The Impact of Divorce on Executive Compensation Packages and Stock Options

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Marriage to a high earner in Florida may sound like life will be smooth sailing in the years ahead. That is not the case if the marriage ends in divorce. The higher a divorcing couple’s net worth in Florida, the more complicated their divorce.

The divisions may not cover just assets such as a home, property, investments, and cars but also the executive compensation one or both spouses will receive from their employer. 

Stock options, company cars, and future bonuses may be awarded to valuable high-net-worth employees who a company wants to retain. The challenge for your Florida family law attorney is to recognize corporate compensation received during the marriage and classify it as a marital asset subject to equitable distribution.

Complex assets include:

  • Supplemental Executive Retirement Plans,
  • Profit sharing plans 
  • Life insurance benefits
  • Pension benefits
  • Top-Hat Plans
  • Deferred compensation plans,
  • Excess Benefit Plans
  • IRAs and 401(k)s 

Equitable Distribution

Unlike a community property state such as California, where half of the community property is divided 50/50 in a divorce, Florida follows equitable distribution, allowing the couple to negotiate assets that are valuable to them. For example, the wife may value furniture and jewelry more than the husband and retain those items instead of cash.

Ultimately there may not be a 50/50 split of assets but an equitable or fair share of property. 

Both states are no-fault, and adultery is rarely considered unless there is a child custody question. The judge has the option to consider each individual’s financial circumstances. When there is a sizeable difference in each spouse’s income, the judge can consider additional compensation as long as it was accrued during the marriage and with marital assets.

The court will consider the length of the marriage. Additionally, credit card debt will also be divided.

Transparency of Executive Compensation

Another challenge is recognizing when these bonuses are delayed in light of a divorce to avoid sharing the compensation with their spouse.

An employee may have been able to purchase stock in his company at a lower price than the actual market price when they exercised their stock option. When dividing these assets, it’s essential to consider the tax consequences and whether the stock has dropped in value or increased. 

The divorcing spouse may take a portion of stock options, 401(k) plans, pensions, and IRAs instead of cash. A judicial order may be required to establish you as an alternative recipient of these benefits.

Whether a stock, bond, executive compensation, or security, estimating their value may require the company to be brought into court to determine the actual value. 

If compensation is deferred or withheld until the future, the ultimate value must be considered in a Florida divorce. 

Contributions made during the marriage with marital assets and a company match may restrict access, so it’s important to understand the rules of these plans before counting on collecting their assets.

A divorce settlement may specify that executive compensation and stocks be held in a trust for the benefit of the non-employee spouse.

Prenuptial Agreement Post Nuptial Agreement

In some cases, one of the spouses may have signed a prenuptial agreement or prenup. It guarantees that one of the spouses wants to keep everything he earned and is not subject to equitable distribution. To make a prenup or postnup legitimate, your attorney will tell you what you are giving up when you sign one before or after the marriage. 

It may be more than you intend, especially if children must be provided for. 

Your Florida Family Law Attorney

It’s essential to understand the assets you accrued in the marriage, the various types of executive compensation, and how they are divided in light of a Florida divorce. 

Attorney Crystal Collins Spencer will be your ally in understanding what may be available when assets are co-mingled and when they are intentionally kept separate.

She insists on transparency in the divorce process and is an expert at uncovering assets subject to equitable distribution. Executive compensation, stock options, and health care benefits are valuable assets in a high-asset divorce that must be included in a divorce settlement.

Contact her at her Pensacola office at 850-795-4910. She provides valuable divorce knowledge for high-net-worth divorcing couples throughout the Florida Panhandle.

Minimizing Reputational Damage During High-Net-Worth Divorces 

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A Florida high-net-worth divorce can become incredibly complicated. The couple’s many assets must be identified and valued. These may include property, businesses, homes, cars, art, and antiques.

This assumes all the assets are disclosed, which is not necessarily the case every time.

A couple can work together to negotiate their dissolution, or the proceeding can become contentious, requiring them to go to trial.

Amidst the divorce proceedings, one spouse may opt to tarnish the reputation of their soon-to-be ex-partner. That can be done through online platforms such as social media or in a less-than-flattering media interview. The media’s fascination with high-net-worth divorces often uncovers unsavory details, typically to the detriment of one party.

Given the potential for reputational harm, factoring this into your Florida divorce mediation is crucial. A seasoned family law attorney is your most reliable guide to navigate these turbulent waters, ensuring a fair distribution of assets under Florida law and shielding you from the reputational damage that one spouse may inflict on the other.

