Divorce is notorious for being one of the most difficult times in a person’s life. The process is emotionally taxing and rarely simple. Unfortunately, the division of assets process can be more complicated when a wealthy couple chooses to divorce. High-net-worth individuals should seek the counsel of a family law lawyer who is experienced in handling high-net-worth divorces. This article aims to provide basic knowledge about high-net-worth separation and advice about where to turn for assistance.
When a high-net-worth couple decides to separate and end their marriage, it can be extremely difficult to untangle their finances, especially if they have multiple assets like stock options, investment properties, real estate, and business interests.
At Gelman & Associates, our family law lawyers regularly assist clients with complex, high-net-worth matters and can help you understand how Ontario’s Family Law Act and the federal Divorce Act may apply to your situation. Contact us today to speak about your situation.
High Net-Worth Individuals and Divorce
High-net-worth separation and divorce typically involve couples who have a significant combined total net worth. This might mean that they individually own large amounts of property, or that they have created a household that shares multi-million dollars in assets.
Under Ontario law, marriage is considered an equal partnership. This means that when a marriage comes to an end, Section 5 of the Family Law Act requires an equal division of property to occur. This rule applies, in particular, to the matrimonial home. However, there are certain types of property that do not require any division upon divorce.
A high-net-worth individual might own a variety of real estate, stocks, bonds, trusts, business interests, and more when they get married. They might have also entered the marriage with a prenuptial agreement and trusts of their own. High net-worth divorces tend to be more complex because the individuals involved have large amounts of property (often held in different forms) and the process of dividing and separating that property takes time and competent professional assistance.
Grounds For High Net-Worth Separation And Divorce In Canada
There are three legal grounds for any divorce in Canada, including those between high-net-worth individuals. When petitioning for divorce, a spouse may allege:
- Cruelty [Section 8(2)(b), Divorce Act 1985] – That one spouse has been physically or mentally cruel to the other such that living together has become intolerable.
- Adultery [Section 8(2)(b), Divorce Act 1985] – One spouse has committed adultery, and the other has not forgiven them.
- Separation [Section 8(2)(a), Divorce Act 1985] – The parties have lived apart for at least one year and consider their marriage to be over.
You may apply for a divorce using any of the above reasons, regardless of the assets you or your partner holds. Once you file for divorce, an experienced high-net-worth divorce lawyer will be able to help you determine the value of your assets and what division might look like.
What is Grey Divorce?
Grey divorce refers to the demographic trend of older people getting divorced who have been married for a long time. Grey divorces are also sometimes called “silver or diamond splitters,” considering the amount of assets that have accumulated over the length of the relationship. The prevalence of divorce among over-50s in Ontario is increasing. In fact, the rate of divorce for those over the age of 50 has doubled over the last 20 years.
The reasons for the high rate of divorce among this older population are varied, but some of the factors at play include:
- people postponing their divorces until their children are fully grown;
- Empty nesting causes a breakdown in the relationship between older couples;
- Couples who have been married before have a greater likelihood of divorce, and second marriages often occur among an older population
- And additional reasons.
Read more about grey divorce in Ontario.
High Net-Worth Separation vs. Grey Divorce
While a high-net-worth separation or divorce can occur at any age, it is most common among older populations. This is because older partners are more likely to have amassed a greater amount of wealth by the time they separate.
It is important to know that, no matter what stage of life you are at, you can take steps to separate and divorce from your partner and protect your assets at the same time. However, a high-net-worth grey divorce can be difficult because partners and their lawyers must unwind and divide the large number of assets and business interests involved.
A grey divorce can have the same complications caused by wealth, but they can be further complicated by factors related to age, including:
- Retirement
- Mental competency
- Social security income and benefits
- Long-term care considerations
- Estate planning
- Interests of adult children
- And more
These considerations often intersect with wills and succession planning and other estate issues. At Gelman & Associates, our high-net-worth separation and divorce lawyers can help you address every aspect of your family law matter.
