To Sign or Not to Sign: Pre and Post Nuptials for HNWIs

Every person facing divorce has something in common.  A journey.  A journey chosen by them or chosen for them.  Stuart K. Skok, Owner and Principal of Stuart Skok Law LLC, a matrimonial and family law firm in Maryland, shares: “People think that they have little control over the divorce process. This is not true.  Everything you do and don’t do in your divorce impacts the divorce results and your future life framed by those results. And those who are willing to focus on releasing the past, appreciating the present and visualizing a future that serves the top priorities of all involved invariably look back and appreciate the divorce journey that lead to their new and better life.”

Stuart shares more below on HNWI divorce, pre and post nuptials and the dissipation of marital assets.

When representing high net worth individuals, would you recommend a prenuptial agreement prior to marriage?

Where there are children from a previous marriage and/or the engaged couple has disproportionate assets and income, I recommend a prenuptial agreement prior to marriage, or, if time does not permit, a post-nuptial agreement after the marriage.  These agreements help the couple have those critical conversations, necessary in all marriages, about their money and future.

A prenuptial or post-nuptial agreement allows for smart planning and concrete expectations that can avoid disputes down the road between the couple and their extended blended family.

The main focus for prenuptial agreements is not the possible dissolution of the marriage, but rather how to plan for the couple’s lives ahead, and their respective children through retirement, death, medical disability or divorce.  There are important tax and estate planning considerations for high net worth individuals that need to be planned for in advance to guard against unintended tax consequences.

A prenuptial or post-nuptial agreement allows for smart planning and concrete expectations that can avoid disputes down the road between the couple and their extended blended family.   Avoiding the discussion about money does not avoid future problems about money.

Furthermore, if a prenuptial was not signed, what should be a HNWI’s first line of action?

It depends on where the marriage stands.  It is never too late to negotiate a post-nuptial agreement, which carries the same purpose and legal effect of a prenuptial agreement.  Those spouses who do not wish to negotiate an agreement that addresses divorce, can alternatively engage an estate planning lawyer jointly to work out how the estate will be handled.  This, at a minimum, allows for a smart and efficient probate of the estate, with minimised taxes, and management of the assets to divide or maintain after death among family members and business partners.

The advantage of keeping high conflict cases out of court, where possible, is that the lawyers and other professionals involved can come up with creative solutions, detailed to the specific needs of the family and any complex assets, which the court may not have the ability or legal jurisdiction to handle.

How complex can divorce cases get? Can you provide some cases you have dealt with and how you overcame the complexities?

Divorce cases are as complex as the parties make them.  The goal in every case is to minimise the conflict, particularly for any children, and to reach a balanced settlement that serves the top priorities of all involved.  But when that does not happen, a team approach can flesh out the information needed and bring creative solutions.

For example, when there are disputes about what is best for a child, a best interest attorney who can give a voice to the child, may give that perspective not yet heard or understood.  That perspective can in turn create solutions that work for all involved.

Likewise, the right expert can resolve disputes over property value, methods for division and income allocation.  The advantage of keeping high conflict cases out of court, where possible, is that the lawyers and other professionals involved can come up with creative solutions, detailed to the specific needs of the family and any complex assets, which the court may not have the ability or legal jurisdiction to handle.

The burden is on the spouse asserting dissipation to prove what funds were spent without consent, which can sometimes require hiring an expert to trace the funds.

Moreover, how do you tackle cases involving the dissipation of marital assets? What should clients be aware of?

Handling the sensitive issue of dissipation, whether one spouse has wasted marital assets, starts with understanding the standard applied by the court and the relief that can be afforded.  A court will only find assets are dissipated if the assets were disposed of without consent by the spouse claiming dissipation, and were disposed of for purposes that are not legitimate family purposes, which includes: day to day expenses, business expenses to produce income, and even legal fees.  It often comes down to the legitimacy of the expenditure and the circumstances in the marriage around that time.

The burden is on the spouse asserting dissipation to prove what funds were spent without consent, which can sometimes require hiring an expert to trace the funds.  If the court finds dissipation, the court can award the other spouse a monetary award from the marital estate to adjust for that inequity at the time of the final divorce.

Stuart K. Skok, Esquire

Stuart Skok Law LLC

2275 Research Blvd. Suite 500

Rockville, Maryland 20850

T: (301) 296-4512

SKYPE: stuartskok

sskok@stuartskoklaw.com

www.stuartskoklaw.com

Stuart K. Skok, is the Owner and Principal of Stuart Skok Law LLC, a matrimonial and family law firm in Maryland, serving Montgomery and Frederick Counties. 

As an experienced Matrimonial and Family Law lawyer for over 20 years, her practice is devoted to separation, divorce, custody and other family law matters, in and out of court, at the lower court level and on appeal.  She also handles post-divorce modification and contempt, domestic violence proceedings, prenuptial and separation agreements. She is certified in Collaborative Law, where parties agree to resolve their family law disputes out of court in a private team-approached process.  She is also certified in Divorce Mediation, where she is appointed by the Court or hired by parties to mediate their family law dispute