Divorce is rarely simple, but when significant wealth is involved, the legal and financial complexities can increase dramatically. In high-asset divorces, issues surrounding spousal support (alimony) and child support often require nuanced legal strategies and thorough financial analysis. Understanding how these support orders are determined—and how they may differ in high net worth cases—is essential for anyone navigating divorce in California. California’s community property laws, combined with intricate income structures, add additional layers to the process, making expert legal and financial guidance a necessity in achieving fair and sustainable outcomes.
What Is Considered a High Asset Divorce in California?
In California, a high-asset divorce typically involves:
- Marital estates worth $1 million or more,
- Ownership of businesses or professional practices,
- Complex investment portfolios or retirement accounts,
- Stock options, restricted stock units (RSUs), or other executive compensation,
- Real estate holdings, both domestic and international.
These cases require detailed forensic accounting, asset tracing, and, in some instances, expert testimony to ensure accurate valuation and equitable division.
How California Determines Spousal Support
Spousal support in California is designed to help the lower-earning spouse maintain a similar standard of living after divorce. There are two types: temporary (or pendente lite) and long-term support. Temporary support is granted during the divorce proceedings to maintain stability, while long-term support is decided once the divorce is finalized.
California Family Code Section 4320 outlines the factors courts must consider when setting long-term spousal support. These include:
- The length of the marriage
- The standard of living during the marriage
- The age and health of both spouses
- Each spouse’s marketable skills and ability to earn
- The extent to which one spouse contributed to the education or career of the other
- The balance of hardships
- The goal of the supported party is to become self-sufficient within a reasonable time
In high asset divorces, these factors take on new weight. For example, a long-term marriage where the couple enjoyed a luxury lifestyle—multiple homes, private schools, international travel—can result in significantly higher support orders. Courts must consider not only what was earned, but how the couple lived.
Calculating spousal support in these cases often requires individualized formulas. Traditional spousal support calculators may be inappropriate when income is irregular or includes bonuses, profit-sharing, or capital gains. The court has wide discretion and will often look to financial experts to provide accurate assessments.
How These Factors Shift in High Net Worth Cases
In high asset divorces, courts often go beyond standard support calculators. Why? Because those tools are based on middle-income scenarios. Wealthier couples may have unusual income structures—bonuses, profit-sharing, or capital gains—that require individualized evaluation.
Moreover, courts may consider the lifestyle maintained during marriage, which can lead to larger support orders or extended durations.
Child Support in High Income Cases
California uses a statewide formula (the guideline calculator) to determine child support. However, under Family Code Section 4057(b)(3), if one parent’s income is “extraordinarily high,” the court may deviate from the guideline amount if it would be unjust or inappropriate.
Key Considerations in High Asset Child Support Cases:
- Actual cost of raising the child in a luxury lifestyle
- Private school tuition, extracurriculars, and travel expenses
- Childcare and medical needs beyond standard expectations
- Parenting time splits and custodial arrangements
Discovery and Disclosure Challenges
High asset divorces often involve:
- Hidden or undervalued assets
- Complex tax structures
- Offshore accounts or trusts
- Business income disguised as personal expenses
Courts expect full and transparent disclosure, but in many high-net-worth cases, discovery becomes a major point of contention. Incomplete financial disclosure can result in penalties and impact support decisions.
Engaging forensic accountants and legal experts familiar with business valuation and financial tracing is often necessary to establish accurate support obligations.
Tax Implications of Support in High Asset Divorce
Since the Tax Cuts and Jobs Act of 2017, spousal support is no longer tax-deductible to the payer, nor is it taxable to the recipient for federal taxes (post-2019 orders).
This change affects how high earners negotiate support, particularly in cases where they once relied on deductions to offset large payments.
California-Specific Note:
While federal law governs taxability, California does not offer alternative tax treatments for spousal support. Therefore, high earners may structure settlements creatively to address the tax burden elsewhere in the asset division.
Real-Life Example: How the Court May Deviate from Guidelines
Imagine a tech executive with $5 million annually in bonuses and equity options. Even if the support calculator suggests $10,000/month in child support, a court may instead assess:
- Actual needs of the child
- Proportional share of the lifestyle maintained
- Whether the guideline amount grossly exceeds reasonable expenses
This flexibility gives courts discretion, but also introduces uncertainty—underscoring the importance of skilled legal counsel.
Protecting Yourself: Best Practices for High Asset Divorces
- Start with full financial disclosure Transparency builds trust and reduces legal complications.
- Work with experienced legal and financial advisors Divorce in high asset cases is part legal battle, part financial transaction.
- Document the marital standard of living Lifestyle evidence—photos, calendars, receipts—can directly impact support.
- Plan for post-divorce budgets Understand what life looks like after support orders are in place.
Valuation Disputes and Their Impact on Support Orders
High asset divorces often involve income sources that fluctuate or are delayed, like stock options, deferred compensation, or profit-sharing arrangements. These types of income don’t fit neatly into monthly support formulas and may require courts to estimate future value or average historical earnings. This makes accurate reporting and expert testimony critical.
Business Ownership and Income Manipulation
When one or both spouses own a business, income reporting can become murky. Business owners may attempt to reduce visible earnings through deductions, reinvestments, or strategic timing of profits. Courts often turn to forensic accountants to assess the true cash flow and earning potential, which directly impacts both spousal and child support obligations.
Asset Classification: Community vs. Separate Property
Another layer of complexity arises when determining whether certain assets are community property (subject to division) or separate property (retained by one spouse). This distinction affects not just the division of wealth, but the overall financial picture used to calculate support. If one spouse contributed to the growth of a separate asset during the marriage, that asset may have a community component, impacting support calculations.
Why These Disputes Matter
Support orders in high asset divorces are rarely cut-and-dry. The more complex the financial picture, the more likely it is that disputes over valuation will arise. Judges rely on credible financial evidence and expert input, and even then, their decisions involve a degree of discretion. To protect your financial interests, it’s essential to build a strong, well-documented case with support from professionals experienced in high-net-worth divorces.
Need Help with a High Asset Divorce in California?
Support orders in high asset divorces aren’t just about numbers—they’re about lifestyle, fairness, and future planning. California courts aim to protect both parties and children, but the path to a fair support agreement in these cases requires deep understanding of the law, finances, and case-specific nuances.
Moore Family Law Group has decades of experience guiding high-net-worth clients through complex divorces. Our team understands the financial sophistication required to protect your future.
Serving Southern California from offices in Corona, Newport Beach, and Beverly Hills.Visit moorefamilylawgroup.com to schedule a consultation today.