Equitable Distribution

Unlike some states, such as California and Texas, which are community property states, Florida law requires that assets be distributed equitably. That does not necessarily mean equal division, but it does allow the couple to determine what is essential to each of them and negotiate accordingly.

In a high-net-worth divorce, we often find a prenuptial agreement in place. Both spouses sign the contract before their marriage and after consulting with their individual lawyers. Its contents are private.

The purpose is to protect substantial wealth in a legally binding insurance policy of sorts. A spouse who finds the proposed agreement insulting can simply refuse to marry.

A prenup signed a day before marriage may ultimately be unenforceable because it can be presumed to have been entered into under duress. A signed prenup may also be invalidated if one partner has not fully disclosed their assets. However, you should not assume that a prenup can be challenged. On the face of it, a prenup is generally recognized by the Florida court as a valid agreement.

Before the marriage, the couple should discuss their wealth. They must be honest about their assets, disclose all and any discrepancies in their wealth, and how that will be divided in case of a divorce. If they agree and commit their agreement to writing, the division of assets will be easier in the event of a divorce.

However, suppose the divorce becomes contentious, and one wants to challenge any previous agreement. In that case, one spouse can try to leverage more money under the threat of disclosure or bad press.

Social Media

A great deal of harm can result when a high-net-worth individual wants to use the media to help navigate their divorce. It can spiral downward into a nasty electronic fight. Children will be collateral damage, as will the high-net-worth individual’s reputation. Their business may be damaged, as well as their ability to conduct future business.

A harmful post can hurt both spouses. Someone who wants more in an equitable distribution may post they are disadvantaged in their settlement. The other side will look for online evidence that they live a good life and are not impoverished. Both sides have reputational harm as a result of a negative post.

Additionally, a social media post can be used to hurt one spouse during settlement negotiations.

A prenuptial agreement should address the potential use of social media as a negotiating tool to pressure a more attractive settlement and discourage that option.

It’s advisable to:

  • Regularly audit your posts for any negative information
  • Make sure your settings are private so no one can spy on your communication.
  • Change passwords regularly.
  • Avoid removing any information while you are in litigation or expecting to enter into legal action. To do so could be considered destroying evidence.
  • Think before you post anything that someone can use against you.
  • Never share details of a prenup, a settlement, or ongoing negotiations with the media.

Your Florida Family Lawyer

Serious reputational damage and privacy issues can result from ignoring social media during a high-net-worth divorce.

Attorney Crystal Collins Spencer understands the pressures of a high-net-worth divorce and can help manage your reputation during this challenging time. Call her Pensacola office at (850) 795-4910 to arrange an initial consultation about your upcoming divorce and share your concerns about reputational harm with her. Ms. Spencer has the experience and compassion to listen and act on your behalf.

High Net Worth Divorces: Understanding the Intricacies of Valuing Private Equity Holdings

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Over recent years, some high-net-worth individuals have emerged from the middle class by playing the market and investing in real estate. However, a typical eight percent return may not suffice for some with loftier financial aspirations. Private equity increases the risk but may also result in higher yields on your invested money.

Also increasing is the complication in valuing private equity holdings when facing a divorce.

In the unfortunate situation of dissolving a marriage, art, jewelry, homes, property, second homes, and boats can all be valued. Private equity holdings represent complexities to valuation and may have tax consequences that must be considered.

An experienced family law attorney will advise you on separating these holdings when facing a Florida divorce.

Private Equity Holdings

In a Florida divorce, a divorcing couple follows the Florida equitable distribution guideline. That means assets acquired during the marriage become marital property and are subject to division.

Unlike a community property state where 50/50 division is the standard, equitable division allows the couple to consider their version of what they believe is “equitable.”

For example, a boat purchased with marital assets may mean more to the husband than the wife, and in turn, she can retain something of similar value purchased with marital assets.

Meanwhile, homes, property, art, jewelry, and second homes all have value, which can be accurately ascertained.

However, the value of a private equity fund (PE) is often unclear, as it is increasingly an investment choice for ultra-high-net-worth individuals. They promise higher returns, especially over the long term, but PE involves risk and is not easily liquified. Typically, an investment lasts from five to 15 years.

While company shares can be valued, private equity (PE) refers to shares of a company that are not listed on the stock exchange.

Private equity partnerships may manage and invest in mature companies before they are sold. To value private equity, the company’s future profitability must be considered by looking at the earnings projection, management team, growth projections, and current revenue.

Also, consider the industry: Is it likely to grow in the future?

