Divorce is inherently complex, but when high net worth is involved, the financial intricacies can reach unprecedented levels. There are multifaceted challenges encountered in such cases, revealing the depth of complexities that often arise.
Real Property and Other Complexities
One significant issue revolves around businesses or professional practices owned prior to marriage. This may increase in value during the marital period.
Other complexities compound when properties owned before marriage undergo refinancing multiple times.Tracing becomes necessary when separate property is commingled with community property, such as inherited money combined with earnings during the marriage.
Businesses with No Value
A particularly intricate scenario involves businesses that had no value initially but gained value through capital infusion and effort during the marriage. Determining the community interest in such businesses post-separation becomes a challenging task due to the continuous influx of capital and the dilution of the original investment—a moving target that demands intricate financial analysis.
Artistic works, including books, TV shows, or medical device developments, add another layer of complexity. For instance, if a book is completed before separation, its royalties are straightforward community property. However, if the creation extends beyond the separation, allocation and apportionment of community and separate interests become intricate. Similarly, the development of a medical device that involves collaborations with doctors, patients, and drug companies requires a nuanced approach to determine the community and separate interests.
The Entertainment Industry
There are unique challenges faced by those in the entertainment industry, specifically dealing with royalties from shows in syndication. Depending on when the artistic works generating royalties were created—before or during marriage—property division strategies vary. Some companies producing royalties are willing to cooperate in splitting payments between spouses, but if not, an ongoing relationship between ex-spouses becomes necessary to manage the financial implications.
Why Complex Financial Cases Require a Forensic Accountant
In the realm of divorce proceedings, a financial fiduciary role becomes crucial. Attorneys, while adept in their areas of expertise, often lack the specific financial skills required for in-depth analyses, such as in the Moore/Marsden cases. Furthermore, the complexity of these cases necessitates expert testimony, which attorneys cannot provide. In these situations, bringing in a financial consultant becomes not only advisable but economically prudent.
High net worth divorces demand a meticulous approach, combining legal expertise with financial acumen. Navigating through the intricate web of complex financial issues requires collaboration between legal professionals and financial consultants, ensuring that each expert stays in their lane to provide the most comprehensive and effective support for their clients.
Ron Anfuso, CPA/ABV, works with divorce cases involving all aspects of complex financial issues. The offices of Ron Anfuso are located 28441 Highridge Rd. #110, Rolling Hills Estates, CA 90274. You may call (310) 378-6606 to schedule a confidential consultation.