High Net Worth Divorce: Navigating The Complexity Of Splitting Large Assets

A gold wedding band surrounds a curled hundred dollar bill on top of a ripped paper with the word divorce visible.

 High Net Worth Divorce: Navigating The Complexity Of Splitting Large Assets

In Arizona, as in many other states, a divorce is legally called a “dissolution of marriage.” Before the court finalizes that dissolution, the couple must divide the assets generated during the marriage. With a high net worth divorce, the division of assets can become a challenge. That is why it is essential to understand all the options for a divorce. The experienced divorce attorneys at Sullivan Law Office stand by to discuss those options. Call (480) 719-2558 to set up an initial consultation today.

Divorce and Legal Separation in Arizona

Every state establishes its own laws governing the requirements for divorce. According to the Superior Court of Arizona, a couple filing for divorce in that state must wait for 60 days from the date when the respondent in the divorce case is served with papers before the divorce can proceed and a decree can be issued. Even with a high net worth divorce, the goal is always to settle the matters as quickly as possible so that all the parties involved can move forward with their lives. The fewer the complications, the quicker the resolution. There are three types of divorce decrees. 

Summary Consent Decree

With a summary consent decree, both parties fully agree on all issues pertaining to assets, debts, and child support before officially filing for divorce or legal separation with the court. If the spouses change their mind about something in this decree, they have 60 days from the date when papers are served to file the appropriate paperwork to make those changes.

Consent Decree

A consent decree serves as an outline detailing the divorce settlement terms. Those terms include any issue related to property division, child custody, and support. The spouses must agree to all terms, just as with a Summary Consent Decree.

Decree on Demand

A decree on demand allows a spouse to schedule a default hearing to proceed with the divorce. This hearing is typically set because the other party has failed to respond to the petition for divorce. That hearing still has to happen after that 60-day waiting period. 

High Net Worth Divorce Rules and Asset Division

The first consideration with filing for an Arizona divorce is that it is a community property state. That means that all the assets and debts acquired or generated during the marriage are considered equally owned by both spouses. That does not mean there won’t be any mediation or discussions about dividing the assets in a high net worth divorce. According to Ariz. Rev. Stat. § 25-318 (2023), the court “shall also divide the community, joint tenancy and other property held in common equitably, though not necessarily in kind, without regard to marital misconduct.” 

An important caveat to the community property rules is the concept of separate property. Anything designated as separate property remains with each spouse after the divorce has become final.

What Qualifies as Separate Property?

For an asset in a high net worth divorce to be considered as separate property, it must match one or more of the following qualifications:

  • Assets owned by one spouse prior to the marriage.
  • Assets given to either spouse as a gift or inheritance before, during, or after the marriage.
  • Property or assets covered by a valid prenuptial or postnuptial agreement.

When a separate piece of property is mixed or commingled with community property, it often loses its status as being separate. For example, if the husband owned a vacation home in Lake Havasu before getting married and changed the title on the house to include his wife after the marriage, that makes the home communal property. That is especially relevant if marital funds are used to pay the mortgage on the home.

Assets can be partly community and partly separate. That would apply to such items as retirement accounts that a spouse contributed before and after the marriage. This also applies to a business that was started by one spouse before marriage and continued during the marriage. The court would divide these mixed assets by defining the portion acquired prior to the marriage and any losses or gains on that portion as separate property, and the portion earned during the marriage and any losses or gains on that portion as community property. 

What Qualifies as Community Property?

Arizona law strongly presumes any asset or debt that is acquired during marriage would qualify as community property. Determining community property versus separate property in a high net worth divorce can be complex. That is especially true when a spouse’s business or other asset, like a piece of property, receives contributions from the other spouse during the marriage.

There is an exception to the 50/50 division rule, under § 25 – 318 A.R.S. That exception may be triggered if it is found that one spouse recklessly spent marital assets. A prime example would be if one spouse gambled away $100,000 of marital assets. A judge could reduce the gambling spouse’s property final award by $100,000. These are the types of issues individuals may wish to discuss with the Sullivan Law Office.

Determining Asset Value

When a couple decides to divorce, they must assign a monetary value to each asset or debt in the marriage to be able to appropriately divide their assets and debts. Those values often require professional appraisals. Those appraisals could be for property, antiques, or artwork in a high net worth divorce. If the spouses cannot agree to those values, the court will step in and make an assessment. That might be a result that neither party would be happy with.

Selling Marital Property

Upon filing for divorce, a judge often issues a freeze order. That order prevents either of the spouses from selling or giving away marital assets. Spouses typically cannot sell marital assets during divorce proceedings without court permission.

What about the family home? In a high net worth divorce, if the couple cannot agree who should keep the home or disagree about selling it, the judge may order its sale during the divorce process. The home sale proceeds would then become part of the community property assets and be divided according to Arizona’s community property rules. Once the divorce is settled, a spouse can sell any property awarded to them as part of the divorce decree.

Arizona Settlement Agreements

Spouses can draft their own divorce settlements in Arizona if the settlements are fair to both parties. Divorcing spouses can use a mediator or negotiate directly. A settlement agreement, among the arrangements it makes, can divide assets by assigning items to each spouse. The agreement can also grant permission for one spouse to “buy out” the spouse’s share of a property. For instance, a wife might want to stay in the family home with the children. If so, she would have to pay her husband half the home’s value, and she would own it outright moving forward. There are also scenarios where couples might agree to maintain joint ownership of property after divorce. In a high net worth divorce, that could mean holding onto a property in the hopes that the property will increase in value.

Any debts that were generated during the marriage must also be assigned to one of the spouses. Those debts include mortgages, car loans, and credit card debts. However, creditors are not bound by the separation agreement or divorce order. Those creditors may continue to collect a community debt from either spouse. Paying off all marital debts before finalizing the divorce is usually advisable.

Understanding all the Options for Divorce

A high net worth divorce means major life changes for all the parties involved. The best approach for filing for divorce is to understand all the options. The Sullivan Law Office understands the Arizona divorce laws. They can explain those options. Call (480) 719-2558 to set up a discussion today with one of their experienced divorce attorneys. Making informed decisions is good for everyone.