Valuing Private Equity Holdings

When dividing private equity holdings, valuation should consider publicly traded comparables, company analysis, and discounted cash flow methods. These are standard approaches in private equity valuation:

  • Publicly Traded Comparables (Comps): This involves comparing the target company to similar publicly traded companies using various financial metrics such as price-to-earnings (P/E) ratio, enterprise value-to-EBITDA (EV/EBITDA) ratio, and price-to-sales (P/S) ratio.
  • Company Analysis: This includes a detailed analysis of the target company’s financial performance, growth potential, and market position.
  • Discounted Cash Flow (DCF): This method estimates the present value of the company’s future cash flows, adjusted for risk and time value of money.

Complications in a Florida Divorce

When facing a Florida divorce, several issues can arise:

  • Prenuptial and Postnuptial Agreements: If one of these agreements exists, asset valuation may be a moot point if the assets are excluded from the division. Florida law allows for prenuptial and postnuptial agreements to dictate the distribution of assets, potentially bypassing the need for valuation.
  • Expectation for Future Investment: Calculating the value of private equity holdings can be challenging due to the expectation of future investments to realize the fund’s total value. Legal and tax advisors may need to analyze both the present and future value of these investments.
  • Volatility: Private equity investments are typically long-term and can be highly volatile. The value of these investments may fluctuate significantly, and there is always a risk of the company failing. Any valuation should consider the potential for losses and the long-term nature of these investments.

Buyout or In-Kind Transfer Options

  • Buyout Option: One spouse may buy out the other’s interest by paying half of the estimated valuation. Taxes and fees should be considered in this process.
  • In-Kind Transfer: This option allows the spouses to split ownership equally, with each spouse responsible for providing additional capital when needed to increase the investment.

Valuation Process

  • Director Consultation: A discussion with a company director may provide insights into the value of the investment and its future prospects.
  • Financial Statements and Tax Returns: These documents are essential for estimating the fair market value of the investment. Normalized financial statements, which adjust for non-recurring or non-economic items, provide a more accurate picture of the company’s earning capacity.

Your Florida Family Law Attorney

Attorney Crystal Collins Spencer understands the complications presented by dividing the assets of a high-net-worth couple in a Florida divorce. She is focused on providing her clients with a sound plan that allows a spouse to move on with their lives, retaining what is most important to them. During a consultation, Ms. Spencer can outline some options for moving forward. Call her Pensacola office at (850) 795-4910 to begin the conversation.

Sources:
Investopedia
https://www.investopedia.com/terms/p/privateequity.asp

Navigating the Complexities of Divorce and Pensions

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You may believe that in a Florida divorce, what is yours, with your name on it, is not subject to division. But this is not necessarily the case.

Under Florida law, a pension, 401k, IRA, or profit-sharing plan you contributed during your marriage is subject to division. Simply put, it is a marital asset.

Florida law differs from other states, which divide marital assets in a 50/50 manner. In Florida, equitable distribution is the guideline for couples to follow when they divorce.

Ensuring a fair and equitable division of assets in your Florida divorce can be complex. To navigate this process successfully, it’s crucial to seek professional advice. Crystal Collins Spencer, a seasoned family law attorney, can provide the guidance and support you need, particularly if you and your spouse have significant assets.

Crystal Collins Spencer’s expertise and experience are invaluable during this challenging time. Her deep understanding of Florida’s divorce laws and her ability to advocate for her client’s best interests make her the ideal choice to represent you in your divorce proceedings.

Divorce and Pensions

In most divorces, homes, bank accounts, property, cars, and art are divided equitably, meaning the couple will negotiate the division if they agree. The division is predicated on several factors:

Some things to consider:

  • How long they were married.
  • Each individual’s economic circumstance
  • Each person’s contribution to the marriage, including no-economic contributions.
  • Each person’s debts, especially considering debt incurred by one individual.

A retirement or pension plan is divided into the same considerations. While a pension plan, or defined benefit plan, guarantees the employee a specific amount of money when they retire, the employer fully funds a defined benefit plan into a tax-deferred investment account.

Your attorney will draft a Qualified Domestic Relations Order (QDRO). This formal order establishes your ex’s right to receive monies from your retirement plan, which the administrator can execute.

Because the retirement plan was supplemented with marital assets earned during the marriage, it is subject to division, whether a 401K, a Roth or IRA, or any retirement plan from your employer.

Even if one spouse didn’t work, contributions to the marriage could be non-economic, such as child care. The pension would still be subject to division in that case.

