Judith Poller of Pryor Cashman LLP in New York says she's not necessarily seeing more wealthy people divorce, but she is seeing people who are divorcing attempt to get through the process quickly to lock in low values.
"Those who own a business that has fallen in value are being more aggressive in terms of getting the divorce done as quickly as possible," Poller says.
But while the wealthier spouse may want to hammer the deal out quickly, the ever-changing landscape is making it hard to value assets and income. Someone might be earning $500,000 one day and lose their job the next. Asset values have become a moving target, and it's made alimony and everything else in a divorce more difficult to negotiate, attorneys say.
"How do you value an apartment right now? You value it at what someone is willing to pay for it, but comparables are tough right now," Poller says.
Depending on the state and the type of assets, values are calculated either when the divorce is initiated or around the time of the trial. But it can be months or years before a divorce goes to trial, and with values falling so rapidly in the last year, some parties in a divorce are complaining that assets should be revalued. Poller has a case that began in 2007 and is only going to trial now. The assets have clearly changed in value. Another case was initiated just last summer and by November the parties were squawking for a revaluation.
"We were trying to get things down on paper, and everything had declined so much," she says. "We had these neutral appraisers appointed by the court, and we had to go back and give discounts to everything because they weren't worth what they had been appraised at."
The drop in values has also changed the way prenuptial agreements are hammered out. Attorneys, for example, are starting to use language that splits estates in terms of percentages, rather than whole numbers. That way, if the value of the estate declines substantially, the person who owns it won't be forced to hand over the whole thing.
"You'd have a hard time overturning a prenup if it was negotiated between two lawyers, with full disclosure, and not under any duress," Poller says. "If it turns out to be just unconscionable right now, because of the terms agreed to? I don't know. That's a tough one. You made a deal."