High Net Worth Divorce in North Carolina
What is High Net Worth Divorce?
High-income couples going through a divorce face significantly different issues than those divorces involving lower income couples. If you are in a higher income bracket it is imperative that you choose a lawyer that has experience with cases involving high-income couples.
High-income couples tend to share several common denominators. It’s likely that you have been married for more than 10 years, you have children that may or may not be grown, you are in your mid-thirties or older, at least one spouse is a professional or you own you a business, and you likely have a significant amount of retirement and property to divide. Most divorces involve three issues: 1) custody and child support, 2) equitable distribution of your property, and 3) alimony. In a high-income divorce, these issues are much more complex.
Consider child support for instance. In North Carolina, child support is calculated based on a formula, or guidelines, designed by the state. The guidelines determine the amount of child support needed to raise a child based on the mother and father’s income, the number of nights the children spend with each parent, daycare expenses, and any other extraordinary expenses that may exist. When a family falls within the guidelines of the state, calculating child support is simple and can be done using the calculator on our website. If, however, the combined gross income of the parties is greater than $25,000.00 per month the case exceeds the maximum amount covered by the North Carolina child support guidelines. Likewise, child support calculators are of little use in non-guideline child support cases. In these situations, we can still use the high end of the child support calculator to get a baseline for child support. Beyond getting that baseline number for child support, we have to negotiate to reach a number that is reasonable for the support of the children.
If we can’t reach an agreement on child support, a temporary child support hearing is scheduled and a judge decides the amount of child support based on the testimony of the parties, income, expenses, and the standard of living the child was accustomed to while the parties were married. Prior to that hearing, most courts require each party to first file a financial affidavit. A financial affidavit is a document wherein a person discloses his or her income from all sources, along with his or her expenses, assets, debts, and liabilities. Financial affidavits are complex documents. They require disclosure of expenses for insurance. The required disclosure of retirement accounts including 401K and IRA accounts. They even require a full disclosure of all monthly utility bills, from your water bill to your cable bill. Financial affidavits are involved and the court may rely on these documents as evidence of your expenses and as evidence of the cost of raising your children. Since the courts can place a great amount of weight on these affidavits, it is important to fill them out correctly.
After the financial affidavits are filed and a temporary child support hearing is held, the court will enter a temporary child support order. In divorce cases that also involve child custody, the temporary child custody order commonly remains in place until a permanent child custody order is in place. Once permanent custody of the children is resolved, the court will have another hearing on permanent child support to determine how child support will be paid until the child reaches age 18 or graduates from high school. There is no requirement in North Carolina that parents support their children after high school, pay for college, or pay for extracurricular activities. However, many parents do negotiate for parents to share in the cost of these expenses. Remember though that a judge will not order these additional expenses be paid, so if it is something important to you then negotiate a settlement.
Equitable Distribution is another area of the law where high-income couples face complexity. It is important that the attorney you choose has a network of financial planners, business evaluators, and tax specialists to assist you in making decisions. All property purchased during a marriage is marital property. Marital property can include 401K plans, IRA, pensions, real property, stocks, bonds, and businesses. It also includes personal property such as jewelry, furniture, and household goods. Typically marital property in NC is divided 50/50. There are some very limited circumstances where a court might divide the property slightly unequally by giving one party a little more of the marital estate. In cases involving little property, equitable distribution is simple. The arguments generally arise when we are called upon to divide a business or more complex investments because the parties can’t agree on the value of the property to be divided. This is where having a good network of experts is important. Equitable distribution can be settled outside of court.
Finally, many high net worth divorces involve one spouse paying post separation support and alimony to the other spouse. Post-separation support, alimony, temporary alimony, and permanent alimony are the terms used to describe the money that a supporting spouse pays a dependent spouse. Many people are often confused by these terms and often use these terms interchangeably. Post separation support is the support that is paid temporarily during the separation. Alimony is described as the support provided by the supporting spouse to a dependent spouse for a longer duration, and in some cases, it can be permanent. Typically courts in NC will award alimony for half the duration of the marriage. Both spouses can settle the alimony or it can be determined by the court.
Only a dependent spouse is entitled to receive alimony in North Carolina. A dependent spouse is referred to as a husband or a wife substantially dependent upon the other spouse for maintenance and support or is substantially in need of maintenance and support from the other spouse. To be entitled to receive alimony, the dependent spouse must be able to show that he or she doesn’t have adequate resources to support his or her needs and that the other spouse is financially capable of paying the alimony.
Unfortunately, there is not a specific formula for alimony in NC like there is for child support. This means that alimony is highly dependent on the amount that the dependent spouse needs to live on and the amount that the supporting spouse has left over after paying expenses. You can use our alimony calculator to see what you might pay or receive in alimony if you lived in a different state. Remember that this calculator does not calculate what you will pay or receive in NC, so it is simply a way to get an estimate of what might be reasonable.
The best advice for high-income families going through a divorce is to talk to an attorney as early in the process as possible and to remember that your case is not necessarily going to be like your friend or family member’s case because everyone has different spending habits and lifestyles. Those factors affect how your property will be divided, how your children will be shared, and how much you will pay or receive in alimony and child support.