High net worth divorce is often fraught with complexities. Beyond the emotional turmoil of ending a marriage, there’s also the matter of divvying up assets and liabilities.
One potential source of contention is determining spousal support. How much should be paid? For how long? By whom, and at what rate?
Divorce is not an easy undertaking for any couple, but if mishandled, it can have far-reaching consequences regarding finances and shared investments.
In this blog post, we explore some of the challenges associated with spousal support determinations in high net worth divorces.
Understanding What Spousal Support Is and How It Works
Spousal support, also known as alimony, is a payment you make to your former spouse after divorce. These payments are there to help the lower-earning spouse maintain their lifestyle, since they have come to rely on their spouse financially.
Spousal support, also called “alimony” lasts for a specified length of time, or it could end when an event modifies or eliminates the obligation altogether. For example, the receiving spouse could remarry.
Factors a Court Considers When Determining Spousal Support
The specifics of spousal support vary widely, depending on the jurisdiction and individuals involved.
Elements that influence spousal support include:
- the length of the marriage
- each spouse’s current income
- the age and health of each spouse
- the earning potential of each spouse
- evidence of abuse within the marriage
- the “accustomed lifestyle” of each spouse (this can include luxury expenses)
The Role of Prenuptial Agreements in Spousal Support
Prenuptial agreements, also known as “prenups” or premarital contracts, can set guidelines for how to manage assets and liabilities after a divorce. With it, you can outline spousal support payments.
Such contracts are becoming increasingly popular, even among couples of average means.
Prenups can provide financial protection, allowing both partners to feel secure in their decision to get married. By understanding the role of prenups in determining spousal support, couples can gain more clarity and peace of mind going into marriage.
If, however, you are now experiencing a divorce without a prenup, it may be too late to attempt creating one. You can, however, negotiate spousal support terms and submit these agreements to the court, bypassing the need for a trial.
The Different Types of Spousal Support and Their Durations
In Florida, there are four different types of spousal support:
- Permanent support lasts until either spouse's death.
- Bridge-the-gap alimony is temporary and helps the receiver transition into single life.
- Rehabilitative support helps someone get back on their feet. The receiver must meet certain employment expectations, or they could be cut off.
- Durational support is designed to provide a financial boost, and it lasts as long as the marriage. For a five-year marriage, durational support lasts five years, etc. It can also end if the receiving spouse remarries.
The Difficulties of Maintaining Lifestyle in a High Net Worth Divorce
In high net worth divorce, it’s difficult to pinpoint an appropriate amount needed to maintain the supported spouse’s accustomed lifestyle.
For one, couples with a high net worth often have complex financial situations. Assets can include businesses, investments, and multiple properties.
Additionally, their lifestyle may involve expensive purchases and luxury experiences that can be difficult to quantify. The paying spouse could spend a considerable amount on spousal support, keeping them within their accustomed lifestyle. Even with this expense, the payor could remain wealthier than the receiver. This may result in the receiver believing they are being treated unfairly.
In high net worth cases, it may be necessary to include forensic experts and financial analysts. They can assist with valuing assets and estimating future income. Of course, you also need a good attorney who can argue for a fair support agreement that benefits everyone.
Russell S. Hershkowitz, L.L.C. is here to help you negotiate a reasonable spousal support settlement in your high net worth divorce. To contact our team, call us today at (407) 753-4111 or contact us online.