Philanthropist power couple Bill and Melinda Gates stunned the world by announcing their plans to divorce after 27 years of marriage. According to news reports, the Gates don’t have a prenuptial agreement and instead have a “separation agreement” that will likely lead to one of the largest divorce settlements in history. Bill Gates, who is the founder of Microsoft and owns 1% of the tech giant is worth an estimated $146 billion, according to Business Insider.
A separation agreement is a type of “postnuptial” agreement which is a legally binding contract that allows couples to resolve important issues. This agreement may include child custody, child support, how the couple will pay for living expenses, and how the couple will divide their property and assets. The separation agreement is binding and is filed with the Court and is adopted as the terms of their divorce.
While prenuptial agreements are gaining in popularity among the millennial generation, most couples don’t have one and not all states recognize them. If you or your spouse has more than $2 million in assets, that is considered a “high net worth” divorce which raises the stakes and can make the divorce process more nuanced. For couples who passed on drafting a prenup, it’s important to know how to protect yourself in a high net-worth divorce. California is a community property state meaning all assets and debts acquired during the marriage are owned equally by each spouse and must be divided equally, with exception of inheritances or gifts to one of the spouses.
There are steps you can take to prepare for a financially complex divorce process:
- Collect financial records from the past 5-7 years
- Gather tax returns, pay stubs, W-2’s and 1099s
- Make copies of bank statements, investment accounts, credit card accounts and retirement accounts
- Establish credit in your name
- Make an inventory of your personal property
- Plan for professional fees and costs associated with a high asset divorce
High net worth individuals will benefit from creating a “divorce team” of professionals that can advise and assist during the dissolution process. You may want to hire an estate planning expert to help make changes to your living will and trust and explore any additional planning for the future. A real estate professional can help with the appraisal of your home, land, rental homes, or commercial property. Real estate brokers can help refinance a mortgage or sell off property. A financial advisor can assist by helping to decipher investment portfolios and offer guidance on a financial roadmap moving forward. A CPA or a tax professional can offer guidance during the divorce proceedings that can help you avoid any tax consequences that might arise.
You will also need a family law attorney with an in-depth understanding of the complexities associated with high net worth divorce. At the Schoenberg Family Law Group, our team has a wealth of experience in expertly and thoroughly addressing complex financial issues including business and corporate interests, pensions and retirement plans, stock portfolios and property. We offer knowledgeable and comprehensive advice to clients who wish to negotiate a Post marital or Divorce Agreement. Our expertise in complex financial matters ensures that we will diligently verify both parties’ assets and debts and draft agreements that best protect our clients’ rights and interests.
By Debra Schoenberg