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Connecticut divorce lawyers grapple with complex issues and exotic asset classes in high-net-worth divorce
Concentration of Wealth in Fairfield County, Connecticut makes the process of divorce more complex, time consuming and increases the stakes for those involved
If you have decided to dissolve your marriage, no doubt you would prefer the process to be as quick and painless as possible. But for many Connecticut residents of lower Fairfield County, a simple divorce is simply impossible. If you have significant assets, a closely held business and/or complex investments, dividing significant wealth can be very contentious. Many of the divorce in Fairfield County are considered as high-net-worth cases. If you have children and disagree about how they should be raised, where they should live and who should bear the costs, there could be an emotional and protracted struggle concerning the custody of your children. Under such circumstances, it is indispensable to have a capable and experienced divorce attorney representing you. At Needle|Cuda, we know how to protect your rights in a complex and high-net-worth divorce in an efficient manner without running up legal bills in pursuit of unreasonable outcomes. When you retain our services, you can expect professionalism along with our sincere concern for your future.
What makes High-Net-Worth Connecticut Divorce so complex and highly specialized?
In Connecticut, asset division during divorce follows the rules of equitable distribution. A judge has broad discretion in arriving at a fair though not necessarily equal division of assets and debts. All property owned by either spouse is considered in the process. Parties in high-net-worth divorces often clash over how much of the property they believe should go to each of them and over the multiple factors that are considered by the court, including each party’s economic and noneconomic contributions to the marriage.
Valuation of real estate portfolios, family businesses, intellectual property interests, fine art, fine jewelry, equestrian ownership interests, cryptocurrency, complex equity holdings (e.g. Carried Interest, Restricted Stock Units, and Limited Partnership Interests) and other exotic assets is often subjective and contentious, requiring the assistance of independent experts. In addition, affluent parties may have offshore bank accounts, cryptocurrencies and other assets that are hard to locate. These require careful investigation since there is no guarantee the party will disclose these hard to locate assets during divorce proceedings. Absent a valid and enforceable premarital agreement, even premarital, inherited or gifted assets will be considered by the court when entering a judgment of equitable distribution, and you should have capable counsel to advocate for you to get your fair share of those and other assets.
Additional complications arise in high-net-worth divorces involving executives and other highly paid individuals, whose compensation packages may include stock, restricted stock units, preferred stock units, stock options (vested or unvested), perquisites, bonuses, deferred compensation and retirement accounts. In addition to determinations as to value and division of these assets, potential tax implications must be considered whenever such property is transferred.
Types of Complex/Exotic Property Division in High-Net-Worth Connecticut Divorces:
Exotic Assets in Connecticut Divorce
Exotic Assets that we encounter include: Collections of Art, Wine, Automobiles, Motorcycles, Rare Coins/Stamps, and Antique Instruments;
Cryptocurrency in Connecticut Divorce
This emerging type of currency presents a wide array of new asset division challenges including: How can ownership of cryptocurrency be identified? How is crypto administratively/legally divided? Who assumed the related tax liabilities? How should the inherent volatility be managed during the pendency of the divorce?
Multiple Homes and Vacation Properties in Connecticut Divorce
It is typical for our clients to have multiple real properties included as marital assets. Common scenarios include Vacation homes, real estate investments (e.g. REITs, LLC’s, and Delaware Statutory Trusts [DST’s]), international holdings.
Business Assets and Valuations in Connecticut Divorce
Ownership interests in Businesses (including family businesses) are generally included in the marital estate and subject to “Equitable Distribution.” Accordingly, the discovery process and organizing a team of valuation, accounting, and tax experts, and their expert testimony are critically important to telling you story/narrative and supporting your financial position in the asset distribution “bucket” of your divorce.
Retirement Accounts in Connecticut Divorce
The State of Connecticut broadly considers the collective Retirement Account Assets of both you and your spouse as part of your martial estate. The administrative vehicle required to distribution/split funds from a retirements account is called a Qualified Domestic Relations Order, also known as a QDRO. A QDRO is a formal court order that provides instructions to the retirement-account administrator on how to pay benefits to the nonemployee spouse after a divorce. The order is important because it allows the separation and withdrawal of retirement funds without steep tax penalties.
Property Owned Before Marriage in Connecticut Divorce
Unless property owned before marriage has been “protected” by an enforceable prenuptial agreement; a postnuptial agreements has specifically delineated a particular property as “separate property”; and/or has be independently, meticulously and diligently maintained (e.g. administratively, operationally, financially) or its title has been comingled between you and your spouse — All property is generally considered part of the marital estate and subject to “Equitable Distribution” in the State of Connecticut.
