Divorce sometimes presents unique problems for high-income earning and high net-worth litigants. These problems are diverse and present in ways ranging from making private information public through the divorce process to valuing businesses and unique assets. In this blog post, we cover three keys such litigants need to know to navigate the divorce process and flourish after the divorce is final.
The first consideration in most high net worth cases is valuations. These may range from valuing businesses to unique assets like artwork. Smart and prudent use of qualified experts usually saves time and money in the overall resolution of your case. The divorce court will rely on fair market values in order to fairly divide the marital estate.1 When business interests are involved, which range from a family business to ownership in a closely held corporation, it is usually necessary to engage an expert to place value on the business or business interest. Without a skilled expert who is a leader in his or her field, there may be wide variations on the value which results in an unjust division. Or worse, the court could find there is no value to the business when it could be very valuable.
One of the threshold inquiries that an expert may be called upon to address is the question of whether there is transferrable value. In other words, would and could the business sustain itself under new ownership or is the litigant merely using his or her unique skills to earn an income through a business entity. Thus, the fair market value of the business to be equitably divided is what a third-party would pay for the business or the litigant’s ownership of the business. Because the value of a business may range from zero to millions of dollars, a prudent litigant begins a business valuation early in the process. Who is your expert?
Secondly, as a general rule, divorce filings are public records. This means that the majority of documents filed with the divorce court are accessible by the public at large at any time. While certain information is maintained as confidential,2 and available only to the parties and their counsel, a Marital Settlement Agreement or order issued by the court following a contested trial is generally public information. Practically speaking, this means that a third party with no involvement in your case could review the agreement you reach or the order of the court following trial and use such private and highly sensitive information to your detriment and that of your business. However, experienced counsel can provide guidance as to the legal tools under Indiana law to protect your privacy—including financial privacy—on divorce.
There are other aspects of divorce where privacy and/or protection of confidential information should be considered. For instance, if you are a business owner being asked to provide information about your business for valuation purposes, which may include proprietary information or trade secrets, a protective order may be appropriate.3 These are available in all civil cases under the Indiana Rules of Trial Procedure. Protective orders are used to prevent the dissemination of such information beyond the parties and the professionals who are conducting the valuation. This allows the owner spouse to comply with discovery requests necessary for the litigation and a fair decision by the court but prevents access to competitors or others who might use such information in a manner that could be harmful to you and/or your business or business interest.
Lastly, a skilled attorney can make all the difference in complex cases that require experience and creativity to navigate all of the barriers in a divorce where high wealth is involved. For instance, a skilled attorney may negotiate a settlement of property in a unique way that allows for settlement by dividing assets in a way the divorce court could not because the parties have the constitutional right to contract for asset and liability division in a divorce; this means the parties may agree and divide their property on terms the divorce court would not have the authority to order. A skilled divorce attorney will help you craft a settlement that is tailored to your specific needs and those of your business, all by thinking beyond what the Court might order if the case were to proceed to a final hearing. In cases that proceed to trial, a skilled divorce advocate will work closely with you and any experts to present a strong case to the Court. This includes accounting for all assets and explaining them in the evidence in a way that is clear to the court, along a theme of why the court should divide the assets in the way you seek at trial. Simply stated, complex financial matters present complex legal issues, and it is critical to have an attorney who understands such matters and can effectively argue these complex issues to the Court.
This blog is written by advocates at Ciyou & Dixon, P.C. who handle complex divorce cases of all types throughout the state. This blog is written to provide general information to legal consumers and the public at large. It is not intended as legal advice or a solicitation for services. It is an advertisement.