Complexities of Dividing a Retirement Plan

In some cases, couples have a prenuptial agreement that keeps assets away from the divorcing spouse otherwise, the theory of equitable distribution applies.

Contributions Before Marriage – It’s essential for your family law attorney to understand what type of retirement plan you’ve been contributing to and for how long. Did the contributions begin before the marriage? In that case, only those assets contributed during the marriage are marital property and subject to division.

Lump Sum—If you do not seek a QDRO, you and your attorney may opt to pursue a lump sum payment at the time of the employee’s spouse’s retirement.

Substitute Assets—Another complexity is that some government pension plan administrators may not accept QDROs. Government pension plans are not subject to QDRO requirements and are not obligated to settle with a lump sum.

In that case, the parties would have to negotiate a substitute for the assets that can’t be divided. For example, if the wife is due $25,000 from the pension plan, she might instead seek a piece of property the couple owns.

Military Retirement Divorce— In a military spouse divorce, the non-service member cannot receive more than 50% of the retiree’s benefits. Calculating benefits in a military retirement account can become very complicated.

Your Florida Family Law Attorney

A general rule of thumb is the more assets you have, the more complicated the divorce can be. Things can become even more complex when one spouse is not transparent about what he owns or when he tries to transfer assets into a hidden account.

There are many factors to consider when dividing retirement plans during a Florida divorce. You do not want to find out the hard way that you missed information that would allow you to make an essential decision for your financial future.

Let Crystal Collins Spencer be your biggest ally during this difficult time. She handles family law matters in Pensacola and the surrounding Florida Panhandle. She can be reached to arrange a confidential consultation in her Pensacola office at 850-795- 4910.

Unpacking the Complexities of Trust Funds in High-Net-Worth Divorces

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High-asset divorces are more complicated than divorces for couples of modest means, especially if trust funds are involved. A trust fund defines the formal relationship between the grantor, trustee (a third party), and beneficiary. An individual with assets transfers them into a trust, which defines who will manage the property if they cannot do so.

A trust fund is essential for protecting assets, estate planning, and naming beneficiaries. No couple expects that when they say, “till death do us part,” they will need to divide assets in a divorce, but as we know, half of all marriages fail. Unpacking the trust fund may become essential to dividing assets in a Florida divorce.

Suppose you plan to divorce or marry, and significant assets are involved. In that case, you may want advice from a family law attorney with decades of experience in high-asset divorces and marriages. Crystal Collins Spencer can help answer your questions during an initial consultation.

Trust Funds

A trust is one way to protect assets before a divorce, especially since an individual cannot move assets during a divorce. At that time, the court will consider the timing fraudulent.

There are two different types of trust funds.

  • A revocable trust means the grantor can change it at any time, has full access, and can move assets into and out of the trust. A revocable trust, overseen by the grantor, a party to the divorce, means the trust may be divided during a divorce.
  • An irrevocable trust protects property against creditors and legal judgments. It cannot be modified for any reason, which creates complications when a divorce is pending.

There are other types of trusts, and whether they are subject to division depends on the trust’s language and when it was formed.

Funding a Florida Trust Fund

Dividing a trust fund in a high net-worth divorce requires that many questions are asked and answered, for example:

  • Was the trust set up before the marriage? The funds then may be the sole property of the grantor if that can be determined.
  • If set up during the marriage, did marital funds contribute to the trust fund? Monies earned during the marriage are subject to division unless a prenuptial or postnuptial agreement specifies that the trust assets are not to be included in a divorce and both partners agree to that language.
  • Dividing a trust fund becomes more complicated if your assets have been co-mingled during the marriage. Have trust assets been deposited into a joint account? Besides cash assets, was one person working and the other taking care of the children? All contributions to the marriage will be considered in a divorce, even non-financial contributions.
  • Was the trust set up to benefit the children or their education? If so, it could be subject to division in a divorce.

Your Florida Divorce and Family Law Specialist

Attorney Crystal Collins Spencer understands that dividing a trust fund in a high net-worth divorce requires accurately valuing it. She and her team will investigate who contributed to the fund and whether all assets have been disclosed.

Ms. Spencer has seen some creative avenues someone may take to hide assets, and she understands how to uncover them.

Offshore trust funds will also be subject to investigation and division in a divorce if both spouses contribute financially to the trust. Even non-financial contributions need to be valued and considered an asset subject to division.

As a soon-to-be-single person, concessions made before and during a marriage should now be reevaluated as you plan on moving ahead without the financial support of a marriage partner.

