I suspect, in many U.S. marriages that end in divorce – dissolution, there are valuable intangible assets still in play that could (should) be subject to valuation and division…similar to other physical-tangible assets. In this regard, on occasion, I am engaged by law firms to conduct intangible asset (operational familiarity) training, ostensibly to be applied as entrees to reengage existing or engage prospective clients. In one instance, it was a boutique law firm primarily focused on intellectual property and complex transactions, however, to my puzzlement, a senior partner of the firm specialized in divorce and dissolution of marriage.
Divorce attorneys who have developed reputations for being aggressive negotiators and tacticians…representing parties in high earning households…may, in a not-significant percentage of instances, overlook, fail to investigate, and/or exhibit dismissiveness about any ‘jointly produced’ intangible assets. Instead, focus negotiating the division of (primarily) tangible-physical assets. For example, not in frequently, spouses, adult children, etc., held positions and/or played various contributory (intangible) roles in a business entity being contested.
In a substantial percentage of instances of high net-worth marriages…for various reasons, it was the exception, certainly not the rule, for a pre-nuptial agreement to be in place specifying which and how, primarily tangible assets were to be divided, in case of divorce, death, etc. What’s more, of the couples who did have some variant of a pre-nuptial agreement in place in advance of filing for divorce, the contents of virtually all, focused on the division of tangible – physical assets with no specific-distinguishable mention of intangible – non-physical assets.
Pre-nuptial agreements minimize standing and/or entrée…for contesting the division of assets differently from what has been stipulated. For high income earner households the absence of mentioning newly developed – acquired intangibles, the circumstance will be pre-disposed to protracted negotiations to resolve the conflict especially with respect to the value – ownership rights – division of those intangibles.
In circumstances where there may be multiple, revenue – competitive advantage driving intangible assets in play…absent a pre-nuptial agreement that addresses prior, current, and future intangible assets, an attorney would be remiss to not aggressively try to leverage such omissions to benefit their client.
As an intangible asset strategist…I find such oversights noteworthy, especially in-light-of the economic fact that 80+% of most company’s value, wealth creation, competitiveness, and sustainability today lie in – emerge directly from intangible assets. In other words, intangible assets are playing increasingly dominant roles in business development, value, revenues, competitiveness, and sustainability. Identifying, unraveling, and assessing the origins, contributors, and contributory role and value of intangible assets is precisely what I do.
Divorce attorney’s not operationally familiar with the contributory role and value of intangible assets…are obliged to obtain familiarity to make intangibles integral to their practice specialization, e.g.
- physical – tangible assets represent the proverbial ‘low hanging fruit’ to most any negotiation, i.e., they are conventional, relatively quick-easy to recognize, acknowledge, and agree upon by parties, and can be valued with the believable presumption of objectivity, whereas
- attorneys not recognizing the relevance of intangible asset sides of clients’ businesses and asset portfolios relative to their specialization needs will indeed not be serving their high net worth clients well.
In divorce – dissolution proceedings among high income households…there may be various investments, real properties, businesses, and partnerships in play in which intangible assets comprise large percentages of the assessed value. To be sure, there are valid arguments to be made that each spouse, and perhaps even children, variously shared – contributed to making specific and legitimate contributions to familial (earnings, business) wealth particularly in contexts of social and/or relationship capital, i.e., business prowess, strategic planning, reputation, decision making, and building and sustaining relationships. Each, in its own way, legitimately contributes to the value – wealth accumulated, and are types – categories of intangible assets.
Therefore, it is prudent and very necessary to avoid excluding any – all intangible assets…when negotiating marriage dissolution settlements. For example, a spouse’s, or other’s contributory role played in these and other matters, as it relates to asset’s sustainability, profitability, and even resiliency, etc., can be objectively valued. In these contexts, foreseeing the value and competitive advantages of intangible assets a business may develop, acquire, and exploit at the beginning of a marriage to its dissolution, would be not be challenging to project and incorporate as a part of a prenuptial agreement prepared years previous to commencement of a dissolution of marriage.
Michael D. Moberly September 11, 2017 St. Louis email@example.com ‘Business Intangible Asset Blog’ where attention span really matters’!