• A high asset divorce is one with $1,000,000 in liquid assets subject to negotiation and division.
  • There are a number of significant challenges unique to a high net worth divorcing couple.
  • Here are 11 critical mistakes to avoid so you don’t lose the wealth you’ve worked so hard to build.


Divorce is challenging no matter what the circumstances.

But divorces for high net worth spouses or couples with a considerable marital estate are significantly more complicated than divorces involving a more basic portfolio of assets.

And there’s a lot more at stake!

From a significant asset pool to non-traditional employee compensation, closely-held businesses, multiple high-value real estate properties, and high standards of living, valuing, negotiating, and coming to an agreement on all issues required to get a high net worth divorce is no easy feat.

But how difficult (and costly) your high asset divorce will or won’t be, depends greatly on the divorce option you and your spouse choose, your eagerness to compromise, as well as your willingness to acknowledge each other’s contributions to the marriage.

In this post you’ll learn the top concerns to watch out for in a high asset divorce.

And that you and your spouse can do to preserve your financial resources and maintain control of your divorce outcome.

What is a High Asset Divorce?

A high asset divorce is one with $1,000,000 in liquid assets subject to negotiation and division.

Not included in this figure is residential or commercial real estate, or closely-held businesses, even though all of these assets are also subject to discussion and possibly distribution.


What are The Top Concerns in a High Asset Divorce?

Every divorcing spouse has worries and concerns, but high asset cases come with many unique challenges.

Let’s take a closer look at some of the critical issues that affect high net worth divorcing couples and 11 tragic mistakes to avoid.


Mistake #1 for a Divorcing High Net Worth Individual: Panicking if There’s No Prenup

If you or your spouse entered your marriage with significant wealth, a prenuptial agreement may already be in place to define separate property and/or make asset division, child custody, and spousal support more straightforward at the time of your divorce.

But if you’ve more recently acquired your net worth, such a document probably doesn’t exist.

Leaving you to wonder if your divorce will turn into a three-ring circus!

The good news is it doesn’t have to, but you must choose the right divorce process.

Bill and Melinda Gates didn’t have a prenup.

Neither did Jeff and Mackenzie Bezos.

Yet somehow, they were able to come to terms in months instead of years in their high asset divorce case. And they’re two of the richest couples on the planet!

Why do you think that is?

Because instead of litigating publicly, where a family law judge would dictate the terms of the settlement, they knew it was better to negotiate the terms of their divorce settlement privately with the help of a skilled divorce mediator.

And in an environment of dignity and respect, that neutral third party helped them negotiate directly and reach an agreement they both found fair and in both of their interests.



Mistake #2 in a High Net Worth Divorce: Going Straight to Litigation Instead of Trying Mediation First

divorce-litigation-destroys-net-worth-emsIf you’re facing divorce, your first thought might be to go straight to litigation in court.

After all, that’s what your family law attorney said was common in complex cases like yours, and since your “attorney client relationship” is decent, you believe them.

But what you need to know is that divorce mediation is a more cost-effective, efficient, and results-oriented alternative. And it can help you successfully resolve all issues necessary for divorce including:

  • The parenting plan - which outlines parenting time and the legal and physical child custody arrangements for your children, and;
  • Child support – which defines financial support for the kids’ living expenses, extracurricular activities, and other extraordinary expenses; and
  • Alimony – also known in some states as spousal support or spousal maintenance, which provides post-divorce financial support to the lower-earning spouse; and
  • The equitable division of your marital assets and liabilities - which is known in some states as equitable distribution and community property division in others.

The issues required to get a divorce are exactly the same for wealthy couples as they are for those who earn a lower income or possess fewer marital assets.

In addition to the wasted time and money, there is also a significant loss of control in divorce litigation in court.

When you pursue a high net worth divorce through the courts, you relinquish control of the terms of your settlement and leave it in the hands of a family law judge.

And it is highly likely you and your spouse will wind up with a settlement neither of you is satisfied with. Which greatly increases your likelihood of ending up back in court fighting about post-divorce issues in the future.