Whether property, brokerage accounts, business interests, homes, cars, or art, you must consider the tax implications of assets post-divorce.

Seeking legal representation when considering a divorce can put you in the best financial situation as we negotiate your separation. Now is not the time to passively agree to any settlement to get it over with. It is also not the time to try to shift assets, as the court will not consider that favorably.

For more than thirty years, Attorney Spencer has advised high-net-worth individuals facing divorce in Pensacola, Sandestin, and Fort Walton.

Let Crystal Collins Spencer’s professional guidance give you the peace of mind you will need moving forward.

Call her Pensacola office at (850) 795-4910 to arrange a consultation to help you move forward in your life.

Protecting Intellectual Property Rights During a High Asset Divorce

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A high-asset divorce can bring particular complications to the settlement table.  Both parties will understandably want to retain what they consider their individual property, but a marital settlement in Florida will divide assets equitably.

While intellectual property (IP) often cannot be divided, its future profits are a consideration for a divorcing couple.

To retain your particular intellectual property rights, you must contact a family law specialist who understands the intricacies a high-asset couple brings to the table.

Intellectual Property

What is intellectual property?  It can be a book, script, radio or television show, an invention, computer code, art, or any creative effort that can be patented, trademarked, or copywritten to protect the owner.

A patent is the most common type of protection for intellectual property rights. With a patent, the owner can sell the invention or license it to another party. IP can deliver value to its owner, who can then develop, protect, and monetize the property.

Protecting Intellectual Property Rights

Several things must be done to get organized as the first step in protecting intellectual property rights during a Florida high-asset divorce. You must know what you have and its value.

  • First – Compile a list of intellectual property (IP) assets and gather the documents that validate such agreements, such as certificates, financial records, and licensing agreements. Determine who contributed to the IP, including financial and other contributions, contracts, and nondisclosure agreements,
  • Second – Hire a professional appraiser who can value the intellectual property in the present and future. That will be speculative but provide some idea of future income from the IP. Consider tax implications and the ongoing cost of maintaining the IP. A forensic accountant or IP attorney will be needed to accurately determine the value of your property before considering how to distribute it equitably in a divorce proceeding. The other option is to use this assessment as the basis for a payout now, not in the future.
  • Third – Protect your intellectual property by closing loopholes, updating confidentiality agreements, and preventing unauthorized access to sensitive information or trade secrets. Document the contributions to the IP made by both spouses.
  • Fourth – Your divorce settlement must address all of your IP concerns. With the help of your attorney, a mediation might include a post-nuptial agreement that addresses how intellectual property will be treated in the divorce. Include in the mediation the assessment of what the value of the IP will be in the future. A non-disclosure agreement, as well as other contracts, may be required as part of the mediation.
  • Fifth – There needs to be an enforcement mechanism in your mediated divorce settlement that may include monitoring and protecting intellectual property rights and a penalty for any violations.Your

Your Florida Family Law Attorney

Among the assets a divorcing couple will address, intellectual property has the potential to generate some of the most contentious and bitter fights.

That’s because it is personal property, and the owner may be very attached to his property and not willing to put it in the pool that is to be equitably divided.  However, if there is present and future value to the IP, and it falls under the definition of a marital asset, unless you’ve negotiated otherwise, it may need to be divided in a Florida divorce.

Attorney Crystal Collins Spencer advises clients that the rights to the income generated by IP will be subject to a discussion about an equitable division along with property, investments, cars, homes, and even time with the children.

At this time, staying closely in touch with the mediations is advised to explore your options thoroughly. Equitable division in Florida does not mean equal, and a settlement may become more favorable if you can work with your ex-spouse rather than have the court impose a divorce settlement.

Attorney Spencer has nearly four decades of experience in high net worth and complex divorce matters. She will be your ally in the division of IP if you call her Pensacola office, Spencer Law, at (850) 912-8080 to begin the conversation. Her family law practice represents individuals from Pensacola to Ft. Walton, Sandestin to Santa Rosa Beach, and Panama City.

Navigating the Transfer of Real Estate During a High Asset Divorce

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A Florida divorce is one of the most stressful events you can endure. Many individuals would like to stay put in the family home, especially if children are involved, and one of the most frequent questions from divorcing couples is whether they can keep the home.

The answer is it depends.

Florida is an “equitable distribution” state. That means that unlike community property states, where assets are tallied and divided “equally,” a divorcing Florida couple can divide assets as equitably as they determine. They will outline their decision in a divorce settlement crafted with the help of their attorneys.

