by John Schill | May 4, 2020 | Alimony, Annulment, Divorce, Legal Seperation, Parenting, Paternity
When younger couples get divorced in Arizona, the process may be fairly straightforward because they may not have had much time to accumulate very many assets. However, if you have been married for a long time and have built substantial assets during your marriage, you may have to go through a type of dissolution called a high net worth divorce.
This type of divorce can be very complex because of the different types of assets that may be involved. High net worth divorces may involve complex asset classes and holdings worth hundreds of thousands up to millions of dollars. People who go through these types of divorces will likely need to get the help of a competent family law attorney who is experienced in handling high net worth divorce cases.
The Schill Law Group understands complex asset and debt division matters and is prepared to help.
How is a High Net Worth Divorce Different from a Regular Divorce?
A high net worth divorce will frequently involve complex legal and business issues that are not involved in regular divorces. High net worth couples may have vastly more extensive assets, including businesses, real estate holdings, art collections, trusts, stocks and bonds, investment accounts, retirement accounts, jewelry, and more. All of these types of assets may need to be identified, located, and valued to accomplish an appropriate division of property.
Under A.R.S. § 25-211, Arizona is a community property state.[1] This means that all of the assets that you have accumulated during your marriage that are not deemed separate property are considered to be equally owned by both spouses and subject to equal division. In many high net worth divorces, however, there may be antenuptial agreements in place.
High net worth divorces are likelier to include disputes about whether certain assets should be considered to be separate or community property.
How are Trusts Handled in High Net Worth Divorces?
Some wealthy couples have trusts established to hold substantial amounts of their assets. The handling of the assets of a trust can be crucial for the outcome of the property division in a high net worth divorce. When a spouse funds a trust with community property, it can transform the assets in the trust from being considered to be the separate property of that spouse to being considered to be the community property of both spouses to be divided in the divorce.
Normally, a trust that was created by a third party to benefit one spouse but not the other will be considered to be the beneficiary spouse’s separate property. The other spouse might argue that the court should consider the trust when it determines the amounts of spousal and child support that the other spouse should be granted.
When a trust is involved in a divorce, an attorney will need to seek disclosure from the trust. This can be hard because trust accounts may be located outside of the U.S. Trustees for U.S. trusts will normally send disclosures in response to a request. Offshore trusts might have trustees that fail to respond. When that happens, you might have to file a petition with that country’s court to seek an order for the trustee to provide disclosures.
How are Businesses Handled in Divorces?
Many high net worth divorce cases involve private businesses. When a private company is owned by one of the spouses, multiple complex issues will need to be addressed. The business will need to be properly valued. If the company has assets that are spread around the world, the valuation will be more complex. Often, business valuations will require significant investigations and the work of forensic accountants.
After a business valuation is completed, the divorcing couple will then need to determine how to distribute it in the property division portion of their divorce. One spouse may not be willing to give up his or her interest in the company. The spouse that wishes to keep control of the company might need to give a larger portion of the other assets to his or her spouse to retain control of the business.
How is Real Estate Handled in a High Net Worth Divorce?
While a regular divorce might involve dividing the marital home, high net worth divorces may involve real estate holdings beyond the home. Wealthy couples might have rental properties, commercial properties, and vacation homes. An appraisal of each of the various properties that are owned will need to be completed to understand what their fair market values are.
Some of the real estate properties might be the separate property that one spouse brought into the marriage. Other properties might be community property. Finally, some separate real estate might become community property if marital funds were used to make improvements. All of these issues will need to be addressed to ensure a fair division of the property.
Types of Complex Valuations in a Divorce
There are multiple types of complex valuations that might be necessary for a high net worth divorce. Some of the types of valuations that might need to be completed include the following:
- Retirement accounts
- Investment accounts
- Stocks and bonds
- Jewelry
- Art collections
- Intellectual property
- Real estate
- Businesses
- Yachts
- Other valuable assets
Different experts might have to value the assets from within their fields and submit written appraisals. In some cases, each spouse will hire his or her experts to testify about how they arrived at their valuations.
Spousal Maintenance in High Net Worth Divorces
Under A.R.S. § 25-530, spousal maintenance is a type of support that may be ordered by the court in cases in which the divorcing spouses have a large income disparity. Spousal maintenance is in addition to any child support that might be ordered, and it is frequently at issue in high net worth divorces. However, some cases involve prenuptial agreements through which the lower-earning spouse may have waived his or her rights to spousal maintenance.
In those types of cases, the lower-earning spouses might challenge the prenuptial agreements’ validity and claim that he or she signed under duress. A lower-earning spouse might also claim that the wealthy spouse failed to disclose all of his or her assets, meaning that the lower-earning spouse could not understand the rights that he or she was waiving.
Managing tax implications involved with asset division
Many tax implications might be involved in high net worth divorces. Both spouses will need to consider credits and deductions that might be lost after divorcing. Spouses who will have to pay spousal maintenance are not able to deduct the payments on their taxes any longer, and spouses who receive spousal maintenance are required to report the payments as income on their tax returns.
