Divorce is messy enough when it doesn't take place in a year that encompasses a global pandemic, an economic recession, and a contentious presidential election.
But 2020, with its myriad health, economic, and political crises, has put immense stress on countless families. And though they may be able to buy their way out of some pandemic inconveniences, the wealthy aren't immune to the virus nor the strain on their families.
As Business Insider's Hillary Hoffower reported in August, divorces in the US started climbing during the pandemic among wealthy New Yorkers as couples in lockdown together were forced to face their unhappy marriages. In July, Legal Templates, a company that provides legal documents, said it had seen a 34% increase in sales of their divorce agreement compared to the same period in 2019.
Unfortunately for these couples, getting a divorce during the pandemic is no easy task — especially when it comes to high-net-worth clients, according to Steven Garfinkle, an attorney at Sharova Law who's been practicing for nearly 20 years in both New York and New Jersey.
"It's definitely a new world," Garfinkle told Business Insider. He said his firm has seen some particular problems "come up repeatedly."
Sharova Law defines a high-net-worth divorce as a divorce that involves assets greater than $1 million. For such divorces, Garfinkle said his clients are typically in their late 30s, 40s, or 50s, and work in a variety of industries ranging from tech to pharmaceuticals.
Here are the five biggest issues he's encountered with high-net-worth divorces in 2020.
1. Wealthy clients don't have the same cash flow they did when they started the divorce proceedings
While the coronavirus pandemic may have made those in the uppermost echelons of wealth, like Jeff Bezos, richer than ever, many wealthy businesspeople have felt the economic effects of the pandemic — and that's been a problem in some expensive divorces.
Many of those who started divorce proceedings before the pandemic have suddenly found themselves with a much reduced cash flow, which can pose a problem when it comes to retainers and other legal fees.
"Restaurant owners, theater owners, people who work in the entertainment industry — these people are taking tremendous hits," Garfinkle said. "Some of them are under current obligations to make payments and are really stuck because it's hard to get a court date to come in to see the judge."
2. The courts have gone virtual
Speaking of the courts, many were closed down for a time earlier this year in New York and New Jersey, with only essential operations allowed. Even after courts reopened, most trials were still delayed until at least 2021, Garfinkle said.
As with many meetings in the professional world, court appearances have gone virtual. At first, the courts used Skype for Business, and now it's Microsoft Meetings, Garfinkle said.
"The technology is not perfect," he said, adding that there have been times when he wasn't able to log on or his camera wouldn't start.
Then there's his clients who are advanced in age — Garfinkle said he has some in their 80s. They can hardly be asked to log onto Zoom because they don't "know how to do that."
More issues crop up when it comes to virtual trials, which are being held in family court, Garfinkle said.
"It's so difficult to present documents and question a witness about a document that they have to look at on their screen while you share the screen," he said. "The logistics of that are a nightmare."
There may, though, be some upsides to a virtual courtroom.
"Most attorneys that I know love the virtual court and the fact that we don't have to go into court and take an entire morning," Garfinkle said.
It can also be beneficial for clients because it reduces the amount of time they're paying their attorneys to wait in line to see the judge, Garfinkle said. Now, attorneys and clients get a scheduled time slot for their virtual meeting with the judge.
"It's usually within half an hour, you're done with the conference," Garfinkle said. "So there's a certain amount of efficiency there that both clients and lawyers are actually appreciating."
3. Evaluating assets and appraising real-estate is 'guesswork' in a pandemic
How do you evaluate an asset — or how much a client's business is worth — in such an uncertain economy? How do you appraise a Manhattan apartment when the market is stagnating?
Many of Garfinkle's high-net-worth clients own businesses and real estate, and often these are marital assets that need to be divided up, he said.
"It's very hard to evaluate the business when you're in the middle of a pandemic," Garfinkle said. "You don't really know what the recovery is going to look like and how the industry is going to be affected. So a lot of this, at this point, is guesswork."
It's especially difficult for entrepreneurs who may own stakes in multiple businesses, Garfinkle said.
"Imagine somebody who's a venture capitalist who owns pieces of a lot of different businesses," he said. "People with substantial investment accounts, especially people with private equity accounts and private placements. It's difficult to get a sense of what these things are worth or how to divide them."
Of course, it's not the divorce attorneys themselves who evaluate businesses or real estate. They work with a network of divorce consultants, mediators, lawyers, accountants, and appraisers.
"When you're dealing with high-net-worth individuals, the lawyer is only a piece of the puzzle," Garfinkle said.
4. Child custody now means navigating state-by-state quarantine rules
Garfinkle has seen issues arise during the pandemic when two divorced or divorcing parents live in different states and travel restrictions are affecting one parent's ability to see their children.
In New York, for example, incoming tourists and returning residents are required to quarantine for 14 days after traveling from a revolving list of states that currently includes 43 states. Children are not exempt.
"So in order for there to be visitation, if the child goes to visit the parent in another state, then that child comes back to New York and they can't go to school," Garfinkle said. "They have to quarantine for 14 days if visitation is exercised. And if it's not exercised ... the impact of missing those scheduled visits is tremendous on the parent who doesn't see their child very often."
5. Parents who used to travel nonstop are now working from home
Another issue Garfinkle has seen crop up frequently is the sudden need to renegotiate custody agreements after one parent who previously spent much of their time traveling is now stuck at home.
"You get a lot of people in sales, pharmaceuticals, who previously were traveling all the time, basically the whole week," Garfinkle said. "And now all of a sudden they're working from home, and they want to see their kids more."
Renegotiating custody can be a nightmare even in normal times — but of course the pandemic has complicated things even further.
Custody decisions are always based on the best interests of the child, Garfinkle said, but the pandemic has affected that, too.
"What happens when it's in the child's best interest to see a parent, but the other parent lives with the grandparents who are elderly or vulnerable? Or one of the parents might be vulnerable?" Garfinkle said. "These are very difficult scenarios and we don't have any real concrete guidance on what to do."
There is at least one constant in a world filled with uncertainties, according to Garfinkle: people will always get divorced.
"Divorce, as one of my old bosses used to say, is a recession-proof industry," he said. "When times are good, people fight about money. And when times are bad, people fight about money."
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