In a paper titled “Divorce Mediation: Reflections on a Decade of Research” authored by J. Pearson and N. Thoennes, they found:

“With respect to compliance with the agreement and re-litigation, 80% of divorcing spouses [who mediated] reported compliance, while only 60% of the adversarial parties did.”

So if you’re willing to skip the courtroom war and instead negotiate in good faith and work together to come to a settlement you both find fair, it’s wise to mediate instead!



People who prepare do better in divorce!



Mistake #3: Letting a Sense of Entitlement Drive Negotiations

For most individuals, the divorce process itself can elicit a wide range of feelings.

But there is one above all to watch out for in a divorce involving a significant marital estate and that’s feeling a sense of entitlement.

On one hand, if you’re the primary income-earning spouse, you may feel that you’re entitled to retain most of the marital property you’ve accumulated during the marriage. After all, it was your income that enabled you and your spouse to significantly grow your marital estate and gather asset after asset to build your net worth.

You might strongly feel that your considerable, if not sole contribution, needs to be reflected in your divorce settlement.

On the other hand, if you’re a spouse who gave up your career to raise your children, you may strongly feel that you’re entitled to retain most of the marital property accumulated while married. After all, it was your hard work inside the home that paved the way for your spouse to build a successful business or climb the corporate ladder to earn that significant income.

While you collected a paycheck of… well, $0.

You believe not only are you entitled to alimony to make up for your lack of income, but a majority share of your net worth to offset all your years of sacrifice.

If you dig in and remain fully entrenched in a divorce position driven by a sense of entitlement, your substantial assets will likely evaporate during what’s sure to be contentious divorce proceedings.

But if you can acknowledge that you each played a valuable role in earning your accumulated net worth and becoming a high asset couple, you can more likely negotiate an equitable division of your asset pool and preserve everything you both worked so hard to achieve.



Mistake #4: Not Hiring the Right Divorce Attorney or Law Firm (if your spouse won’t agree to mediate)

You might think because there are numerous valuable complex assets at stake, the financial cost to battle it out in litigation is well worth it, so you may be tempted to pursue a scorched earth strategy and hire the most aggressive lawyer you can find.

One who vows to provide you with “fierce representation” and “take your spouse to the cleaners.”

But the thing is, divorces with significant marital property and “pitbull” lawyer representation are a dangerous mix.

Think it through.

Each attorney and law firm bills by the hour for their hard-nosed advocacy. They have no incentive to help you reach a settlement agreement.

To them, a high asset divorce is an endless stream of income, and the longer it goes on, the better for them.

But not for you and your soon-to-be ex-spouse!

In addition to depleting your financial net worth, this type of divorce approach also depletes your emotional capital.

There’s a very real human cost to endless divorce litigation in the form of wasted years, burned bridges, and family destruction which you can expect if you pursue this strategy.

So be smart.

If your spouse won’t agree to mediate, do your homework and learn how to choose the right divorce lawyer.



Mistake #5: Failing to Disclose or Attempting to Hide Assets (or Debts)

Every divorce, no matter how simple or complex requires a process known as discovery.

During discovery, you and your spouse will disclose your complete financial picture including, but not limited to all income, assets, and debts.

If your spouse suspected there were hidden assets, there’s an excellent chance a forensic accountant would be hired to uncover anything that was not voluntarily disclosed.

According to the American Bar Association:

“Forensic accountants are specialists at unraveling financial and compliance puzzles for businesses, nonprofits, governmental entities, and individuals, using precise processes and a systematic investigation of data.”

Forensic accountants (who charge an average fee of $15,000) excel at exposing an individual’s true financial picture and once they do, divorce proceedings often go from bad to worse!

Given what’s at stake in a high asset divorce, it might be tempting to not fully disclose everything – but failing to do so would lead to significant legal and financial consequences.

So don’t do it!



Mistake #6: Not Planning for Estate Planning

Many wealthy couples choose to set aside a portion of their asset pool for the benefit of their children.

But when they find themselves going through a divorce, those gifts can get squandered during divorce negotiations.

Let’s say you and your spouse have two daughters and you always planned on paying for their weddings. According to The Knot, the average cost of a wedding in 2021 was $30,433, with couples in San Francisco spending more than $45,000, and in New York City more than $70,000 - not including honeymoons!