Challenges Unique to High Net-Worth Separation And Divorce
A high-net-worth separation can present a variety of unique challenges. While the primary challenge with any divorce is the emotional turmoil it causes, a high-net-worth divorce also entails accurately valuing large quantities of family property.
When a family’s portfolio includes business interests, professional practices, and real estate holdings, the assistance of a professional appraiser may be required to accurately define the family’s total wealth. Stocks, bonds, pensions, and retirement accounts may further complicate the equalization process.
Dividing property and assets in a high-net-worth divorce can also have serious tax implications for each party. That’s why you need family lawyers and other experts, such as professional accountants, chartered business valuators, and tax lawyers, to assist. At Gelman & Associates, our legal team works with all relevant assets to make sure your situation is handled clearly and efficiently.
How Can A Family Lawyer Assist With High Net-Worth Divorces?
Some people going through a divorce might not want to disclose all of their financial documents, and could try to keep certain assets secret from their spouse. We do not want this to occur in your situation. A family lawyer should be able to help you get an accurate valuation of your spouse’s total net worth by examining their financial statements and corporate accounts in detail.
A legal team can help:
- Identify, trace, and value complex assets such as stock options, investment portfolios, and privately held businesses.
- Coordinate with accountants, business valuators, and tax professionals to understand the tax consequences of different settlement options.
- Ensure that appropriate financial disclosure is obtained and that no significant asset is overlooked.
Our Toronto separation and divorce lawyers provide support, guidance, and representation throughout this process and can discuss the best path forward based on your specific circumstances.
Common Mistakes Made in High Net-Worth Separation And Divorce
Common mistakes individuals make in high-net-worth divorces might include:
Agreeing to settle too quickly
A common mistake is one of the parties agreeing to settle before they are ready because the level of stress and trauma becomes overwhelming. It is necessary to take the time to evaluate the offer you receive rather than settling too hastily.
Generally speaking, we always recommend that you secure meaningful legal advice before you sign any agreements. Not doing so may impact your finances significantly, putting your future well-being at risk.
Hiding assets from their spouse
Some people deliberately hide their property to prevent their spouse from receiving a fair share. The Family Law Act clearly states that spouses must disclose all assets as part of any divorce settlement. As your lawyers, we make sure to do our best to uncover all of your ex-spouse’s assets and make sure that you get everything to which you are entitled.
Hiring the wrong lawyer
Lawyers who deal in high-net-worth divorce are uniquely skilled in working with clients with large estates. If you don’t hire a lawyer with relevant experience in high-net-worth divorce, they may lack the necessary experience to foresee potential issues. At Gelman & Associates, the members of our legal team have decades of combined experience handling divorces that involve significant and varied assets.
For additional guidance on selecting representation, read our guide about choosing a lawyer.
What Alternatives to Litigation Can High-Net-Worth Individuals Seek?
| Mediation | Mediation allows parties to reach a solution by following the guidelines of a third party called a mediator. Although it is not necessary, it is a key way you may resolve your dispute. |
| Arbitration | An arbitrator is appointed to hear evidence and make an expert determination. The advantage is that there is no defamation, and the proceedings happen in a closed room rather than in public court. |
| Collaborative Separation | Both parties agree to use mediation and negotiations to arrive at a conclusion. They also agree not to take court action before the collaborative process is complete. |
To learn more about these processes, you can explore our resources on alternative dispute resolution.
Contact Gelman & Associates’ High-Net-Worth Separation & Divorce Lawyers Today
If you are in need of an experienced divorce and separation lawyer with knowledge of handling high-net-worth clients, call our legal team at Gelman & Associates today. Our lawyers understand your needs and can provide you with tailored solutions. We can connect you with experts who regularly navigate large, complex financial portfolios and have extensive experience in the field of high-net-worth divorce.
With offices in Aurora, Barrie, Grimsby, Mississauga, North York, Scarborough, Toronto, Whitby and other locations across Ontario, we’re ready to help with high-net-worth separations and divorce for clients across the province.
Call us at (844) 736-0200 or visit our contact page to book your consultation and discuss your case with a member of our team.
