Navigating a high-net-worth divorce
Updated: Sep 22, 2022
Dividing the assets of a marriage can be a challenge, even when a separation or divorce is relatively straightforward. But when there is a large variety of assets worth millions of dollars at stake, the process can get a lot more complicated — even acrimonious, says Toronto family lawyer Gary Gottlieb.
That’s what happened in the 2018 divorce of American billionaires Harry and Linda Macklowe. By all accounts, the division of property was contentious. In addition to their other substantial assets, including the General Motors Building in Manhattan, the couple had acquired a huge collection of blue-chip works of art over more than five decades of marriage.
Splitting vacation homes, art collections
The art, including pieces by renowned artists Jackson Pollock, Andy Warhol and Mark Rothko, made up about 75 percent of their total assets. Half of the couple’s collection ended up being sold at a Sotheby’s auction in November 2021 for a record-breaking US$676 million. Journalist Vicky Ward told the New York Post that Linda had wanted to keep the collection together but since she had forced Harry to sell the GM Building, selling off the art was considered “the ultimate tit for tat.”
Closer to home, former Shark Tank star Robert Herjavec and his ex-wife Diane Plese were embroiled in a high-profile court battle over several of the family’s real estate assets, including ski chalets and a Florida vacation home. After a long and complex trial involving testimony from business valuators and real estate appraisers, Herjavec was ordered to pay Plese $125,000 a month in support and a total of $25 million, representing her share in the family property.
Of course, most divorcing couples won’t have to deal with dividing up such a massive accumulation of wealth or have such an acrimonious split. But for those with significant financial assets, divorce or separation can be complex and they will need help to navigate the process.
A network of trusted professionals
Gottlieb says it’s important to have legal counsel with access to a network of trusted professionals who can help in handling the assessment and division of marital assets and other financial concerns. High-net-worth divorces — typically worth more than $3 million — often involve multijurisdictional assets around the world, including:
· Real estate
· Business Ownership
· Trust funds
· Fine art or antiques
· Executive bonus packages
· Books of business
“Our firm has developed an extensive network of business valuators, real estate appraisers, forensic accountants, and other professionals who we trust to serve our clients’ needs,” Gottlieb says.
Determining child/spousal support
Toronto family lawyer Gary Gottlieb says the main issue in high-net-worth divorce cases is how to value the multifaceted assets, many of which are held by corporations, that can make such divorces so complicated.
“Usually, I work with lawyers in foreign jurisdictions to ensure that I have the proper values for the assets and any rules and regulations of that particular jurisdiction that I need to be aware of,” he says.
Gottlieb’s professional network also includes business valuators and forensic accountants who work with high-net-worth clients to ascertain the value of business assets. Sometimes a spouse won’t know about certain assets or assets may be hidden, which can further complicate the process, he explains.
“High-net-worth people are used to working with professionals, so they tend to expect very good customer service, including fast turnaround on the response time and being available for their questions when they want information,” says Gottlieb.
Determining child and spousal support in these cases can be a challenge since some high-net-worth clients are not necessarily drawing a salary.
“These are people who are getting dividends or who are managing what has remained in the company and what draws they take,” says Gottlieb, so it can be difficult to determine their true income. He relies on the means-and-needs test to determine what the monthly support payments should be.
“It goes back to calculating what their true ability to pay is, what their true lifestyle is, and what the family has gotten used to as their lifestyle.”
That can include plenty of expensive activities, such as horseback riding, skiing lessons, country club memberships, and high-end skating competitions.
Parties in a high-net-worth divorce may be tempted to try to hide their assets but Gottlieb says it’s important that everything is disclosed when a property is being divided.
“Any attempt to hide or conceal assets can destroy a spouse’s credibility in court,” he says.
Since judges don’t take kindly to a lack of transparency and honesty, Gottlieb says he encourages clients to be completely honest and transparent about all their assets.
There can be “obfuscation, evasion, or avoidance and so, while it is open for people to interpret things in different ways, it’s not open for them to lie,” says Gottlieb. “When people are found to be liars, there’s no way of getting out of that quagmire.”
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