To be safe, you and your spouse set aside $200,000 in an account titled in one of your names before a divorce was ever on your radar.

But now you’re divorcing and your spouse wants half, while you insist it should be removed from your collective asset pool because it’s earmarked for your children. Round and round you’ll go until you each need to deplete that account in order to pay your skyrocketing legal fees.

Arguing over what was supposed to be a gift for your children can quickly turn into a bone of contention between you and your spouse if you’re not careful.

A good time to pull out your estate plan is before starting a high asset divorce. This way, you can review it with your spouse and remove from your negotiations any asset or property earmarked for others.



Mistake #7 in a High Asset Divorce Case: Assuming Inheritances

For married couples who have wealthy parents who are still living, the issue of assuming future inheritances can be a dangerous game. And can have significant financial consequences on both your property division and alimony agreements.

One spouse may assume the other spouse is certain to receive an inheritance, but as the old saying goes, there are no guarantees in life.

For example, let’s say there’s a couple divorcing after 20 years of marriage and during the marriage, they accumulated substantial business assets as owners of a local chain of successful sporting goods stores.

During their divorce, one spouse insists on retaining the full value of the business because they’re convinced the other spouse will receive a significant inheritance from their father who is still alive.

The other spouse doesn’t agree because they have two siblings the father clearly favors. They think that even if an inheritance is received, it will be much smaller given the family dynamics.

The couple has no way of knowing if and/or when this inheritance will be realized, yet one spouse wants to factor it into the divorce negotiations. And around they’ll go in adversarial litigation with no resolution in sight.

Some individuals are self-made and acquire their own wealth, while others obtain it by having wealth passed to them via an inheritance.

And while it’s our opinion assuming inheritances is never a good idea, be sure to raise this issue early on with your divorce professional to get their guidance on the best way to handle it in your unique situation.



Mistake #8: Not Factoring in Taxation Issues and How They Can Affect Your Settlement

While issues surrounding taxation are relevant in all divorces, in a high asset case, they can play an outsized role due to the value of a couple’s property as well as the complexities of their investments.

Sale of a Marital Home:

Currently, a capital gains tax exemption of $500,000 is afforded to married couples who sell a home.

So should you choose to sell your home, depending on its value, you may exceed this exemption threshold and incur significant capital gains on the sale.

These funds must be estimated and set aside (or held in a trust account) so as not to muddy the negotiation waters and ensure their availability for when the taxman cometh.

Otherwise, you may find yourself holding the bag and having to go to court to get your now ex-spouse to pay their share.


Brokerage Accounts:

A lifetime of investing (hopefully) resulted in a lifetime of gains.

Gains which Uncle Sam is going to want a piece of upon sale - whenever that may be.

Be aware that even if your total holdings look equal on paper, tax gains and tax losses can impact their value significantly, making that 50-50 split not so equal.

Seek out a fair and equitable split from both a valuation and tax perspective at the time of your negotiations.

Otherwise, you may find yourself renegotiating your settlement at the 11th hour, costing you more time, money, and stress.


The Timing of Your Divorce Filing:

Most people don’t know that their marital status on December 31st determines their filing status for tax purposes.

So if you get divorced on December 30th, even though you were married for 364 days, come April 15th of the following year, you file separately.

Companies typically issue bonuses early in the year, so you and your spouse may have put those funds to use before divorcing. Leaving the bonus recipient impacted come tax time if you file separately the following tax year.

A potential tax burden post-divorce can create an imbalanced settlement, especially if the bonus was significant, and send you and your ex-spouse back to the courthouse.

If you think taxation issues will play a significant role in your divorce, be sure to work with a divorce professional with a financial background to ensure you both come to an agreement that’s fair and factors the complex issues of taxation into your settlement.



Mistake #9: Not Recognizing That Determining Child Support and Alimony is Far More Complex in a High Net Worth Divorce

Here in the United States, all 50 states have guidelines for child support.

These “guidelines,” while helpful in some cases, are difficult to apply to high-income earners or self-employed individuals - for many reasons.

