A High Net Worth Divorce from the Perspective of the Person Who Is the Primary Breadwinner
How does a high net worth divorce affect the financial stability of the spouse who is the primary breadwinner? After years—and sometimes even decades—of work to support your spouse and your family, it can be devastating to think about the emotional and financial implications of divorce.
It is important to learn how to protect your money during divorce, and to take steps to ensure that you are treated fairly by the court. There are many ways to protect your wealth even if you are required to pay alimony or spousal maintenance. At 1-800-FAMILY-LAW, we often receive calls and emails from clients who are concerned about whether they will be able to retain property in a high net worth divorce and, more importantly, whether they will be responsible for an unfairly high alimony payment each month. We want to say more about how alimony or spousal maintenance works in most divorce cases, including for high net worth clients who were the primary earners in their families.
Will I Have to Pay Alimony?
As the primary breadwinner in your marriage, you are probably asking: will I have to pay alimony? And if you do have to pay alimony, you are likely wondering: how much alimony will I have to pay?
As we mentioned, each state has its own laws governing alimony, which is also known as spousal maintenance or spousal support. Generally speaking, in order for the lower-earning spouse to be eligible for alimony, she or he needs to specifically request it from the court. Then, the court typically will look at a number of different factors in deciding whether alimony is appropriate. This is true regardless of the income of the parties. In other words, the court does not consider only that you are a high-earning person, or that you were the primary breadwinner in the family, when it decides whether alimony should be awarded. Rather, your earnings and your current income can be one factor in determining whether alimony is appropriate, as can the standard of living that your spouse became accustomed to during the marriage.
As an example of the factors that courts use in determining whether alimony is appropriate, we have the statutory factors from Illinois law (750 ILCS 5/504) to give you a sense of how the court makes its decision:
● Your income and property;
● Your spouse’s income and property;
● Apportionment of marital property to each spouse;
● Your financial needs;
● Your spouse’s financial needs;
● Impairment of your spouse’s future earning capacity due to his or her decision to forego an education, training, employment, or other career opportunities for the sake of the marriage or performing domestic duties;
● Time it will take your spouse to acquire the kinds of education, training, and employment she or he would need to be able to support himself or herself;
● Standard of living established during the marriage, which includes the conditions made possible by your earnings;
● Duration of your marriage;
● Age and health of both you and your spouse;
● Other available sources of income for your spouse;
● Your spouse’s contribution to your education, career, or training; and
● Terms of a premarital agreement.
How Much Alimony Will I Have to Pay?
If the court says alimony is indeed appropriate for your spouse, how much will you have to pay? For high net worth individuals, this is a complicated answer and there is no specific formula. Many states have instituted a statutory formula for determining spousal maintenance, which take a portion of your income in relation to your spouse’s income, and then determines the duration of the award based on the length of the marriage.
However, in most states with a formula for determining the amount and duration of alimony, the formula is only applicable for couples who earn under a certain amount of money. For example, in Illinois the maintenance guidelines only apply to couples who earn less than a combined $500,000 each year. As such, high net worth couples do not typically have cases that fall clearly within these guidelines, and the court has more discretion in determining the amount of alimony that is appropriate.
If you earned, for example, approximately $2 million per year, and you shared a lifestyle with your spouse that requires approximately $1.5 million per year, the court could grant your spouse significantly more alimony than your state’s guidelines might suggest. And keep in mind that some states do not have guidelines. Instead, the alimony amount and duration is left to the discretion of the court. In determining a final alimony amount and duration, divorce courts often take into account some of the same factors listed above that help to determine whether alimony is appropriate in the first place.
Can My Spouse Receive Alimony If She Or He Is Unemployed?
We often work with high net worth individuals who are frustrated that they have to pay alimony when their spouse is unemployed. However, courts do often award alimony to an unemployed spouse if an award of alimony is equitable under the circumstances.
However, you should not assume that you will need to pay alimony for the rest of your soon-to-be ex-spouse’s life, regardless of whether she or he becomes employed in the future. As we noted above, spousal maintenance awards have a specific duration. While some awards are permanent for particularly long marriages, this is not the norm. Instead, most spousal support awards are designed to help your unemployed spouse get back on his or her feet and develop the skills and education necessary to support himself or herself in the future.
If your spouse refuses to work, and refuses to take any steps to find employment, you may be able to seek a modification of the support award, or you may be able to ask the court to require your ex-spouse to seek employment in order to continue receiving alimony. In some cases, the court will even impute income to your ex-spouse.
Contact a Divorce Lawyer With Your Alimony Questions
Any high net worth individual who is going through a divorce should seek advice from an experienced high asset divorce lawyer in order to protect assets. Contact 1-800-FAMILY-LAW today to speak with a dedicated and compassionate divorce lawyer with years of experience handling high net worth cases.