How Divorce Among the Wealthy Differs
Randall Kessler, Esq.
Kessler & Solomiany, LLC
July 08 – 12. 2019 The grueling process of dividing assets between a divorcing couple often involves an army of lawyers, paperwork and proceedings. That’s not to mention the mental agony and emotional turmoil of an extended legal dispute with a former loved one.
But legal proceedings for a couple on the higher end of the wealth spectrum tend to be strikingly different than the average divorce. There may be more tax implications or local laws to consider in a divorce with higher stakes.
For example, the Tax Cuts and Jobs Act in the U.S. eliminated a tax break for alimony payments that were finalized after Dec. 31, 2018 and is likely to disproportionately affect wealthy divorced couples. The top 5% of household income earners claim more than 20% of this tax deduction, according to CNBC.
Other complicating factors may include the ownership of stock in public companies, rare collectors items that are difficult to value, offshore accounts and shell companies that are easier to leave undisclosed, and the residence status of globe trotting ultra-wealthy couples with multiple passports.
Wealth, effectively, complicates the split. This fact was made apparent when Jeff Bezos, the founder of Amazon and currently the richest person in the world, and MacKenzie Bezos, a novelist, announced their divorce earlier this year.
With an estimated $136 billion at stake, most expected a colossal battle between the high-profile couple that would have played out in the media for years. Instead, they wrapped up their split in a few months and issued affable press releases to describe their path forward.
The seamless and good-natured approach didn’t seem to surprise experts, like divorce attorney Randall Kessler, Esq., who says the nature of divorce can change beyond recognition if a family has assets in excess of a few million dollars. “There’s no doubt that more wealth brings more complications, but it also involves more financial and legal experts,” he says.
In his experience as a divorce lawyer for high and ultra-high net-worth couples, Kesseler says the proceedings are more systematic and formal which makes the couple much less combative. “They’re not looking for an even 50-50 split like ordinary couples. One of them might be willing to sacrifice a few percentage points to avoid all the frustration, aggravation, litigation and bad feelings that litigation generates.”
Despite the many challenges and complexities of a high-profile divorce, the wealthy seem to fight less and often through proxies, according to Kesseler.