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August 28, 2020 Blog

High Net Worth Divorces In The Time of COVID-19: Is Now The Right Time To Split?

ring from high networth divorceIf you’ve recently made the decision to divorce, you’re definitely not alone. Divorce lawyers in North Carolina have seen an uptick in couples wishing to separate during the COVID-19 pandemic. Lots of people are spending more time together under these stressful circumstances and finding out that they no longer enjoy each other’s company. However, the current economic and logistical challenges are making an already difficult process even more complicated, especially for high net worth couples. 

Even before the courts (and COVID) get involved, high net worth divorces in North Carolina are much more complicated than your average split. While couples with just a few assets simply have to fill out a couple of forms, agree on the terms of the divorce, and speak with a judge to dissolve their marriage, it gets a lot messier when there are numerous complex assets to divide, alimony to consider, and business interests involved. 

Timing is everything in a high net worth divorce. Your asset value is constantly fluctuating and the timing of your divorce could significantly change the amount of the settlement for each party. Whether you’ve been considering divorce for a long time or you’re just starting to realize that there’s no way to make the relationship work, you might be wondering if getting a divorce during COVID-19 is a smart financial move. 

The short answer to that question is “maybe.” Every divorce situation is different, but if you’re dealing with the prospect of a high net worth divorce in the Raleigh North Carolina area, here are some things to consider when timing your split. 

What Qualifies as a High Net Worth Divorce?

Although net worth is relative, divorces are generally considered high net worth if the combined assets exceed one million dollars. This does not mean that divorces involving fewer assets will be easy or simple to resolve, but they are not considered to be high net worth.

High net worth divorces can be contentious. There’s a lot at stake, and if you don’t have a prenuptial agreement in place, then you might have to go through extensive mediation or even the courts to protect your assets. Even if you are your soon-to-be-ex are on good terms, splitting up assets can be a painful process that can easily turn sour.  

Ultimately, it doesn’t matter if your divorce will be high net worth or not. If you have complex business and retirement assets, multiple properties, or other major financial considerations, then it’s important to think about the timing of your divorce. If you split up during COVID, for example, your house might be worth more than you expected. On the other hand, your retirement portfolios and other assets may have dropped in value.

Assets to Consider

When thinking about the best time to proceed, consider the value of all your assets and how they might change over the course of the divorce discussions. You’ll be gambling on the market to some degree should you choose to divorce during the pandemic. However, the timing makes sense for some high net worth families. It’s all individual!

Assets to consider may include: 

  • Bank accounts
  • Investment accounts (including retirement accounts)
  • Primary residence 
  • Rental and commercial property 
  • Vacation home
  • Business assets 
  • Vehicles and/or boats 
  • Furniture
  • Valuables, collectibles, and artwork
  • Tax refunds or losses
  • Timeshares 
  • Patents, copyrights, and trademarks
  • Insurance policies 

During the pandemic, some asset values have been holding steady or gaining, while others have been fluctuating or dropping. The economy has shrunk significantly overall, but the stock market continues to hold strong. Home prices have also remained high, due to low inventory and excellent interest rates for buyers. 

Many people entering into a high net worth divorce don’t consider all of the smaller assets that must be split up and fail to fully understand what they could lose. Before you initiate the proceedings, think about what assets are the most important to you and what you feel you could give up without much trouble.

What Can You Expect to Retain?

Unlike some states, North Carolina divorces are settled under the equitable distribution model. The assets held by a married couple are split up in a way that is deemed fair by the courts, but is not necessarily equal. That’s good news for people who are entitled to more than 50% of the common assets within the marriage. 

With that said, courts are working under extraordinary circumstances during the pandemic and might make different decisions than they normally would when it comes to splitting up assets. Alimony might end up being higher due to the poor job market and it will be more difficult to assess the true current and future value of some assets. Working with a talented divorce lawyer will help ensure that you get your fair share of the assets, but the outcome may be more unpredictable during the pandemic. 

Remember the Separation Period

Under North Carolina law, couples must be separated for at least one year before they will be granted a divorce. If you’re just now thinking about splitting up, you should realize that the market conditions could change significantly by the time you actually get divorced.

Regardless, it’s important to get the separation process started as soon as you can. You and your spouse must live apart continuously for twelve months and one day before you can legally divorce. Since high net worth divorces usually take time to resolve and settle, you can use the separation period to start that process. 

In a High Net Worth Divorce, Dating and Wasteful Spending Could Count Against You

When people get separated, it isn’t usually out of the blue. Generally, it’s something that happens after a long period of unhappiness, which causes a slow erosion of the marriage. In some cases, marriages dissolve because one of the partners was wasteful or dishonest with the spending of common funds. That slow erosion and loss of trust are partly why it’s so common for people to start dating again very soon after they separate. 

It’s totally understandable to feel ready to date again right away. But doing so can be risky, especially in high net worth divorces in North Carolina. If you start dating, particularly before you are officially separated, your ex could try to use that fact against you to get a higher settlement, custody rights, and other valuable perks. 

It’s rare that dating would be taken into consideration by the court when assigning assets, but it’s something you need to consider before you move forward with the case. Wasteful activity might also affect the court’s decision. Thinking about the possible long-term consequences of your actions is important when you’re getting ready to divorce. 

Understand That Your Divorce Will Take Time

High net worth divorces aren’t simple, especially when there are numerous types of assets involved and ongoing disagreements over those assets. COVID-19 is slowing things down even more, especially with the increased demand for divorce proceedings nationwide. 

These cases can take quite a while to untangle through mediation, so it’s a good idea to get started as soon as possible if you want to resolve your divorce immediately after the separation phase is complete. If you can work with your ex amicably, the process will be a lot quicker and a lot less painful, but that isn’t always possible. 

If you’re thinking of beginning the divorce process during COVID-19, you need to consider not only the economics of splitting up now but how the current market volatility might affect the settlement later. With all the uncertainty, the courts will not have their usual reliable guidelines for determining what’s fair. 

No one has a foolproof crystal ball in these situations and the COVID-19 pandemic continues to shake things up in unexpected ways. You might assess the value of your assets at the beginning of the process, only to find that a year later, when your hearing arrives, that their value has changed dramatically. That’s a risk you have to be willing to take if you want to enter into divorce negotiations in the near future.

 

You Can’t Do it Alone—Talk To a Lawyer Immediately

If you will be splitting up lots of assets in North Carolina, then it’s important not to make any big missteps along the way that could jeopardize your case. Even if you haven’t yet separated from your spouse, it’s important to speak with a lawyer as soon as possible. If you’re still trying to decide if it’s best to separate during the pandemic or wait until things calm down, an experienced high net worth divorce lawyer in North Carolina can evaluate your situation and make recommendations. 

People who only have a few assets to distribute don’t always need help from a divorce lawyer. But in high net worth divorces, you need someone to help you who understands the ins and outs of divorce law and asset distribution in the Raleigh area. 

Getting divorced isn’t fun. It’s a messy process that usually involves stress and frustration. Although it’s not possible to eliminate those problems altogether, an experienced and motivated attorney can walk you through the process and make it as painless as possible. 

At Gailor Hunt in Raleigh, NC, we understand that each divorce case is unique. Our renowned attorneys are standing by to help you retain the assets that matter the most and resolve your divorce as quickly as possible. Call (919-367-1512) today to connect with one of our expert divorce lawyers.  

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