Special Challenges with CEO Divorces
Considerations in a CEO Divorce
Certain jobs, especially those that require people to be away from their spouse and family often, can contribute to a person’s divorce—one such job is being a chief executive officer (CEO). However, it is important to note that female CEOs are more likely to divorce because of their job than men. A 2020 study in the American Economic Journal: Applied Economics found that promotions to mayor, parliament, or CEO double the probability of divorce for women—but not men.
If you or your spouse are a CEO or company executive, your divorce can have unique challenges. Below, we will discuss what potential complications you may have if you are involved in a CEO divorce.
CEOs have a lot of responsibility, which is why they often have such intense travel schedules and demanding hours as is expected with such a high-level position. With such great responsibility, CEOs may be under a lot of stress and pressure and getting divorced often only adds to both spouses’ daily stress.
Getting divorced is known to affect employees’ work performance. Specifically, employees, including CEOs, can lose focus or energy, be less productive, engage in risky behavior, and/or lose concentration more often.
Disclosing Your Divorce at Work
Many clients wonder whether they have to disclose their divorce at work to their boss or the company board. We recommend disclosing your divorce and being transparent, especially if you are the CEO of a public company or if you have business interests or shares involved in the divorce.
Protecting Your Business Shares or Stock
If a CEO has shares in a business or stocks that they obtained during their divorce, those assets can be divided in a divorce. To protect those assets, the couple may decide to attend mediation to work out their property division settlement themselves.
Business stocks can also be used to cover the cost of a divorce. During his divorce, Best Buy CEO Hubert Joly sold over 350,000 shares of stock, which initially alarmed the public. The company then had to release a statement that Joly still had a large amount of stock and did not lose faith in the future of the company. It was later revealed that Joly was involved in a divorce and needed funds to cover divorce-related expenses.
Demanding Work Schedule & Child Custody
As we mentioned, CEOs often have demanding work and travel schedules. It is important to note that irregular or complex work schedules can complicate child custody determinations.
If left to the court, they will consider a variety of factors concerning the best interest of the child when making custody decisions. One of the factors the court considers is each parent’s ability to provide a consistent routine for their child.
Parents can work together to agree on parenting time and child custody. As we mentioned in our previous blog, “What Issues Are Unique to Doctor Divorces,” a 70-30 plan with alternating weekends and a weekday visit often work best for families with a co-parent with complicated work schedules.
Other High-Net-Worth Divorce Concerns
According to Salary.com, Florida CEOs receive a $764,900 salary (on average), and the typical salary range for Florida CEOS is between $408,219 and $1,186,345. Depending on the CEO-spouse’s salary and net worth as well as the other party’s net worth, another unique challenge involved in CEO divorce is that the divorce is a high-net-worth divorce.
If spouses have a combined net worth of $1 million or more, their divorce is considered a high-net-worth divorce. High-net-worth divorces also have unique considerations, including (but not limited to):
- Tax issues. Certain property divisions, alimony, real estate transfers, business ownership-related decisions, and other divorce-related issues can have serious tax implications. For instance, the sale of a family home is typically exempt from capital gains tax; however, if a divorcing couple sells another asset (like artwork) that they have owned for over a year, then they may have to pay capital gains tax on that sale.
- Complex asset division issues. As we mentioned, business shares and/or ownership can lead to unique complications in a divorce. Other asset division complexities can arise if either party has an extensive real estate portfolio, family heirlooms, or other valuable assets. There can also be international legal complications if either party has foreign investments or assets.
- Forensic accounting needs. Because of the unique financial concerns, the valuable assets typically involved, and the potential for hidden assets in a high-net-worth divorce, couples may need to retain a forensic accountant. In divorce cases, forensic accountants can help conduct a business valuation, uncover hidden assets, investigate wasteful dissipation claims, and testify in court.
- Longer divorce process. Because of the number of assets involved, high-net-worth divorces can take a long time to conclude. In many cases, disputes concerning whether an asset is marital or separate property, the value of certain assets, and more can lengthen the divorce process.
- Publicity. CEO and company executives are often subject to public scrutiny. For example, consider how publicized Jeff Bezos’ divorce was in 2019 or how much coverage Bill and Melinda Gate’s divorce received.
Get Legal Help
With over 30 years of experience, our attorney is committed to helping our clients understand the unique issues they may face during their divorce. If you or your spouse are CEO or company executive, Dale L. Bernstein, Chartered Law Office is here and prepared to support you throughout the entirety of your divorce case. We can help you develop a personalized case strategy and make informed case decisions throughout the entire divorce process.
Schedule an appointment to discuss your case with a member of our team today. Call (727) 312-1112.