Transferring certain assets in divorces can trigger tax consequences. Some of the illiquid assets that might involve tax issues include the following:
- Brokerage account funds
- 403(b) accounts
- 401(k) accounts
- IRAs
- Stock options
- Annuities
- Thrift savings plans
To prevent tax consequences when transferring some of these illiquid assets, a qualified domestic relations order may need to be prepared. This might help people to avoid penalties and taxes on what is transferred.
Concealment of Assets During a Divorce
Unfortunately, some spouses try to conceal or hide assets to prevent their spouses from getting their rightful share in divorces. They might try to transfer assets to family members or friends, hide them, or spoliate the assets. Others simply do not disclose all of their assets. For example, they might have accounts that are not disclosed and transfer funds from disclosed accounts to make it appear as if they have less. They might also move assets to offshore locations or place community assets in trusts.
Whenever a spouse believes that the other spouse is concealing or hiding assets, he or she will need to get help from an experienced attorney. A lawyer might work with a forensic accountant to find assets that have been spoliated, hidden, or concealed. If it is not possible to determine the extent of the person’s actions, the court can draw an adverse inference against the spouse who has engaged in this type of behavior.
Schill Law Group Experienced High Net Worth Attorneys
If you have accumulated substantial assets during your marriage and want to get divorced, getting help from an experienced high net worth divorce lawyer at The Schill Law Group is important. Our experienced property division and divorce lawyers understand how to handle the complex issues that are frequently involved in these types of divorces.
Contact us today to schedule a consultation by calling us at 480.525.8900.
by John Schill | Nov 18, 2019 | Laws
Parents have the right to have a relationship with their children. State laws end up enforcing these rights a lot of the time, including what is known as father’s rights. In the state of Arizona, fathers have certain rights in regards to parenting, just as the children have a fundamental right to have healthy relationships with their parents.
Arizona established state laws to help encourage a parent/child relationship, and the courts don’t step in unless absolutely necessary. In the majority of father’s rights cases, the child’s best interest is a cornerstone in any decision.
A Father’s Effect on a Child’s Life
Traditionally, the mother holds the position of a child’s primary care provider. But fathers also play a critical role in the child’s development and healthy growth. Both in and out of the courtroom, fathers have proven they can be capable disciplinarians and competent caretakers.
These two roles are essential to any child’s upbringing. Fathers can help instill social and cognitive development, as well as confidence and a sense of security.
Arizona’s Laws for Establishing Paternity
It’s still common for a mother to raise a child by herself without a father figure present. There may come a time when the father has to step up in the child’s life to help with raising them. This is why the father or mother must establish the child’s paternity very early on, ideally, right after the mother has the child.
Establishing paternity simply means that a court judge or government entity has made a ruling on which male is the child’s father. One of the easiest ways to establish paternity in Arizona is for the family to fill out a Voluntary Acknowledgement of Paternity Form
Both the mother and father should sign this form. Having both parties sign this form makes the paternity official in the government’s eyes, and it legally outlines who the child’s father is for all intents and purposes.
If the parents can’t agree on who the child’s father is, any of the following people can start a paternity matter under Arizona state law:
- The mother of the child
- A male believed to be the father (putative father)
- The person whom the child is living with or their guardian (custodian)
- Any government agency that provides the child with welfare benefits or health insurance
A superior court system can start a motion to establish the child’s paternity where the mother, child, and putative father reside. Any government agency that provides any form of care for the child can bring up a motion to establish paternity outside of the court system
When it comes to determining paternity, either a ruling from a government agency or a court is valid. Both the government agency and the court can order genetic or blood testing to help establish the child’s paternity. The paternity test is only valid if it shows there is a 95% chance the male in question is the child’s father.
Arizona’s Best Interest of the Child Standard
The Best Interests of the Child Standard in Arizona is the guiding force for Arizona judges who are trying to preside over parental right or child custody cases. There are determining factors the judges must consider when it comes to the child’s best interests, including:
- Both parents’ mental health
- Both parents’ physical health
- Both parents’ preferences
- Child’s ability to adjust to current or potentially new surroundings in the community, home, or school
- Child’s mental health
- Child’s preferences
- Relationship between the child and any siblings
- Relationship between the child and each parent
- Relationships between the child and other significant individuals
The court will consider which parent will be more likely to allow for frequent and meaningful contact between the other parent and the child. They also look at which parent took on the role of the traditional caregiver. Any parent that used duress or coercion as a way to get primary custody will cause the judge to look unfavorably on them.
This is especially true when you compare it to how the judge will look on the other parent that cooperates for the child’s benefit. Ultimately, the judge wants to know that the child is in a living situation that serves their best interests. The end goal is not making things fair for the parents, but rather, it’s to ensure the well-being of the child.
Father’s Rights to Visitation and Custody in Arizona
Both of a child’s biological parents have the right to seek custody or visitation, and both parents have equal rights in this regard. This right also stands whether or not the parents were married or not married when they had a child. Arizona judges rely on the child’s best interests standard to help guide their decisions regarding custody.
This guidance also applies to any visitation rights, whether they put them in place for the mother or the father. The judge usually assumes that it’s beneficial for the child to have both parents play a role in their upbringing.
