How Is Spousal Support Calculated for Spouses With Very High Incomes?
High net worth divorces come with unique needs and challenges, including spousal support. Because there may be multiple streams of income and professional business interests involved, it can be more challenging to calculate an appropriate amount of support in these cases.
However, legal guidelines can help determine what is fair, and a lawyer can help determine when a deviation or exception applies.
Types of Spousal Support in California
California recognizes two main types of spousal support: temporary and permanent (long-term).
Temporary Spousal Support
Temporary spousal support can be awarded soon after a divorce or legal separation is filed. It is designed to help the lower-earning spouse maintain financial stability during the divorce process. California uses a standard formula to calculate this amount: (40% of the higher-earning spouse’s net monthly income) – (50% of the lower-earning spouse’s net monthly income).
While straightforward, this formula can break down in high-net-worth cases where income isn’t reported on W-2s. Business interests, real estate holdings, and passive investments often require expert analysis to determine an accurate monthly income.
Permanent (Long-Term) Spousal Support
Permanent support is awarded at the end of a divorce and can continue for years. Unlike temporary support, there is no formula. Instead, California courts weigh a variety of factors under Family Code §4320.
Unique Challenges in High-Income Support Calculations
High-income spousal support cases present several challenges that don’t apply to most divorces:
- Non-W2 income sources: Dividends, capital gains, and business distributions require detailed financial disclosures.
- Valuing business and investment holdings: Complex ownership structures and fluctuating market values make it hard to pin down income.
- Forensic accounting: Experts are often necessary to trace, value, and verify income sources.
These challenges mean the support determination often goes beyond the standard calculation or statute.
Factors That Can Influence High-Income Support Awards
Spousal support decisions in high-net-worth divorces hinge on several critical considerations. Courts evaluate both the financial realities and personal circumstances of each case to determine a fair and reasonable outcome.
Key factors include:
- Prenuptial or postnuptial agreements: Courts often uphold these agreements unless found to be invalid due to lack of disclosure or fairness.
- Standard of living during the marriage: Judges strive to ensure both parties can maintain a lifestyle similar to what they had while married.
- Tax Implications: The tax burden of asset transfers or income distributions can influence support outcomes.
- Complex financial holdings: Trusts, business interests, stocks, and cryptocurrency often require expert valuation.
- Additional considerations under California law: These include the length of the marriage, each party’s earning capacity, any history of domestic violence, and non-financial contributions to the marriage.
Every divorce is unique, and no single factor determines the outcome. Courts look at the full picture to reach an equitable support decision that accounts for both spouses’ financial realities and long-term needs.
When calculating spousal support in a high-income divorce, expert guidance can be critical. Here’s why:
- Complex income sources: Experts can identify and quantify nontraditional income like stock options, bonuses, or dividends.
- Business valuations: A forensic accountant or appraiser can determine the true value of a closely held business or partnership interest.
- Asset tracing: Financial specialists can trace the origin of funds and uncover hidden or commingled assets.
- Tax strategy: Tax professionals can advise on the implications of different support and property division arrangements.
- Litigation support: Professionals can prepare detailed financial reports and provide credible testimony in court if needed.
Working with the right professionals ensures your spousal support arrangement is based on accurate, comprehensive financial information—and that your rights are fully protected throughout the process.
Contact an Experienced Spousal Support Lawyer for a Confidential Case Assessment
The decisions you make now during your divorce can affect you for years to come. If you need help during your high-net-worth divorce, reach out to the legal team at Berenji & Associates Divorce Lawyers.
We can explain how California’s spousal support laws apply to your case, estimate a fair amount of support, and negotiate for a fair resolution. Call us today at (310) 271-6290 to arrange a confidential consultation.
We serve all through Los Angeles, Beverly Hills, Los Angeles County, and its surrounding areas. Visit any of our offices at:
Berenji & Associates Divorce Lawyers Los Angeles Office
550 S. Hill Street STE 1467
Los Angeles, CA 90013
(213) 277-2586
Berenji & Associates Divorce Lawyers Beverly Hills Office
9465 Wilshire Blvd #333
Beverly Hills, CA 90212
(213) 277-2586