In a high-asset divorce, there may be contributions to the marriage that deserve consideration even though they are not financial. The division of assets will be finalized in a divorce settlement that may not divide assets in a 50/50 manner but instead in a manner that reflects the contributions each made to the marriage.

Transferring Real Estate

The court will first determine if the real estate is marital or separate property.

If marital property, under Florida law, married couples hold the property as tenancy by the entireties, meaning they are both 100 percent owners of the property and entitled to any profit and liable for any debts associated with the property.

In the case of separate property, if the home was owned by one of the divorcing spouses before the marriage, it could remain the property of that spouse, providing that joint assets were not used to improve the home or pay off the mortgage. If the couple used marital assets to maintain the house or to pay down the mortgage and taxes, the equity in the home may be subject to an equitable distribution.

If assets are needed to address the divorce settlement, one spouse may agree to a buyout over the property. A buyout releases one owner in exchange for assets, usually cash. That may be a necessary outcome when one person wants to remain in the home and the other wants to leave.

In a marriage where the primary asset is the home’s value, the court may order the house sold as part of the divorce.

Key Words to Transfer Real Estate in a Florida Divorce

Dividing Florida property during a divorce is accomplished by filing a quitclaim deed. Real estate is transferred via a deed, and a quitclaim deed is the most efficient way to remove the name of a soon-to-be ex-spouse, removing all of their interest in the property, not just half.

The recipient (grantee) is named as is the grantor (granting the property to the other). The deed does not indicate whether the grantor has an interest in the property.

Within families, quitclaim deeds are often used when the grantee understands the grantor has some ownership of the property.

Transferring real estate during a high-asset divorce should involve keywords to transfer the property correctly.

Under Marital Settlement Agreement and Final Judgment of Dissolution of Marriage should include:

  • The date
  • The correct names and addresses of the grantor and grantee
  • The legal description of the property and parcel identification number
  • Using a notary and both grantor and grantee signing before two witnesses
  • Recording the deed at the county recorder’s office

The grantee then will have a clear title to apply for a new mortgage in their sole name. The other spouse then will have no further legal obligations to the mortgage holder.

This property division should only be undertaken if the grantee maintains the home and pays all the bills.

If the divorcing couple has settled, the final divorce judgment will likely state both parties must sign the quitclaim deed. If one refuses, the other can take him back to court.

The receiving spouse can legally transfer the title by filing a copy of the divorce judgment with the clerk of court records.

You will want to accomplish a transfer of property at the time of the divorce so that you are not surprised down the road when you go to sell a property you thought you had an interest in and find you must negotiate with a former spouse whose name is still on the property.

Your Florida Family Law Attorney

Transferring real estate during a high-asset divorce can be complicated and open to interpretation. That is why Crystal Collins Spencer is your greatest asset at this time. She has spent more than three decades delving into the tactics one spouse may use against the other in a high-asset divorce. Let her experience work for your side in negotiating a favorable dissolution of your marriage.

Attorney Spencer works with individuals and complex family matters in Pensacola, Sandestin, Fort Walton, and the surrounding Florida communities. Contact her to schedule an appointment at (850) 795-4910.

Divorce and Philanthropy: How to Handle Shared Charitable Endeavors

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You and your spouse have decided to go your separate ways. For most couples, that means dividing assets and making decisions about the children and custody issues. 

Some couples grow their wealth while married and are committed to charitable endeavors. The Family Wealth Report estimates in 2020, charitable giving amounted to $471 billion. The majority of high-net-worth families, nearly 90 percent, contributed to this amount.

Whether you have a private foundation, a donor-advised fund, or volunteer your time because philanthropy is vital to you, these forms of giving must be reassessed when a couple divorces. 

Family law attorney Crystal Collins Spencer specializes in high-net-worth individuals changing their family structure. A consultation with her will help send you in the right direction for your future needs.

Assessing Your Commitment

As is sometimes the case, one of the soon-to-be-ex partners may have more of a commitment to charity than the other. During your divorce discussion, the couple should honestly assess each person’s degree of dedication. Is your standing in the community based on giving to charities? How will you continue to fulfill that commitment? Or is that commitment important to you in your new life?

Your shared value to philanthropy may go through a significant shift when you become single. 

Some things to consider are:

  • Can one partner be more active in any charitable organization and its future growth?
  • Can the other partner remain present in name only with less of a contribution?
  • What is the role of individuals –donors, advisors, or trustees, and how does that impact their gift after a divorce?
  • To what extent have financial contributions represented your spending together, and can that continue? 
  • To what degree do finances versus volunteer hours represent your contribution?