Father’s Rights to Child Support in Arizona
Circumstances pending, the judge could appoint either the father or the mother as the child’s primary guardian or custodial parent and the other parent as the non-custodial one. The custodial parent is the one who will be largely responsible for the child’s care and upbringing. The non-custodial parent usually pays child support and gets visitation rights.
Child support is a way for the non-custodial parent to help provide financially for the child’s care and upbringing. Child support is supposed to pay for anything the child should need like their housing, clothing, food, or other items.
It doesn’t matter if the father or mother gets the custodial parent role. The custodial parent has a right to seek child support to help them raise the child. A father whom the judge names as the custodial parent has as much right to petition for child support from the mother as the mother would if she was the custodial parent.
In Arizona, custodial parents can use the Child Support Enforcement Program to help get child support payments from the non-custodial parent.
Married Father’s Rights
In the state of Arizona, if a couple is or gets married before they have a child, there is a presumption of paternity. The state presumes you’re the child’s biological father. The state considers paternity to be already established when you’re married.
As a result, you have a legal right to see and interact with the child, and you also get to participate in major decisions regarding the child. These decisions could be education, medical treatment, or religious training.
Being married when you have a child also gives you responsibility in the event of a divorce. This is true for child support payments if you are the non-custodial parent.
Married Fathers Get Equal Rights
Arizona law recognizes and protects equal rights between the mother and the father in the event of a separation or divorce. If you worked full-time while your wife stayed home and took on the role of the primary caregiver for the child, the court wouldn’t hold that against you when it decides parenting time or legal decision-making rights.
In Arizona, courts don’t follow the Tender Years Doctrine anymore, which favored mothers when it came to deciding the primary placement and visitation schedules. Today, both the mother and father have equal rights in the eyes of the court, no matter the child’s age. The court isn’t allowed to favor one parent over the other parent.
The courts have to take all of the facts of the case into consideration before they make their ruling and final decision. The parents and the court system should all focus on the child’s best interests throughout the custody and visitation proceedings.
Unmarried Father’s Rights
Any father who isn’t married to the child’s mother at the time of the birth has no legal rights to the child until they establish paternity under Arizona law. You can establish paternity through an affidavit (agreement) between both the mother and the father. There is also the option to get a court order to try and establish paternity with a test, and from that, establish rights for the unmarried father.
Arizona law allows an unmarried mother to make more significant decisions with regards to the child’s education, medical treatment, and religious training without seeking the father’s approval or without his consent. This changes if the father decides to seek his parental rights.
Custodial Interference
For unmarried fathers in Arizona who don’t go through the process of establishing paternity, custodial interference is a very real possibility. For example, you take your daughter to the park to play like you have hundreds of times before. You help her on the slide and push her on the swing. Suddenly, a police car pulls up and asks you for your ID.
Once you show it, the officer arrests you and tells you that they’re charging you with custodial interference. The police take your daughter away and give her back to her mother. You and the mother argued this morning before you took your daughter to the park. As a result, she called the police on you after you left to get her daughter back.
Is this legal? If you’re unmarried, it might be. If you’re not married to your child’s mother and you don’t establish paternity, you have no rights to that child. Now, if you had established paternity, this wouldn’t be legal.
FAQs Regarding Father’s Rights
There are several frequently asked questions people have regarding father’s rights in Arizona. We picked out the most popular questions and answered them below.
Your significant other just had a baby. What are your rights if you’re not married?
You have no rights until you establish paternity. This doesn’t mean that you should be denied time with the child. If one or both parties dispute custody, a court will include a review of how both the mother and father treated one another with regards to access to the child.
If one parent decides to deny access without having a good reason, the court will review it later when they’re deciding the best custody arrangements. Good reasons for denying one parent access to the child include child abuse, drug abuse, domestic violence, or untreated mental illness.
Does the child’s age matter?
Whether they are six months or sixteen, the age won’t impact a judge’s decision. As long as they are a minor, you can dispute custody or seek visitation rights. You’re free to establish paternity starting at birth and going up to the time the child turns 18.
If you get a paternity test, will you have to pay child support?
Yes. Every parent has to pay for their child until they turn 18, and it doesn’t matter if the child lives with you or not. Non-custodial parents are the ones who typically pay child support to the custodial parent to help support their child.
You have your name on the birth certificate, and the hospital staff signed it; does that prove paternity?
As long as the mother or another party doesn’t contest your name on the birth certificate, yes. A signed birth certificate is enough to establish paternity.
Can you establish paternity without involving a court or government agency?
Yes. You can draft a legally binding agreement that both you and the mother sign without going to the court. However, you can’t claim this is a court order unless a judge signs off on the agreement you set up.
Is submitting paternity paperwork to the state of Arizona free?
No. Arizona charges a filing fee. The amount depends on what paperwork you want to submit to establish paternity. If you have trouble affording this fee, a court can waive it if you request it.
Find Out More About Father’s Rights
Do you want to know more about your rights? Maybe you need an attorney to help guide you through the process of establishing paternity. If so, you can reach out and contact us. We’re happy to set up a consultation today!