High-Net-Worth Divorce in New Jersey

If you are facing a complex, high-asset, or high-net-worth divorce in New Jersey, it is critically important to retain a matrimonial or family law attorney with a wealth of relevant experience, excellent negotiation skills, and expertise in the complex financial issues that will inevitably arise in your case. Whether you are the high-net-worth or high-income party, their spouse, or whether both of you are independently wealthy, you have considerably more at risk than couples involved in a middle-income divorce.

An experienced divorce attorney who regularly handles high-net-worth divorce will know how to identify, value, and distribute high-value marital assets as well as liabilities, including (but not limited to):

  • The marital home
  • Vacation properties
  • Investment properties or real estate currently under development
  • Family or closely-held business(es)
  • A professional practice
  • Executive and deferred compensation:
    • stock options: usually Non-Qualified Stock Options (NQs)
    • restricted stock: either actual shares of stock (RSAs), or a right to acquire shares at vesting (RSUs)
    • annual bonuses
  • Luxury cars and other high-end vehicles
  • Private planes
  • Yachts, motorboats, and other watercraft
  • Costly jewelry
  • Extensive and expensive separate (non-marital) property
  • Valuable art collections
  • Valuable memorabilia and other collectibles.

If you or your spouse has high-net-worth, we can help you negotiate custody and child support, make your case regarding alimony, and guide you through complex asset and debt division inequitable distribution. Aggressive when necessary and compassionate with our clients, we have the skills, knowledge, and experience to protect your rights during high-net-worth divorce in New Jersey.

Dividing a Business During High-Net-Worth Divorce in New Jersey

There is no set formula to divide a business during high-net-worth divorce in New Jersey. There are many factors that determine what each spouse is likely to receive during equitable distribution. The non-owner spouse will likely receive compensation for a certain percentage of the business, but the percentage is subject to numerous factors, including the type of business, the tax consequences in the event that the business is going to be sold in the future, or whether the person keeping the business has a spousal support obligation, to name just a few.

What Happens If Both Spouses Co-Own a Business?

First, you must identify what kind of business it is. Is it a sole proprietorship? In that case, only one spouse is the owner – but both spouses may work in the business. Is it a partnership in which they both own 50%? Is it a C-corporation or an S-corporation?

If both you and your spouse are active in the business – and if both of you bring specific value to the business – will you be able to put aside your differences in order to continue to work together? Both parties continuing to own and operate a business together post-divorce is relatively uncommon, however. Usually, a forensic accountant will value the partnership or the corporation and then one spouse will buy out the other in accord with what percentages might be equitable given their circumstances.

Should You Hire a Business Valuator?

The first step is to evaluate whether the business is a marital asset – or what portion of the business is a marital asset. Was the business gifted to one of the parties before or during the marriage, or has it grown during the marriage? Was the business a gift or inheritance from a parent (gifts and inheritances are generally non-marital property)? Did both spouses invest into a premarital, gifted, or inherited business during their marriage? You may have a blend of a marital and a non-marital business, so the next step is to carve out the marital portion of the business.

Before hiring a forensic accountant to value a business during a high-net-worth divorce in New Jersey, however, you should consider the size of the business. For example, one spouse may have a side business that does not generate more than a small profit – if any profit at all. From a cost-benefit perspective, it would not make fiscal sense to have a professional business valuation performed on that kind of business. If the business has multiple employees and provided a high-net-worth marital lifestyle for both of you (and your children, if any), on the other hand, hiring a forensic accountant would likely be necessary.

Alimony and High-Net-Worth Divorce in New Jersey

New Jersey, alimony (which is also known as spousal support) is addressed under the factors that are set forth under the Alimony Reform Act. The first step would be to determine the standard of living of the marriage. To do that, f your divorce is contested (and possibly even if it’s not), both of you must complete and file a “Case Information Statement” (CIS), which is known as a “Financial Affidavit” in some states. Your CIS reflects your monthly expenses of the parties monthly and separately if they have already separated. The court considers the needs of the recipient spouse and the supporting spouse’s ability to pay among other factors, such as the duration of your marriage, your ages, your respective physical health, and equitable factors.

Stock Options and High-Net-Worth Divorce

A stock option is the right to buy stock in the company that employs the spouse at a discounted or fixed price within a certain period of time. Stock options can be valuable, and they are subject to equitable distribution as a marital asset. Since the stock has not yet been purchased – and the right to purchase stock cannot be transferred to the non-employee spouse – the stock options are distributed by a constructive trust known as a “Callahan Trust.” The non-employee ex-spouse receives his or her percentage of the shares from the Callahan Trust when the options vest.

Prenuptial Agreements for New Jersey Business Owners

A Prenuptial Agreement (also called an Antenuptial Agreement, or a Premarital Agreement) is a contract between two people who are contemplating marriage and is effective upon the date of the marriage or civil union. The agreement should include all property of the parties including their business, real estate investments, retirement accounts or pensions and debts.

A Prenuptial Agreement must contain full disclosure, so if a business is involved, the business owner must provide their corporate and personal tax returns – which may include a K1, Schedule C, whatever tax documentation is applicable. Most parties do not obtain a forensic evaluation for a Prenuptial Agreement, and business owners generally have a good idea of what their business would sell for. If you choose to include the value provided by the business owner, you must confirm that you accept that stipulated value and that you waive your rights to any formal forensic evaluation.

Prenuptial Agreements for High-Net-Worth Individuals/Families

For a high-net-worth individual and/or someone from a high-net-worth family, a Prenuptial Agreement is invaluable – especially when the engaged person has an interest in a family business. Prenuptial Agreements in these situations are very common as the family wants to protect the business in the event that the marriage ends in divorce.

For a Prenuptial Agreement to hold up in court, it is essential that the agreement include each party’s rights and obligations as well as full disclosure of each party’s earnings, assets, and debts immediately before the marriage. The full disclosure should be supported by documentation such as statements of net-worth, investment statements, savings statements, retirement statements, and tax returns.

To be enforceable, both parties should be represented by counsel, and there should be enough time for the non-monied party to be advised by their attorney and to fully understand the agreement before signing it. The Prenuptial Agreement must be signed by the parties voluntarily and it must be conscionable.

It is valuable for the non-monied party to have a prenuptial agreement so that they know what would happen in the event of a divorce; with the help of their attorney, they can make the decision as to whether they want to live with the conditions of the agreement. If there is a waiver of financial obligations such as spousal support, the waiver must be voluntary. Issues of child support and custody would not be enforceable in a prenuptial agreement.

High-Net-Worth Divorce: Mediation vs. Litigation

Mediation can be a very effective way to resolve a high-net-worth divorce case. If you need to have a business valuation, you and your spouse will select a neutral forensic accountant or business valuator to perform the valuation; since the neutral is working for both of you rather than just one of you, you are more likely to accept the expert’s opinion. You can hire other financial neutrals with specialized expertise if necessary to value everything from a baseball card collection to an ocean-going yacht. real estate. After all marital property has been valued, you and your spouse can enter into an agreement that no judge could order if your case went to court. Instead, you can “think outside the box” and design a settlement agreement that is in both of your best interests.

The Law Office of Brassington & Browndorf – Serving all Your Family Law Needs

Successfully resolving a complex, high-asset, or high-net-worth divorce in New Jersey requires a matrimonial or family law attorney with financial knowledge and expertise regarding businesses and investments, negotiation and trial skills, and abundant relevant experience. To secure your financial future, contact the law office of Brassington & Browndorf in Linwood, New Jersey; call 609-601-2323.