It’s entirely possible that one of the partners may want to launch in an altogether new direction after the divorce. That may be represented by a new charity, even in a different area of the country.

If you both remain committed to the same charity, will you be comfortable working together in the future, even when you are not married? You may both decide that your generosity and commitment to a cause override any animosity between you, ultimately benefiting both parties and the cause you are both committed to. 

All of these possibilities must be considered, preferably under the guidance of a third party.

Philanthropic Settlement Agreement

Attorney Spencer may suggest if you are committed to moving forward with your philanthropic efforts, she can help craft a settlement agreement to define charitable assets. If you use stocks, real estate, or cash directed to the charity, you must ascertain which person will continue owning those assets. 

A charitable mission statement may help define gift-giving objectives in the future.

Will your new arrangement require you to rearrange a board of directors in the future? If you have a foundation, how will that be handled when you are no longer married? 

Contributors no longer own the charitable entity but may be able to advise its direction moving forward. Should a donor-advised fund be divided into separate funds? Alternatively, a charitable trust can name a charity as the beneficiary and include both heirs and a charity. 

The agreement should specify the stated goals for the future of the organization. 

Also, what contribution each individual will make, whether financial or volunteer hours, will be decided. 

Tax consequences will be attached to your charitable giving, and the couple needs to ascertain which option is best.

Your Florida Divorce and Family Attorney 

Dividing a couple’s assets into charitable purposes can be complicated and must include advice from estate planning, tax, and non-profit specialists. 

Attorney Crystal Collins Spencer represents couples throughout Florida and in the Pensacola, Ft. Walton Beach, and Sandestin, Florida, areas focusing on family law.

In her 35 years advising couples, she has encountered many high-net-worth couples with complicated uncoupling needs. Ms. Spencer will counsel you with sound, aggressive strategies to allow you to move forward with your new life, with particular attention to maintaining your strong sense of personal responsibility.  

Call our Pensacola office at (850) 795-4910 to arrange a consultation on your needs moving forward.  

Sources:

Family Wealth Report
https://www.familywealthreport.com/article.php?id=192813

Maintaining Privacy and Confidentiality During a High-Net-Worth Divorce

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Avoiding a lengthy court battle is the best way to keep personal matters private and confidential when a marriage ends. Preplanning can circumvent the potential for unwanted disclosure and stress on both parties. 

This can be accomplished by the spouses agreeing (before marriage) to a prenuptial agreement (prenup) that outlines how property and finances will be divided should the marriage conclude. 

In some cases, spouses also have a postnuptial agreement if any additional arrangements need to be considered due to changing circumstances.

Because court records are in the public domain, mediation or a prenup will keep your personal business private. That may be preferable to airing your business, giving up control to the court, and letting the judge decide the best outcome. 

A split can be uncontested if there are no unresolved money issues between the divorcing couple. However, more often than not, when the stakes involve couples with several million dollars or more, and there is a disparity in wealth, we can expect high drama and the proceedings to be contentious.

Prenuptial agreement

A prenuptial agreement contributes to a more peaceful dissolution of a marriage, bypassing a costly and lengthy court battle. The agreement can involve:

  • Division of assets and liabilities
  • Spousal support
  • Care and cost of the children
  • The family home and other real estate holdings 
  • Attorney fees

If the divorcing couple is willing, negotiation can help iron out some sticking points between the parties and allow them to dissolve the union. Otherwise, they may be locked in a contested divorce for years. 

At this time, you will benefit from the guidance of an experienced, compassionate Florida Family Law attorney. The wrong move or accusation can exacerbate an already contentious situation and elevate the fight to a new and unwanted level. 

There is also the public interest consideration in the details of your split, the valuation of assets, and the maneuvering of one or both spouses to hang on to what they believe is theirs. 

Children, unfortunately, are often caught up in this War of the Roses, and experiencing a public airing of personal matters may not be in their best interest.  

Divorces are almost always messy, but Crystal Collins Spencer will be your advocate to get through the painful process with the best possible outcome.  

Negotiations

If you and your spouse cannot agree, the court may take over the dissolution of the marriage. Without a doubt, there are things you will not agree with if that happens. Once you hand over the power to the court, you should be prepared to compromise beyond the level to which you are comfortable.

When privacy is a concern in a high-stakes divorce, both parties should be able to find the motivation to reach a fair compromise that allows each party to move on with their lives.

