Divorce is a difficult experience regardless of how long a couple has been together or how many assets they have between them. However, high net worth divorces can lead to unique issues, especially when discussing tax issues and support, in tandem with asset division. Equity is the watchword, and it can be more difficult to achieve equity when there is a wider pool of marital property than usual.
A divorce generally falls under the heading of “high net worth” when several large assets are at issue during proceedings. The most common assets at stake in these types of divorces can include:
Because these assets generally have high monetary value, and because there are laws that strictly govern their conveyance (especially regarding classes such as real property), it can very often take a professional to assess what is legally possible and what is not. It can even become more difficult if the assets of a divorcing couple include business interests that may not end even if the couple ceases to be a couple.
Illinois, unlike many other states, is an equitable property state. This means that all property is equitably divided between the spouses, but this is not always as easy as it seems. It is extremely common for spouses (and lawyers) to disagree on whether something constitutes marital or non-marital property. One might think this was straightforward – property acquired during the marriage is marital property, at least in theory – but there are enough exceptions where reasonable minds may sometimes disagree. The most common exception is a gift or inheritance to one spouse; that asset remains solely their property (if retained solely in their name), even if acquired during their marriage.
Another possible issue when negotiating a high net worth divorce agreement is the question of asset hiding. While it does happen at a fairly steady clip – a National Endowment for Financial Education (NEFE) study in 2011 reported that about three in ten Americans were routinely untruthful with their spouse or partner about financial matters – it is nonetheless improper. It is a breach of the rules of civil procedure to knowingly lie on divorce asset disclosure forms. In Illinois, asset hiding is punishable by fines and/or jail time in serious matters. The principle of equability is taken very seriously by the courts, as well as the principle that both spouses should be left financially stable after a divorce.
High-net-worth divorces in Illinois pose distinct challenges due to the intricate nature of assets, financial holdings, and legal considerations involved. Unlike standard divorces that typically deal with simpler financial situations, high-net-worth cases often encompass business valuations, hidden assets, and specialized negotiations pertaining to complex financial arrangements. Below, we explore the latest trends and considerations that shape high-net-worth divorces in Illinois, elaborating on each aspect for a clearer understanding.
The division of assets in high-net-worth divorces necessitates a thorough and detailed financial analysis to achieve a fair and equitable distribution. The variety of assets commonly involved includes:
Business Ownership Interests – This can encompass privately held companies or partnerships, requiring expert valuation to ascertain worth.
Investment Properties and Vacation Homes – Real estate assets must be appraised, often considering market conditions and potential rental income.
Stock Portfolios, Hedge Funds, and Retirement Accounts – These financial instruments require careful assessment of current valuations and potential future growth, which may involve financial advisors to effectively analyze.
Executive Compensation Packages – High-ranking professionals may have complex compensation structures, including bonuses, stock options, and deferred compensation that need precise evaluation.
Luxury Items – Valuables such as fine art, antiques, and collectibles often necessitate the expertise of specialists in those fields to appraise accurately. Given the complexity of these assets, leveraging professionals like forensic accountants and financial experts is often essential to determine accurate valuations and provide a comprehensive view of the marital estate.
In high-net-worth divorces, issues of hidden assets can complicate proceedings significantly. It is not uncommon for one spouse to attempt to obscure certain financial holdings to benefit themselves during asset division. In such scenarios, courts may mandate forensic accounting services to thoroughly investigate financial records and uncover hidden funds, offshore accounts, or undisclosed investments. Ensuring full financial transparency is critical for both parties involved, as it fosters a fairer and more equitable settlement process.
Many affluent couples choose to safeguard their assets by entering into prenuptial and postnuptial agreements. These legal documents define the terms of asset division, spousal support, and financial responsibilities should a divorce occur. By laying out clear expectations and protecting individual interests, these agreements can effectively minimize disputes during the divorce process. They not only provide a framework for negotiations but also establish guidelines for addressing financial situations that may arise during the marriage.
The division of high-value assets carries substantial tax implications that can significantly impact both parties’ financial futures. Illinois courts take into account tax liabilities when determining settlement agreements, which means that careful planning is essential. Often, financial advisors help navigate these tax considerations, structuring agreements strategically to reduce tax burdens and ensure that both parties are positioned favorably in a post-divorce scenario.
Wealthy individuals often face heightened concerns regarding privacy during divorce proceedings. The potential for public exposure of personal financial details can add stress to an already challenging time. To mitigate this, many high-net-worth divorces incorporate confidentiality agreements or utilize private mediation processes that allow for discussions and negotiations to remain confidential, thereby keeping sensitive information out of the public eye.
Due to the inherent complexity of asset division and the extensive financial negotiations required, high-net-worth divorces often take significantly longer and incur higher costs compared to typical divorce cases. The financial implications extend to legal fees, expert consultations, and the potential for protracted court proceedings, all of which contribute to the overall expense. It is not uncommon for these divorces to become a lengthy and drawn-out process, impacting both emotional well-being and financial stability.
By understanding the unique characteristics and current trends of high-net-worth divorces in Illinois, individuals can better navigate the complexities associated with these cases, ensuring that they are equipped to address the unique legal and financial challenges that may arise.
Disagreements over property division can, on occasion, render an entire divorce agreement subject to lengthy discussions and outright battles. The assistance of a competent legal professional can help smooth out the process and eliminate any lingering confusion over the complex rules of asset distribution. The Chicago high net worth divorce attorneys at Gordon & Perlut, LLC have years of experience in these cases and are ready, willing, and able to share their knowledge with you. Contact our offices in Chicago or Skokie to discuss your options. We serve the entire Chicagoland area.
(Updated 4/21/2025)