Alimony and High Net-Worth Divorces 

Alimony, also known as spousal support, often plays a central role in high net-worth divorces, where the financial stakes are significantly higher and more complex than in divorces where less money is in play. When one spouse has significantly greater income or assets, alimony helps to ensure financial fairness after the marriage ends. Whether you are the partner potentially paying alimony or receiving alimony in a high net-worth divorce, determining alimony can be tricky in these situations. Unlike standard divorce cases, determining alimony in high net-worth divorces involves unique challenges, including intricate asset structures, variable income streams, and potential disputes over valuation. 

Whether you expect to pay or receive alimony, here’s what you need to know about how it works in high asset divorce cases in Massachusetts. 

What Is a High Net-Worth Divorce?

Different people offer different dollar amounts that make a divorce high net worth.

The term “high net-worth divorce” can be somewhat subjective and often depends on the surrounding economic environment. Generally, a divorce is considered high net-worth when one or both spouses have a significantly higher income or greater assets than the median income or asset level in their area. Assets may include multiple real estate properties, business interests, investments, retirement accounts, luxury vehicles, and valuable collectibles. These divorces are more complex than standard divorces due to the need for accurate asset valuation, division of diverse property types, and potential tax implications. Determining asset ownership and value can be contentious, often requiring the involvement of financial experts, appraisers, and forensic accountants.

What Is Alimony?

Alimony, also known as spousal support, is a court-ordered payment from one spouse to the other after a divorce. Its purpose is to help the lower-earning spouse maintain financial stability and a similar standard of living post-divorce. Alimony may be temporary or long-term.

Massachusetts recognizes four types of alimony:

• General-Term Alimony: Regular payments to a financially dependent ex-spouse, usually based on the marriage length.
• Reimbursement Alimony: One-time or periodic payments to repay a spouse for financial support provided during the marriage, such as funding education or training.
• Transitional Alimony: One-time or periodic payments to help the recipient adjust to a new lifestyle or location after divorce.
• Rehabilitative Alimony: Temporary support aimed at helping the recipient become self-sufficient.

Is The Alimony Payment Forever?

Most of the time, no. Its duration depends on the length of the marriage and ends upon remarriage, cohabitation, death, or when the paying spouse reaches full retirement age and qualifies for Social Security. Additionally, alimony can be modified, even if it is not completely cancelled. Common reasons for modification include a material change in circumstances, such as a serious health issue or a significant change in income. The court may adjust the amount or duration of support based on these changes.

How Alimony Is Determined

When determining alimony payments, courts consider several key factors. They assess the length of the marriage, with longer marriages often leading to higher and longer alimony payments due to extended financial dependence. For marriages of up to 5 years, alimony can last no more than 50% of the number of months the couple was married. For marriages between 5 and 10 years, the cap is 60%. If the marriage lasted 10 to 15 years, alimony can continue for up to 70% of the months. For marriages lasting 15 to 20 years, the maximum is 80%. Only when a marriage lasts 20 years or more may the court award indefinite alimony.

Courts also evaluate each spouse’s income and earning potential, requiring the higher-earning spouse to provide more financial support if necessary. The court examines the couple’s standard of living during the marriage to ensure both spouses can maintain a similar lifestyle after divorce. Additionally, they review financial needs and obligations, such as childcare and healthcare expenses, to determine appropriate support.

How Does Alimony Work In High Net-Worth Divorces?

Whether a couple has $1,000,000 in assets or $100 in assets, the factors impacting the alimony calculation will be the same. The court will consider the overall financial status of both parties, their standard of living during the marriage, their training or ability to work, and the duration of the marriage. That said, couples who have a high net-worth will run into unique issues when doing the alimony calculation.

One of the significant issues in divorces like these is calculating income. For couples with more modest means, calculating how much someone makes can be rather simple. Each partner has a job, for example, and a W-2 proves the income. 

But for couples with high net-worth, this calculation can prove much more difficult. Business owners often receive compensation through a mix of W-2 wages, taxable business income, and an increase in their company’s market value. Real estate investors add another layer of difficulty, as they frequently invest large sums upfront without seeing profits for years. For corporate executives, income calculations must account for:

• Deferred compensation
• Bonuses and commissions
• Equity awards (e.g., stock options or RSUs)
• Business earnings and profits

These varied and often unpredictable income sources require careful analysis to determine fair and accurate support obligations. Potential earnings from rental income and real estate appreciation as well as trust disbursements or investment dividends must also be taken into account. 

Even when income appears calculable, significant challenges can still arise in high-net-worth divorce cases. One spouse may suspect the other of hiding income or undervaluing assets, especially when complex investments, multiple business interests, or offshore accounts are involved. Hidden or undisclosed income streams can distort the financial picture and lead to unfair spousal support or property division outcomes. 

This is where a forensic accountant becomes essential. These financial experts specialize in uncovering concealed assets, analyzing intricate financial records, and identifying income sources that may not be immediately visible—such as investment returns, rental income, or trust disbursements. A forensic accountant can also trace the flow of money through various accounts, flag inconsistencies, and provide a comprehensive and accurate income analysis for the court.

Contact a High Net-Worth Divorce Attorney

Because the financial stakes are higher, working with an experienced high net-worth divorce attorney is essential. They can:

• Ensure full financial disclosure and accurate valuations. 
• Work with forensic accountants to uncover hidden income
• Advocate for a fair alimony arrangement based on your unique financial situation
• Anticipate potential tax consequences of spousal support 
• Negotiate or litigate in high-conflict or complex cases

High net-worth divorces require careful planning and skilled legal guidance—especially when it comes to alimony. With substantial assets, business interests, and complex financial portfolios involved, determining fair spousal support can be challenging. A knowledgeable high net-worth attorney will advocate for your rights, ensure accurate asset valuation, and work to secure an alimony arrangement that reflects your particular financial situation.