Divorces involving HNW individuals are likely to be more complicated due to the significant assets involved that need to be divided between the couple.
Significant amounts of a divorcing couple’s wealth can be tied up in trusts; consequently, how the trust assets are treated can have a critical impact on the outcome of the case. Obtaining disclosure about trusts can be a difficult process. If the trust is located in England and Wales, a request can be made to the trustees to provide documentation about the trust. The position becomes more complex if a trust is located offshore.
The most significant asset in high value divorces is often a privately-owned business. Valuing a private business is a difficult process. The position can be further complicated if, for example, the business is active and has assets around the world held in complicated corporate and trust structures.
Companies and trustees of trusts, which may form the business or hold shares in it, can apply to be joined to divorce proceedings so as to best protect their own interests. Obtaining disclosure from these parties and the role that they play if successfully joined to proceedings can complicate matters further.
High net worth divorces involve special issues concerning the distribution of wealth.
In all divorce cases, when dealing with a spouse’s financial remedy application, the court’s overall objective is to achieve a fair result. The court will try to meet the parties’ needs in a way that enables them to transition to independence as far as possible in the relevant circumstances.
The courts have a very broad discretion when assessing what a spouse’s financial needs are. In high net worth cases, where the family have enjoyed a very high standard of living and there are substantial financial resources, the parties’ needs will be computed in a more generous way than in an ordinary divorce case. This can mean that the court determines a spouse ‘needs’ very large sums, which may run into the many millions of pounds.
In high net worth divorces, arguments about whether assets should properly be classified as matrimonial or non-matrimonial can have a significant impact. The general rule is that the court will not seek to share the non-matrimonial property, unless the needs of the parties or any of the children of the family cannot be met from the parties’ matrimonial property alone. Where assets are limited, needs usually require the court to invade any non-matrimonial assets. In high net worth cases, spouses with non-matrimonial assets regularly engage in arguments about why these assets should not be shared on divorce.
If one spouse has generated significant wealth, they may argue that on divorce, the division of the matrimonial capital should not be done equally because of the fact that they made a special and unmatched financial contribution to the marriage. Where the parties have enormous wealth, even the smallest departure from equality can result in a gain or loss of millions, or even billions, of pounds.
High net worth individuals often lead international lifestyles, which bring their own particular difficulties on divorce.
Parties with international ties may have a choice of where the divorce could proceed. This can lead to a dispute about which is the right jurisdiction. The choice of one jurisdiction over another can, and often will, have enormous implications. The UK is often hailed as “the divorce capital of the world” due to the use of its broad powers to ensure a fair financial result on divorce, but many other jurisdictions are more inflexible with far less generous financial provision.
If you have divorced overseas and a financial order was made in the overseas court, you may be able to secure further financial provision in England and Wales. Under Part III of the Matrimonial & Family Proceedings Act 1984 the English court has the power to step in, in certain circumstances, and make the same financial orders as if the divorce had been granted in England.
The information on this website is intended as a guide and does not constitute legal advice. Vardags do not accept liability for any errors in the information on this website, nor any losses stemming from reliance upon the statements made herein. All articles and pages aim to reflect the legal position at time they were published, and may have been rendered obsolete by subsequent developments in the law. Should you require specialist advice, tailored to your situation, please see how Vardags can help you.