: Lifestyle Considerations

The court will also consider if one party was financially dependent during the relationship. The standard of living during the marriage will be considered and in determining a fair settlement they must balance the needs against future earning capacity and that neither party will significantly struggle after the divorce.

In taking into account the above considerations, it is important to get expert legal advice as soon as possible to ensure your financial position is safe and you can secure a fair outcome.

 

Conclusion: Coutts Specialise in Divorce for High Net Worth Individuals

With our extensive experience, the Family Law team at Coutts Lawyers & Conveyancers can help navigate the specific complexities of divorce for high-net-worth individuals. Our extensive experience in all areas of family, property and business law mean that we offer the full-service support that these individuals need, and allow us to tailor our suite of services to the specific needs of the individual matter. We assist our clients through every stage of the divorce process, from legal planning to the restructuring of their assets, allowing them to move on with their lives. Our team of Family Lawyers are equipped to provide you with expert knowledge and advice relating to your divorce, and can give you extensive information on your legal rights when filing for divorce.

Schedule an Appointment Now

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