Some state guidelines have an “upper-income limit,” so if your earnings exceed a certain amount, the guidelines become useless and cannot be used as designed. And because guidelines assume income is the same month-to-month, they become less effective if your compensation includes variable components like commissions, bonuses, RSU, or stock options.

Child support guidelines are typically intended to cover ordinary expenses like food and shelter, but children incur many other expenses which fall outside the guidelines such as car insurance, summer camp, and private school to name a few, which need to be negotiated separately.

And since children of wealthy families tend to have higher extraordinary expenses than children from lower-income families (and two households are more expensive to run than one,) this is a topic that can create a lot of disagreement between divorcing parents.

While guidelines do exist for resolving matters of child support, they come with significant limitations which leave parties no choice but to negotiate an amount they both find fair, and not cause their children to become the economic victims of their divorce.



Unlike child support, where all 50 states have a guideline for determining it, only a handful of states have a guideline for alimony.

And of the ones that do, guidelines are rarely useful for high-earning individuals. This makes coming to an agreement on alimony especially challenging.

First, even though income may be significant, what was enjoyed by the parties as their marital lifestyle may not be possible once divorced. One or both parties may believe they are still entitled to live in the same manner they’re accustomed to.

And demand to receive or retain a significant portion of the earned income.

Second, high-level employees are typically compensated in less traditional ways than lower-level employees.

For example, bonuses and equity shares received by partners in a firm can vary significantly from year-to-year based on factors outside of their control (e.g. the pandemic,) while other forms of compensation such as restricted stock units or stock options may not be easily realized as income due to vesting periods or stock market fluctuations.

And third is the employment risk associated with a high earning individual. When lower-level employees lose their job, there is far less income loss at stake. And replacement jobs are easier to find.

As opposed to high-level employees whose compensation is significant, and replacement job pool is much more limited.

While there may be substantial income at stake, parties must understand and factor into their negotiations the unique risks and complexities associated with a high net worth divorce case.

And be sure to plan now for changes in future circumstances to avoid having to return to court down the road!



Mistake #10: Not Accepting How Your Lifestyle Will Change Post-Divorce

In our experience with high asset cases, typically one party is in charge of the household finances.

And that spouse has detailed knowledge of the couple’s expenses and income required to maintain the marital lifestyle. As well as what areas of spending may need to be reduced after divorce because there will be increased costs associated with having two separate households.

There’s no doubt it can be very upsetting to need to make adjustments to spending and lifestyles post-divorce.

But if you’re a spouse who has no idea about what it costs to maintain the marital lifestyle, and high standard of living, it’s smart to get educated on your current financial picture now.

This way, you won’t have unrealistic settlement demands that only drag your divorce out for years, adding expense and stress - and preventing you and your spouse from reaching a negotiated settlement.



Mistake #11: Thinking You Can’t Have an Amicable Divorce if You’re a High Net Worth Individual

high-net-worth-amicable-divorce-emsMost people think it’s not possible for a high net worth couple to divorce amicably.

But that’s simply not true!

Just because you have significant financial resources doesn’t mean you need to waste them during your divorce.

Instead, you can choose to approach your divorce in ways that will enable you and your spouse to work together to end your marriage peacefully and productively.

If you put the needs of your children first, engage in full financial disclosure, and negotiate the terms of your settlement in an environment of mutual respect and dignity, you’ll improve your ability to get an agreement you feel comfortable with.

And at the same time, preserve your wealth!

So it's better for you and your children.



Other Useful Resources:

Joe Dillon, Divorce Mediator

Written by Joe Dillon, Divorce Mediator

Joe Dillon is a divorce mediator and founder of Equitable Mediation. He holds a master’s degree in finance, and has completed formal training in negotiation and mediation from Harvard University, MIT, Northwestern University (Chicago, Illinois campus), the NJ Association of Professional Mediators, the Institute for Continuing Legal Education, the Academy of Professional Family Mediators and the Institute for Divorce Financial Analysis. As a child, Joe witnessed first-hand the damage of attorney-driven litigation during his parents' divorce. And in 2008, he set out to offer divorcing couples a more peaceful and dignified alternative. Throughout his professional career, Joe has helped over a thousand couples reach a fair and equitable divorce agreement - out of court.