FAQs on Collaborative: Legal Separation vs. Divorce and High Net Worth Divorces
Collaborative Divorce has many finer points that clients and students often ask about. These FAQs posts clarify some of these muddier details, giving you the opportunity to accrue as much helpful information as you can. Whether you are considering your divorce options, seeking more knowledge about the process you’ve already chosen, or hoping to learn more about Collaborative Divorce more generally, the FAQs on Collaborative are a straight-forward teaching tool to answer specific questions you might have. If you have more questions, please feel free to contact the Miller Law Group at 914-738-7765.
What is “legal separation”? How is it distinct from marriage and divorce? What happens during it?
Legal separation exists as kind of twilight between marriage and divorce. Divorce puts an end to your marriage; legal separation does not. The Collaborative process also applies to people seeking a legal separation either as a stop on the road to divorce or as an end in and of itself. A legal separation could mean you live as all-but-divorced with separate finances, a formal separation agreement and completely separate lives. It could also mean something less formal.
In order to be legally separated, however, you need a formal separation agreement or a court judgment. Some couples who want to avoid divorce — for religious or personal reasons — get a legal separation as a stop gap solution. Sometimes people decide to stay legally separated for a period of time in order to allow one person to remain on the other’s health insurance plan.
What are the unique features of high net worth New York divorces?
New York has what are known as equitable distribution laws for marital property. As we discussed before, this doesn’t necessarily mean that everything is split 50-50. In high net worth divorces, the marital estate is often large, complex and sprawling. A business (or businesses) owned by the couple may need to be valuated and split up or sold off. Hidden assets and hidden debts may need to be unearthed and discussed. The tax implications can be profound, as can the inheritance issues.
With greater – and more diverse – assets come more complex discussions. High net worth divorces sometimes take a bit longer to sort through and require some financial sophistication and wise guidance. Done wrong, such divorces can lead to the needless hemorrhaging of assets, high taxes, and hurt feelings. The couple also needs to be especially aware of possible fraud and theft. For instance, unscrupulous “friends” of the family (or outright thieves) may try to take advantage of the couple’s emotionally vulnerable state to tap their assets.
High net worth divorce can also have implications that go beyond the immediate family. For instance, if the couple owns a business together, that business (and its employees, stakeholders, customers, etcetera) can all be affected. For an extreme example, consider the 2014 divorce between Harold and Sue Ann Hamm. Mr. Hamm founded and owned a company called Continental Resources, valued at its peak at nearly $20 billion. Its enormous size and scope made it as economically powerful as small nation! Mrs. Hamm ended up with an award worth nearly $1 billion — and she later appealed that decision. Continental Resources’ employees and vendors watched the proceeds with bated breath. The judge’s decision could have effectively destroyed the company. Residents throughout North Dakota, where Continental Resources does a lot of business, watched also, because the outcome had such big implications for the lives and livelihoods of everyone in the state.