Challenges of Divorce Involving High-Net-Worth Individuals in South Carolina

What is a Considered High Net Worth Divorce?

The State of South Carolina recognizes both a fault and no-fault divorce. A fault-based divorce must occur on the grounds of adultery, alcohol or substance abuse, physical cruelty or domestic violence, or desertion. A no-fault divorce may be granted after the couple lives separately for one year.

A high-net-worth divorce involves a couple whose property has a high monetary value. This type of divorce is typically more complicated due to the nature and extent of the divisible assets and other factors.

How is Property Divided in a High Net Worth Divorce?

A key challenge in high-net-worth divorce cases is dividing the high-valued assets between the two parties. During the divorce process, assets are divided into two separate categories:

• Separate property is property that was owned individually by either party prior to the marriage.
• Marital property is property that was purchased during the marriage or that marital time or funds were used to maintain up to the date of divorce.

South Carolina employs a system of equitable distribution to divide marital assets. Equitable distribution requires that marital assets are divided between both parties based on what is fair, though not necessarily a 50/50 split. Only marital property is divided between the parties, and, generally, separate property remains with its original owner unless it has become a comingled asset, which means marital funds or time has been spent to maintain the asset.

High-value assets that may be divided during divorce refer to significant financial investments that may include:

• Real estate, such as marital homes, vacation homes, rental properties, or commercial real estate
• Investment portfolios, such as stocks, bonds, mutual funds, or other market-based investments
• Business interests, such as partnerships, corporations, or small business ownership
• Retirement accounts and pensions, such as 401(k)s, IRAs, and other long-term investment plans
• Collectibles and luxury items, such as art collections, jewelry, vehicles, and other property

What Factors Determine Property Distribution?

Factors used to determine which party receives which asset include:

• Length of the marriage
• Earning potential of each party
• Contributions to the marriage, including family care and homemaking
• Marital misconduct that contributed to the demise of the union
• The age of each party
• The value of the marital assets
• Which party has primary child custody
• Tax implications for either party
• Other factors the judge may consider relevant

Asset division is a common challenge for high net worth divorce for several reasons, including:

• Complex asset valuation: Shared assets such as business interests, stock options, or investment portfolios may require the services of a forensic accountant or business valuation specialists.
• Hidden assets: During a contemptuous divorce, assets may be fraudulently hidden from the other party in an attempt to avoid sharing the value. Asset discovery is crucial in the distribution process.
• Tax implications: The tax consequences of selling or dividing assets should be thoroughly considered when negotiating fair distribution.

What is the Benefit of a Prenuptial or Postnuptial Agreement During a High Net Worth Divorce?

Prenuptial and postnuptial agreements are contracts that contain how assets, business assets, and alimony will be divided between the two parties during a divorce. A judge reviews the contracts to ensure they are fair and then signed by both parties, either prior to or during the marriage.

While this type of agreement typically makes the asset division process easier, it is not an ironclad document and can be challenged or invalidated by either party.

A valid prenuptial or postnuptial agreement in the State of South Carolina must meet certain legal criteria to be enforceable. For example, the document must be in writing and signed by both parties, who entered the agreement voluntarily and free of duress, fraud, or coercion.

A prenuptial or postnuptial agreement may also only be enforced if it contains the full and fair disclosure of assets. This means that each party must have a thorough understanding of the other party’s financial situation prior to signing the agreement. Hidden assets or failure to disclose assets could cause an agreement to be nullified.

How is Alimony Determined in a High Net Worth Divorce?

Alimony or spousal support tends to be more significant in a high-net-worth divorce. Determining alimony can be difficult due to the variety of income sources, including salary, bonuses, dividends from investments, and profits from businesses.

Factors used to determine alimony include:

• Marital misconduct that contributed to the demise of the marriage
• The length of the marriage
• The standard of living enjoyed during the marriage
• The income and earning potential of each party
• The age and health of each party
• Which party has primary custody of the children
• Which party has contributed to the marriage, including homemaking and family care
• The use of a prenuptial or postnuptial agreement

How Can You Help to Protect Your Assets?

Some strategies to use to ensure high-valued assets are protected during a divorce include:

• Hire an experienced attorney: A family lawyer with experience in high-net-worth divorces, such as those at The Howze Law Firm, LLC, can help you navigate the complexities of asset distribution and protect your interests.
• Get a comprehensive asset valuation: Forensic accountants and business valuation specialists can help you obtain accurate valuations of all assets, including business interests, investments, and real estate.
• Utilized mediation or collaborative divorce: These could be cheaper alternatives to settle asset division without the need for court involvement.
• Prepare for discovery. The discovery process will allow both parties to request information regarding assets and income, which is crucial in asset identification.

Do You Need an Attorney?

If you are considering divorce and you share high-valued assets with your partner, you need legal help who is ready to help you navigate this complex process and fight for what is rightfully yours. Call The Howze Law Firm, LLC, at 803-266-1812 or fill out a contact form to schedule a consultation.