High Net Worth Divorce
If your high income level, family wealth or personal investments are adding complexity to the dissolution of your marriage, Stern Perkoski Mendez has attorneys who specialize in high net worth divorce and can expertly support you in navigating the process.
Any divorce in which the size of the marital estate or a party’s income adds complexity to the divorce process may be best handled by an attorney specializing in high net worth divorce. Tax issues relating to a family’s income or assets, as well as the source or sources of money, often complicate the division of assets, maintenance and child support.
Our divorce and family law attorneys at Stern Perkoski Mendez have expertise navigating tax shelters and determining how to best manage family gifts, high income and complicated compensation structures. We handle these delicate cases ethically and confidentially, while ensuring your income and assets are protected.
Our experience with high net worth divorce has proven that mediation leads to more favorable outcomes than litigation. With substantial amounts of money and complexity, mediation allows divorcing couples to better focus on the specifics of their case. However, whether your divorce leads to mediation, collaborative law or litigation, we will represent you zealously and help you find the best resolution for you.
What Constitutes a High Net Worth Divorce?
Many factors contribute to classifying a divorce as high net worth, but these are common situations that add complexity and necessitate an attorney familiar with the nuances of high net worth divorce:
- You receive income from a K1, 1099 from trading and sale of securities, or stock options and unusual incentive bonuses from your company.
- You are in sales, so most of your income comes from bonuses and varies widely every year.
- Much of your income is tied up in various investments.
- Your spouse’s family owns a large business. In order to marry into the family, you have to sign a pre-nuptial agreement to protect their trust.
How Do High Income and Tax Shelters Affect My Divorce?
Tax shelters are commonly used by households with substantial income to offset their higher marginal tax rate. Tax shelters can take many forms, although private LLCs and real estate depreciation are perhaps most common.
When a high-income couple divorces, it is possible that one spouse may continue to have a substantially greater income than the other. As such, the assignment of privately held LLCs and other tax-assisting assets will play a role in the final settlement above and beyond their fair market value. This can, in turn, benefit the spouse who is likely to receive maintenance (alimony) if it permits the other spouse to have a greater net income.
If your income is significantly higher than your spouse’s, our divorce attorneys at Stern Perkoski Mendez have experience setting up tax shelters and private LLCs—and can assist you in protecting your income during divorce.
What Happens to My Trust and Family Gifts During Divorce?
High net worth divorces frequently involve family wealth, which may be included in a spouse’s income depending on the situation. During the dissolution of marriage, the source of wealth often complicates the division of assets.
In many cases, individuals with substantial family wealth will create a prenuptial agreement (link) before marriage, often at the discretion of their family lawyer. The prenuptial agreement will hold ultimate authority and act as a protective measure to ensure that any trust and family gifts are retained in divorce.
If you have significant family wealth and did not sign a prenuptial agreement, our divorce attorneys can work with you to determine how to navigate division of assets, maintenance and child support in a fair and ethical way.
How Are Maintenance and Child Support Payments Determined in High Net Worth Divorce?
In nearly every marriage, there is an income discrepancy between spouses—and sometimes, it can be a substantial difference. Maintenance and child support exist to ensure that the lower earning spouse can continue living a similar lifestyle to that during the marriage, and that the child or children have everything they need at both households.
Maintenance and child support are determined using a formula dictated by Illinois statutes. However, the formula only applies to couples with a combined income of $500k or less. There are no specific legal guidelines for spouses with a combined income exceeding this cap—leaving maintenance and child support to the discretion of a judge, the attorneys or the divorcing couple depending on how the marriage is being dissolved.
For couples who make less than $500k combined per year, maintenance will be awarded as 33% of the higher earning spouse’s income minus 25% of the recipient’s gross income. (See our Maintenance Calculator.) This formula does not always make sense—nor is it legally required—for spouses grossing more than $500k.
If you and your spouse are earning $500k or more per year, it’s critical to hire a divorce attorney who understands the discretion and judgment required above this income level—as well as the intricacies of Illinois statues. For high-earning couples, their income is frequently complicated by an income that flexes with compensation, sales, family wealth and money tied up in investments.
To determine ethical maintenance and child support in these cases, our attorneys at Stern Perkoski Mendez can work with you to develop a structure that ensures you give or receive a fair amount of money in your divorce. This may mean a monthly payment schedule or a lump sum, depending on the specifics of your divorce and income.
Contact Our High Net Worth Divorce Law Firm in Evanston, Chicago or Lake Forest
If you have further questions about high net worth divorce or wish to discuss your case, please contact Stern Perkoski Mendez for a a free consultation online or call us at (847) 868-9584. We will happily meet with you at our offices in Evanston, Chicago and Lake Forest or at another location.