Your Experienced, Compassionate Florida Family Lawyer  

Ms. Spencer has experience dealing with high-stakes divorces where privacy is a concern. In some instances, she brings in experts to delve into offshore holdings, to probe one’s digital life, and multi-tiered financial arrangements. Ms. Spencer enjoys the reputation of being a tough negotiator who has seen every trick in the book performed by those who want to hide assets. 

The goal will be equitable distribution under Florida divorce laws. Properties, pensions, investments, retirement accounts, foreign holdings, business assets, trust accounts, family holdings, boats, cars, jets, commercial and residential real estate, jewelry, and art will all be valued and equitably distributed. 

Alimony, rehabilitative alimony, the cost of maintaining a family home, and legal fees can all become part of the negotiation. Debt accrued by one or both parties must be included in the final negotiation. 

The tax consequences looking forward will be considered as part of the long-term value of your assets.

Attorney Crystal Collins Spencer will be your advocate in crafting the structure of your divorce agreement that works for you and your family moving forward. 

Let her compassionate guidance and experience help you during this difficult time. Call our Pensacola office at (850) 795-4910 to reach Ms. Spencer to begin the conversation.   

Sources:

SmartAsset
https://smartasset.com/financial-advisor/high-net-worth-divorce

Mitigating the Risks of Business Depreciation During High Asset Divorces

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Divorces can be complicated, and that is especially true if there are high assets involved. While both spouses must be transparent about all of their assets, it’s also crucial that they are valued accurately. Failure to do so can result in an uneven and even unfair distribution of assets.

In Florida, equitable distribution of marital assets is the guideline for divorce. That will include anything of value, whether property, house, bank accounts, or businesses.

When dividing the business asset, which may be the asset with the highest value, it first must be determined if the business is a marital asset. If it is, to mitigate the risks to the company during a divorce, some moves can be put into place either before or after the marriage to make its division more equitable.

When sizeable assets are involved, consulting with an experienced, compassionate family law attorney specializing in high-asset divorce can protect the impact on your business and, ultimately, on your relationship.

Prenuptial Agreement

If one spouse owned the business before the marriage, kept assets in a separate account, and made no money with that business during the marriage, there would not be much to divide. However, any appreciation during the marriage is subject to division unless a prenuptial agreement specifies how the business will be divided.

Before the wedding, a prenuptial agreement should detail how the business assets will be distributed in a divorce. Separate attorneys will represent each partner, and the business division should be negotiated to include the division of depreciation and appreciation of the business.

Sometimes, the business will remain with one spouse, and its value can be offset by agreeing to divide other assets, such as a house or property.

A prenuptial agreement should consider the potential impact on other partners to mitigate risks to the business.

It may be challenging to determine the value of a business down the road, so its current value should be estimated, and both parties need to agree on the methodology to be used to value the asset in the future.

The benefit of a prenuptial agreement is that both partners enter into it when they are most agreeable, about to enter into marriage, and want to avoid conflicts in the future.

Postnuptial Agreement

A postnuptial agreement is crafted after the marriage to determine what happens to a business in the event of a divorce. The other spouse may agree that the company is not subject to marital distribution, mainly if the other spouse founded it before the marriage. If that is not the case, the post-nup should establish how much appreciation or depreciation the spouses will share.

Suppose both spouses are involved in the business. In that case, they must determine whether, upon divorce, the company is dissolved, one partner retains ownership, or it continues under a new partnership agreement.

Hiding Assets

If you suspect your spouse is trying to conceal assets, Crystal Collins Spencer has the tools she needs to uncover hidden assets. She can bring in a forensic accountant to discover where assets are and their origin.

This is especially important if one spouse does not handle the family finances.

A forensic accountant is like a detective. They will conduct a detailed review of bank and tax documents to determine their consistency. Employers may help a divorcing spouse by withholding a bonus until the divorce is final. An employer can defer benefits, a company car, or a salary increase, so they are not subject to equitable distribution. A forensic accountant can uncover that tactic.

We may need to hire a valuation expert to determine the value of the business before its division in a Florida divorce.

Your Florida High Asset Divorce Attorney

If a divorce is imminent, the business can be protected by maintaining detailed records, including personal and business expenses and premarital versus marital funds.

Crystal Collins Spencer has extensive experience with high-asset divorces and can advise you to what extent the business is a marital asset or separate property. She has the experience to hire the experts needed to value the case for the court’s consideration and to gather the evidence essential to your argument.

This is not a time to try and litigate your most valuable asset. Divorce can complicate the simple division of assets. Call Crystal Collins Spencer at Spencer Law at her Pensacola office at 850-912-8080 to get started.