How the Family Court Approaches Complex Asset Division for High Net-Worth Couples

by Walid Joseph Kalouche

When a marriage or de facto relationship ends, the division of assets can become complicated, especially when one or both parties are high-net-worth individuals. In such cases, the Federal Circuit and Family Court of Australia must navigate the complexities of substantial asset pools, often including businesses, investments, properties, and trusts. Unlike simple asset divisions, the division of wealth among high-net-worth individuals involves various layers of legal, financial, taxation and practical considerations.

Key Takeaways

• Asset division in high net-worth divorces can be highly complex due to the involvement of numerous significant financial assets.
• The Family Court’s primary concern is ensuring a fair and just division of assets, taking into account both financial and non-financial contributions.
• The Family Court will consider the future needs of each of the parties and their standard of living prior to separation is relevant.
• Spousal maintenance may be applicable in high-net worth cases, depending on each party’s financial needs.
• Professional advice from specialised family lawyers can ensure that complex assets are fairly and appropriately divided.

What Is the Family Court’s Approach to Asset Division?

The Family Court of Australia follows a well-established framework when determining how assets should be divided. The court’s goal is always to ensure that both parties receive a fair and equitable share, though this does not necessarily mean a 50/50 split. In high-net-worth divorces, the court typically considers the following key factors:

1. The financial contributions of both parties: This includes direct financial input such as salary or investments, as well as indirect contributions like managing a family business or homemaking.
2. Non-financial contributions: The court also considers contributions that do not involve money, such as raising children, maintaining the family home, and assisting in the development of a spouse’s career or business.
3. Future needs: The Family Court looks at each party’s financial future needs, including their capacity to earn, care for children, and maintain a certain standard of living.
4. The length of the relationship: In long-term marriages, the expectation of equality in asset division is often stronger than in shorter relationships.

How Are Business Interests Handled in High Net-Worth Divorces?

In high-net-worth cases, one of the most challenging aspects of asset division is identifying and valuing business assets. Whether it’s a family business, shares in a publicly listed company, shares in a private company, or a business owned by one party in their own name, the Family Court must determine how to divide these assets fairly.

The court may:

• Appoint experts to value the business or other complex assets.
• Consider the impact of a sale or restructure of the business on the ongoing operation.
• Take into account whether the business was built before or during the marriage and the level of involvement each spouse had in the business.
• For business owners, protecting these assets during divorce often requires careful planning and legal counsel, particularly when there are significant shares, intellectual property, or joint ventures with third parties involved.

What Happens If One Party Has Hidden Assets?

In any divorce, whether high-net-worth or not, hidden assets can complicate proceedings. If one party attempts to hide assets to avoid a fair division, the Family Court has the power to investigate and order full financial disclosure. In some instances, the court can draw adverse inferences from a party’s failure to disclose assets or intentionally provide misleading information.

If you suspect that assets are being hidden, it is crucial to work with an experienced family lawyer and forensic accountant who can help uncover hidden assets and ensure they are appropriately included in the division.

Spousal Maintenance in High Net-Worth Divorces

In certain cases, one party may seek spousal maintenance. This is especially common in high-net-worth divorces where one spouse may be entitled to financial support due to substantial disparity in income or assets. However, spousal maintenance is not automatic and must be proven based on the financial needs and circumstances of the requesting party.

For example:

• One party may need maintenance if they are unable to support themselves due to age, illness, or other factors.
• The pre separation standard of living of that party, even though it is not a test, is a relevant consideration.
• The spouse seeking maintenance must show that they cannot meet their reasonable needs from their income or assets.
• They must of course show, which is usually easy in High Net Worth cases, that the other party is able to provide that support.

The Role of Pre-Nuptial or Post-Nuptial Agreements

High-net-worth couples often opt for prenuptial or postnuptial agreements to clarify the division of assets in the event of separation or divorce.

Even though, they are susceptible to being set aside, they are still worth having because they create at the very least a substantial impediment to proceedings under section 79A for property settlement in Family Law.

Agreements may set aside agreements if they were not properly entered into (that is a defect in the procedure in entering the agreement), or for a number of other factors including fraud, duress, undue influence or if there has been a substantial change in the circumstances since the agreement was entered into. Statistically, it has proven difficult to set aside a financial agreement and that is why having it, is better than not.

How to Protect Your Assets in a High Net-Worth Divorce

If you are facing a divorce with substantial assets, protecting your financial interests requires strategic planning way before the separation. A few ways to ensure your assets are properly safeguarded include:

1. Seeking professional advice from a skilled family lawyer who specialises in high-net-worth divorces to prepare a Binding Financial Agreement ( pre nuptial or post nuptial).
2. Ensuring full financial disclosure to avoid any future legal complications.
3. Business Succession planning.
4. Considering trust structures: Setting up a family trust can help protect assets, though it is crucial to do so in a way that complies with legal principles.
5. After separation has occurred, it is worth considering mediation before going to court, because an outcome through mediation is one which has been decided by the parties. A decision at court is one which is made by a judge (not the parties) and may result in business being sold, companies being wound, valuable investment assets being auctioned.

Conclusion: Why You Need Expert Legal Guidance

The division of complex assets in high-net-worth divorces is never straightforward. Each case involves unique challenges, and a fair division requires careful analysis, skilled negotiation, and often expert financial advice. It is not always about the percentage shares and is often about seamless business continuity and undisturbed investment path. Engaging a family lawyer who has experience with high-net-worth divorces is essential to ensure that your rights and interests are protected.

If you would like to discuss your Family Law matter with an expert, please contact me for a confidential consultation. My team and and I are highly experienced in such matters.

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