Pets and Connecticut Divorce
Who gets the dog in a Connecticut divorce? Some people have extremely emotional connections to their pets. Some, in fact, have a parent-child like relationship with their pets which can create the perception of “custody” issues in a divorce. Connecticut treats pets as “property” and therefore the fate of pets in Connecticut, unless settled by mutual lies with a determination of “Equitable Division.”
Inheritances and Trusts in Connecticut Divorce
The State of Connecticut generally considers monies and property inherited during a marriage (when it has been comingled into martial accounts and not separately held or maintained) to be part of the marital estate and therefore subject to “Equitable Distribution.” Multi-Generation Family Trusts holding assets and where the related administration/decision making with respect to trust distributions is outside your control and the control of your spouse are almost always considered as separate property of the beneficiary spouse — provided that any related recipient accounts that the monies flow into are maintained as individual accounts held the name of the beneficiary spouse — and/or not used, invested, or mixed with marital funds. Comingling of funds on any level presents a risk factor that inherited monies from a trust be considered part of the martial estate. Notwithstanding the foregoing, there are rare and ultra-technical exceptions (like fraud) where the protections of a Trust can be challenged –which is why you should always consult an attorney experienced in this area of the law for guidance.
Lastly, many legitimate reasons exist that could motivate a spouse to set up a trust during marriage, including for tax or Medicaid planning included in a robust estate plan. However, any spouse who attempts to shield assets that are marital from equitable distribution by placing them into a trust will fail in this objective. Putting marital assets into a trust does not magically redefine those assets separate property. In the divorce action, the non-beneficiary spouse may trace the source of the assets in the trust to determine if they are actually marital property (before the Trust was established) and thus be subject to equitable distribution.
Complex Child Custody Issues in High-Net-Worth Divorce 
In a high-net-worth divorce, both parties are generally able to provide a suitable residence for the children. Nevertheless, child custody can still be disputed. The demands of a career can make it hard to assume the responsibilities of a caretaker and arranging parenting time when each parent has a busy work regimen can be a challenge. Child custody and support agreements often include provisions for private school, costly enrichment activities, summer camps, college funds, and even payment for college education itself. We are adept at finding creative solutions that protect your parental rights while also serving the best interests of your children.
The impacts and enforceability of prenuptial and postnuptial agreements in High-Net-Worth Connecticut Divorce
A premarital or postnuptial agreement can simplify a high-net-worth divorce by providing instructions on property rights, support and other financial issues. However, if the court finds there was fraud or coercion in obtaining the agreement or that it is so one-sided that enforcing it would be unconscionable, the court can invalidate the agreement. This can lead to an appeal, which would prolong the divorce process.
Nevertheless, the more that complex issues can be committed to a written, enforceable agreement, the better the chances of achieving an effective resolution of a high-net-worth divorce. Even without a pre- or postnuptial agreement parties can often reach a settlement through various processes, including 4-way conferences and mediation with counsel on both sides, which can save the time and expense of a trial.
Contact our Westport, CT attorneys to learn more about how we handle high-net-worth divorce in Connecticut
Needle|Cuda in Fairfield County represents high-net-worth clients in divorce proceedings throughout Connecticut. We provide highly responsive service and effective representation focused on positive results. To schedule a consultation, call us today at 203-557-9500 or contact our Westport office online.
Frequently Asked Questions (and Answers) about asset and property division in Connecticut divorce
What is equitable property division in Connecticut divorce?
Equitable property division is the "fair" distribution of property owned by both spouses—either marital or separate—in the event of a divorce as determined by the court. The critical term is fair concerning equitable property division proceedings. As discussed above, what the court deems "fair" in equitable property division is rarely equal. Connecticut is an all-property state, meaning that all types of property are considered when the court makes its findings. It is important to know the difference between the types of property to be divided.
Is equitable distribution the same as 50/50?
While a divorce decree could result in a 50/50 split on all marital property, in practice, that rarely happens. In Connecticut, equitable distribution means that the court will consider various factors when they decide how the marital property will be divided. This could result in one spouse receiving the lion's share of the property to balance an inequity in earning power or to provide a financially dependent spouse with the means to become self-sufficient.
What is separate property in Connecticut divorce?
