By Steve Erfle, CFP®, CDFA™, MBA

Divorce is never easy. However, some divorces are far more complex than others. A prime example is a high-net-worth divorce. 

If a divorcing couple owns a house, two vehicles, and a joint bank account, dividing assets is likely to be simple. If the couple has multiple business ventures and one spouse has a complex executive compensation package, figuring out fair distribution can be a challenge.

For high-net-worth couples, dividing complex assets often requires collaboration with professionals, careful strategy, and an in-depth knowledge of both financial and legal principles.

Who Keeps Complex Assets? The Answer Can Significantly Impact the Settlement 

Complex assets may be valuable and difficult to accurately appraise. In a high-net-worth divorce, these assets may be divided first because they have a major impact on the ultimate settlement.

The list below is not exhaustive, but it covers some of the most common complex assets I’ve seen in high-net-worth divorces.

Privately Held Businesses

Dividing shares of publicly held businesses tends to be straightforward because the shares are valued daily on a stock exchange. Private businesses must undergo a professional business valuation, which usually takes six to twelve months and can cost between $10,000 to $20,000 or more.

Real Estate

Similarly, real property must be appraised before the property division phase of a high-net-worth divorce. Sometimes the spouses disagree on the home’s value, making it necessary to schedule (and pay for) multiple appraisals.

Mortgages must usually be refinanced to remove one party’s name, and given today’s high rates, that can be an unwelcome change. If one spouse is stuck with a much higher interest rate because they received the property in the divorce, the settlement may be adjusted accordingly.

Executive Compensation

Executives often receive generous (and intricate) compensation packages. I’ve found that compensation is often especially complicated for tech executives. In addition to a standard salary, executives can receive multiple other types of compensation:

• Restricted stock units (RSUs)
• Stock options
• Performance shares
• Deferred compensation
• Carried interest arrangements
• Bonuses

Before you attempt to divide this kind of compensation, it’s wise to have a detailed timeline of vesting schedules, grants, and payoff dates—as well as having a professional complete an analysis of marital versus separate property.

Depending on the division of assets, the distribution of executive compensation may come with major tax implications. It can be risky to attempt to divide and distribute this kind of compensation yourself.

Remember the Importance of Balance

If you’re in the midst of a high-net-worth divorce, be careful to avoid becoming rich in assets and poor in cash. I find it’s often a smart strategy to have a certain amount of liquidity to cover expenses and set up your new life as a divorced person.

Lean on Your Professionals

The valuation and division of complex assets requires a team of knowledgeable professionals. Generally, we recommend your team to at least include the following:

• An accountant
• A financial planner
• An attorney

The better these professionals work together as a team, the more smoothly your high-net-worth divorce is likely to go. In some cases, your team may have to get creative to come up with a reasonable division. For instance, asset or cash equalization often makes it easier to come to a fair settlement.

Anticipating a High-Net-Worth Divorce?

High-net-worth divorce can be financially, emotionally, and logistically difficult. However, Thrive Wealth Management, LLC, is here to help guide you through this challenging process. We have extensive experience assisting our clients (and especially clients in the pharmaceutical industry) through this process. 

If you’re in the midst of a high-net-worth divorce or think you may be soon, contact us to see how we may be able to assist you. To schedule a meeting, call (215) 376-5530 or email steve@thrivewealth.com.

Frequently Asked Questions About High-Net-Worth Divorce

1. What makes a high-net-worth divorce more complicated than a typical divorce?

A high-net-worth divorce often involves business interests, real estate, and executive compensation packages that require professional valuation and careful planning. These complex assets make determining a fair division far more challenging than in a standard divorce.

2. How are complex assets (like private businesses or executive compensation) divided in a high-net-worth divorce?

In a high-net-worth divorce, complex assets typically require formal appraisals, business valuations, and detailed analysis of vesting schedules or tax implications. Collaboration among financial planners, accountants, and attorneys is essential to reach a fair and informed settlement.

3. Why is it important to work with a team of professionals during a high-net-worth divorce?

Because a high-net-worth divorce involves assets that are difficult to value and divide, having a coordinated team of experts can help shield both liquidity and long-term financial stability. Financial planners, attorneys, and accountants can work together to structure a division that supports your future.

About Steve

Steve Erfle, CFP®, CDFA™, is a Co-Founder and Managing Partner at Thrive Wealth Management, LLC, a boutique financial firm located in Blue Bell, Pennsylvania, dedicated to offering REAL financial planning for a fair fee. With over 15 years of experience helping clients move from confusion to confidence in their financial lives, Steve specializes in comprehensive financial planning, including investment management, retirement, tax and estate planning, charitable giving, risk management, and divorce consulting. 

Prior to founding Thrive Wealth Management in 2013, Steve worked at SEI Investments, Legacy Advisors, and United Capital Private Wealth Counseling, gaining experience with high-net-worth clients on wealth management, family continuity, and estate distribution. Steve obtained a BA in Economics from Ursinus College, an MBA in Finance from Saint Joseph’s University, and holds the CERTIFIED FINANCIAL PLANNER® and Certified Divorce Financial Analyst™ designations. Outside of work, he enjoys spending time with his wife, four children, and two dogs, as well as coaching youth sports and playing basketball and golf. To learn more about Steve, connect with him on LinkedIn.

Disclosure:

This material is provided for informational and educational purposes only, should not be viewed as an exhaustive discussion of the topics presented, and should not be construed as individualized advice for any reader’s personal circumstances. For guidance on how these matters may impact your financial plan or investment portfolio, please contact your Thrive Wealth Management, LLC representative. While the information presented is believed to be factual and up to date, Thrive Wealth Management, LLC does not guarantee its accuracy and, due to various factors, including but not limited to changing laws and regulations, this information is subject to change. All expressions of opinion reflect the judgment of the authors as of the date of publication. Thrive Wealth Management, LLC is not a law firm or an accounting firm, and no content contained herein should be construed as legal or accounting advice. Please consult with the qualified professional(s) of your choosing for legal and accounting advice.

Please visit https://thrivewealth.com/disclosure for additional information regarding the professional designations and credentials discussed. Professional designations and credentials do not guarantee success or any particular investment or financial outcome.

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