Bill and Melinda Gates’ separation in 2021 is likely to be the most expensive divorce in history. The exact figures involved were not publicised but, according to Investopedia, it’s estimated that Melinda Gates received around $76 billion in the settlement.

Fellow tech entrepreneur Jeff Bezos and his ex-spouse Mackenzie Scott hold the official title for the most expensive divorce as they publicly disclosed the $38.3 billion settlement awarded to Scott in 2019.

The divorce process is far more complicated when dealing with assets at this scale. You might have high net worth (HNW) clients who experience this, to some extent. While your clients are unlikely to have assets in the billions, they may still have a significant amount of wealth to divide during a separation, and this creates several unique challenges.

Fortunately, with the right support, they can overcome these hurdles.

Read on to learn how a financial planner could help HNW clients navigate a divorce.

High net worth couples may be less likely to split assets on a “needs basis” during a divorce

Deciding how to split assets during a divorce can be challenging and if couples disagree, it can lead to lengthy negotiations. If both parties can’t agree, a judge may rule on how a couple share their wealth.

Often, the judge makes this decision on a “needs basis”. This sees them divide wealth in a way that meets the housing and income needs of each party. So, even if one person contributed more to the couple’s joint wealth, they wouldn’t necessarily receive a share that reflected their contribution.

The judge will first consider the children, if the couple has any, and the financial needs of the parent who takes custody. They may also consider the current lifestyle of each party and what level of wealth they’d need to maintain that standard of living.

However, HNW couples may have enough wealth to easily meet the needs of both parties, with a large surplus. Sometimes, couples may opt for an equal split. Alternatively, each person might want to retain assets that they brought to the relationship, including inherited wealth.

In this case, it’s important that the couple can demonstrate the origins of their wealth and make a clear case for how much each person should receive. This can be complicated, especially for clients who have significant assets.

A financial planner can help your clients take stock of their wealth and understand which assets belong to which party. They can also assist clients in finding all the relevant paperwork to support their claims to certain assets. This is especially useful if a client’s ex-spouse dealt with the finances and holds all the information.

Couples may also use post- or pre-nuptial agreements to protect their wealth and dictate how they divide their assets in the event of a divorce. A financial planner may be able to support clients in putting these agreements in place and following them during a divorce.

Wealthy couples may have more complex assets to manage

Wealthy couples may have more complex assets than the average person. For instance, your HNW clients are likely to hold various types of investments, often in countries around the world. They might also have several properties.

As a result, your clients may find it difficult to value their assets. Additionally, they may need help from a financial planner to understand the tax implications of transferring ownership of certain assets to their ex-spouse.

Further to this, HNW individuals may hold many of their assets in trusts for tax efficiency. This can create complications if your client doesn’t have an interest in a trust held by their ex-spouse but wants to argue that those assets should be split equally.

A financial planner can help your HNW clients understand the structure of assets and how best to dismantle trusts and share wealth during a divorce.

If one or both parties owns a business, this can create complications too. Certain company assets may be hidden, and the ownership structure of a business can be very complex. Couples may not want to sell the business and split the proceeds either, so deciding how to divide this asset can be a challenge.

A financial planner will help HNW clients determine the most effective way to share their business, whether that means one person takes over or both parties still play an active role in the company.

Without professional support, your HNW clients may struggle to divide complex assets fairly. In some cases, their ex-spouse could use complicated financial structures to hide wealth and stop your client from receiving their fair share. We can help prevent this.

High net worth individuals may want to protect their charitable endeavours

When Bill and Melinda Gates divorced, they agreed to continue running their charitable organisation, the Gates Foundation, together for a trial period of two years. After this, they decided that they couldn’t work together amicably and instead, Melinda was awarded $12.5 billion from the charity funds to pursue her own philanthropic work.

This is a situation many HNW couples may face if they use some of their wealth to set up a charity. On divorce, they must decide how to proceed. Do they both continue running the charity together or should one person step down? Perhaps they could pass control to their children and take a less hands-on role?

Often, their decision depends on how amicable the split was. If the couple does decide to separate their charitable endeavours, a financial planner can guide them through the process, ensuring that both parties can continue to support the causes that are most important to them.

Get in touch

If you have HNW clients navigating a divorce, we can support them and ensure the best outcome.

They can contact us at hello@ardentuk.com or call 01904 655 330. As an award-winning financial advice company with advisers included in the 2024 VouchedFor Top Rated guide, you can be sure that we’re a bona fide company providing excellent advice and high-quality service.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate tax planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.