Separate property is any property owned solely by one spouse, such as property acquired before the marriage, gifts, or inheritances. In most equitable division jurisdictions, separate property would be excluded from the court's distribution discretion because property established to belong to one person should remain with that person. However, because Connecticut is an all-property state for the purposes of divorce, even the property which has been proven to be owned or under the control of only one spouse is still subject to distribution. This includes exotic property like art, cars, and other unique or custom items.
What it marital property in Connecticut divorce?
Marital property is property obtained by either party while married. This property can include items like cars, houses, or other financial assets acquired while you and your spouse are married. Even assets like retirement funds can be distributed in divorce to the extent that those funds were added to the account while married.
Will I lose my 401(k) in a divorce?
It is unlikely that any spouse will be left without any interest in their 401k at divorce. But because retirement accounts are eligible for "Equitable Distribution" in a divorce, it is possible that a spouse could be forced to part with a portion.
What can I do if I don't know anything about my spouse's retirement accounts?
Through the discovery process, your lawyer can demand that your spouse provide all relevant financial information. This may include whether they have a retirement account and which institution services it. Spouses that seek to hide assets may be sanctioned by the court.
How do I know my prenuptial agreement is enforceable?
For a prenup to be valid in Connecticut, it must meet several requirements. The judge handling your divorce will be responsible for determining the validity of a prenup. However, the divorce attorneys at Needle I Cuda know the law surrounding prenups and will be your best resource in evaluating the potential validity of any prenuptial agreement.
Does the court favor the wife when deciding who gets the house?
The law in Connecticut does not favor either spouse. A judge deciding who gets the house is bound to follow the law. They are not permitted to favor either spouse when determining what is equitable. Still, a spouse that was the primary caretaker for the children during the marriage can argue that when considering all of the factors, they should remain in the marital home. Spouses must remember that that will not be the only factor considered by the court.
I have been given primary custody. Will I get to keep the house?
The court may award the marital home to the spouse that is awarded primary physical custody. Still, primary custody is defined as having the children more than 50% of the time. In other words, having primary custody is different from sole physical custody, which would mean one spouse has the children all of the time. In a sole physical custody situation, the spouse caring for the children full-time may be likely to get to remain in the marital home.
Can my spouse and I sell our home (the martial residence)?
Yes, but not unless an order from the court has been obtained or you and your spouse agree that it is best to sell the home--and the sale of your house is incorporated into your final (court ordered) divorce decree. Clearly, before agreeing as impactful as this, you will want to consult with a divorce attorney before any agreement is finalized. Issues surrounding taxes, title, the mortgage, possible liens, and how the proceeds of the sale will be allocated will need to be sorted before a sale is effectuated.
When we were married, my spouse moved into the home I owned. Will I be able to keep in in the divorce?
It depends. In short, all property, no matter when it was acquired and by whom, can be divided and distributed upon divorce in Connecticut. This can potentially include a property one spouse owned in full before the marriage. While you may be permitted to argue that certain property should be excluded from the marital estate, the law in Connecticut does allow for equitable distribution of all property of both spouses.
Who will get the marital house in the divorce?
Who will get the marital home after the divorce depends on several factors. If there is an agreement between the spouses on what will happen to the marital home, then that likely will be the result. For divorces where there is no agreement, a judge will decide based on the "Equitable Distribution" factors that must be considered by statute . If there are children involved who are currently living in the home, that may also have a bearing on who will get the home.
Can I lose my business in divorce?
While it is rare that a spouse will lose all interest in a business due to a divorce, the business may need to be sold. Still, when this happens, the proceeds from the sale will be distributed between the parties. It is unlikely a business asset will be sold with only one spouse receiving all of the proceeds.
How is the value of the business determined?
How much the business is worth can be determined through the use of business valuation experts. These professions will look at the business's data and draft reports that will tend to show what the business is worth. Another method is comparing the sale prices of similar businesses within the same industry.
I don't know anything about my spouse's business. How can I obtain information about his business? What can I do?
Through a process known as discovery, your lawyer will be able to request all relevant information concerning the business and its financial health. Valuation experts can then analyze that info to paint a picture of the business asset's worth and projected outlook. Once a value is determined, the business asset or the value assigned to the business asset may then be distributed by the court upon divorce.
When we were married, my spouse moved into the home I owned. Will I be able to keep in in the divorce?
It depends. In short, all property, no matter when it was acquired and by whom, can be divided and distributed upon divorce in Connecticut. This can potentially include a property one spouse owned in full before the marriage. While you may be permitted to argue that certain property should be excluded from the marital estate, the law in Connecticut does allow for equitable distribution of all property of both spouses.
