For high-net-worth individuals, divorce isn’t just emotionally difficult - it’s can be a seismic shift in financial architecture. With the average cost of a complex divorce often exceeding $150,000, and 67% of affluent women reporting that divorce helped build their net worth, the experience is far more than a legal matter. Add in recent tax law shifts and the complexities of multi-generational wealth, and divorce becomes an inflection point for legacy, liquidity, and control.
Key considerations for affluent individuals:
- 33% of HNW women were awarded a majority or all of the marital assets - emphasizing the importance of equitable negotiations.
- Pensions and retirement vehicles were a central issue for 20% of high-net-worth women - underlining the value of forward-thinking retirement strategies.
- Divorce often involves illiquid assets, complex valuation disputes, and shifting tax dynamics that require sophisticated strategies to preserve wealth.
1. What are my post-divorce liquidity and cash flow needs?
High-net-worth divorces often involve illiquid holdings - restricted stock, private funds, real estate, and trust distributions. Conduct a stress test across these assets. Will you need to unlock capital for a settlement or alimony? Is there a tax-efficient way to restructure or sell assets? 18% of HNW women began working with a financial advisor post-divorce, signaling a strong need for expert support during this transition.
2. How does divorce impact my retirement and legacy planning?
Reevaluate defined benefit pensions, equity-based compensation, and estate-linked retirement plans like CRUTs or GRATs. Also consider how a divorce affects donor-advised funds, private foundations, and multigenerational trusts. For many, divorce is a moment to recast not just retirement timelines but also their purpose and legacy.
3. How will complex assets be valued and divided?
Art, collectibles, private companies, and IP require expert valuations. In some cases, a structured payout may preserve value while limiting tax exposure. For family businesses, buy-sell agreements or recapitalization may allow one party to retain operational control without forced liquidation. You may also need to consider the role of personal goodwill, which is typically excluded from division but can complicate negotiations.
4. What are the tax implications of my divorce strategy?
Tax law continues to evolve. The TCJA’s alimony deduction repeal still affects divorces finalized after 2018, while new proposals may increase capital gains rates for top earners. Evaluate the timing of property transfers, gift exclusions, and charitable deductions. Filers with significant passive income should also factor in the Net Investment Income Tax and potential exposure to AMT.
5. How should I restructure my estate and philanthropic plans?
Update your estate plans immediately post-divorce. Swap out your ex-spouse as beneficiary or healthcare proxy. Also revisit the role they may play in charitable foundations, revocable trusts, and any irrevocable grantor trusts they were involved with. If children or family members were expecting to inherit jointly owned assets, re-communicate expectations clearly.
Protect what you've built - and what comes next. Divorce is the beginning of a new chapter - financially and personally. With over 1 in 5 wealthy individuals changing their financial strategy post-divorce, don’t leave this transition to chance. Comerica’s team of wealth professionals offers bespoke guidance in trust restructuring, business continuity, tax mitigation, and next-generation planning.
Connect with your Comerica Relationship Manager or contact Comerica to schedule a confidential consultation today. Timing is everything - start your strategic transition now.
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