How Are Investment Portfolios Split in a High Net Worth Divorce?

Diversified investment portfolios can quickly become a complicating factor during the property division process of a divorce. Marital investment holdings can be the result of both spouses’ contributions, and the value of a couple’s portfolio can fluctuate significantly between the time when one spouse files for divorce and when the courts ultimately dissolve the marriage.

Understanding how to divide investment holdings can be complicated. Kansas is not a community property state that presumes marital assets are owned equally by each party. Rather the state’s equitable distribution statute holds that when divorcing spouses cannot agree on a property division settlement, the judge decides what is fair. The result does not have to be a 50/50 split in value. 

Determining what is equitable when it comes to the distribution of investment assets first requires the identification and valuation of accounts and other holdings within the martial estate. Spouses may need to agree on a specific valuation date, which might be the day that they officially separated, to calculate what dollar figures will be used when dividing certain assets. 

Once spouses have agreed on the value of their investments, they can then begin addressing how to divide them. The direct division of investment accounts is sometimes an option, but splitting or liquidating investment holdings is not always a realistic solution. In-kind division, where the actual assets are divided and the stocks, mutual funds or bonds are placed in separate accounts, is also used. Deferred distribution may be necessary for unvested stock options and other future anticipated payouts. Qualified Domestic Relations Orders (QDROs) may be required to avoid triggering withdrawal penalties and unnecessary taxation. 

In some cases, investments can be used as leverage against other aspects of a property settlement. For example, one spouse may buy out the other’s share of an investment by ceding their interest in the family home or agreeing to take more of the marital debt. 

Ultimately, whether through settlement or judicial decision, the method in which valuable investment portfolios are divided in a divorce has a lot to do with the unique situation and each party’s goals. Working with an attorney with experience successfully resolving complex property division matters gives you the best chance to obtain a favorable resolution.

The Henry Law Firm P.A. in Overland Park, provides comprehensive legal counsel for Kansas clients in all types of divorce matters, including the division of investment assets. For a consultation, please call 913-381-5020 or contact us online.