Divorce is difficult for any couple and their children. In cases where the couple has accumulated significant wealth over the length of a long marriage, these can add an additional layer of complexity.
At Ansham White Solicitors, our aim is to achieve good outcomes for our clients that will benefit them in both the short and the long term.
Trusts in HNW divorce
Trusts are frequently used by high-net-worth individuals as a form of estate planning. However, trusts can cause significant and complex issues upon divorce. Dealing with both onshore and offshore trusts is a difficult process.
Spouses without an interest in, or access to the trust interests of the other spouse, can argue that the trust is a source of financial support that should be taken into account on divorce. Alternatively, the trust possesses a nuptial element that means it is capable of variation in favour of the parties and/or the children of the family.
Obtaining disclosure about trusts is another problem and can be a difficult process. If the trust is located in England and Wales, documentation from the trustees regarding the trust can be requested. It can become more complex where a trust is located offshore. Here, trustees may not respond at all. In this scenario, court applications may then need to be issued for disclosure.
Business Interests in HNW divorce
Shares in private companies give rise to numerous issues within divorce proceedings. It will be necessary to establish not only how much the shares are worth, but also the liquidity of the business needs to be given significant thought also. Where the settlement cannot be funded using the non-business assets, the court will look into any options of payment plans to provide the other party their awarded share.
Companies and trustees of a trust, 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. Here they will be known as a “joinder” to the proceedings. Obtaining disclosure from these parties and the role that they play if successfully joined to proceedings can complicate matters further.
NON-DISCLOSURE IN HNW DIVORCE
In high-net-worth divorces, the financial stakes are high. As such, some spouses may refuse to make full and frank disclosure of their financial position in an attempt to gain a financial advantage over the other spouse. This might be by transferring money to different bank accounts, transferring large sums to another party, or the formation of complex and intricate trust and corporate structures. This can be seen in the eyes of the court as an intentional dissipation of assets, where this act has taken place within the three years prior to filing for divorce.
Applications can be made for emergency orders to search property owned by the other spouse (or even third parties such as accountants or advisors) where it is believed that non-disclosed documentation or information might be held.
Where a party has failed to provide full and frank disclosure, this can be deemed as contempt of court, therefore, it will be up to the courts discretion as to whether they want to charge and send the non-disclosing party to prison. Where the scale of a spouse’s non-disclosure cannot be fully uncovered, at trial it may be necessary to ask the Court to draw adverse inferences against the non-disclosing spouse about the true nature and scale of their wealth.
SPECIAL CONSIDERATIONS IN HNW DIVORCE
What is special contribution on divorce?
Where one party in the marriage has generated a very significant sum of capital through their effort or acumen, that party may claim that they have made a special (or stellar) contribution to the wealth of the family and therefore the assets should not be divided 50/50 as would be the starting point in most typical divorce cases.
In high-net-worth divorces, the classification of matrimonial or non-matrimonial assets will have greater significance than in ordinary divorces.
The Court will seek to share the non-matrimonial property of one spouse with the other spouse on divorce, if the needs of the other spouse or any of the children of the family cannot be met from the parties’ matrimonial property and assets obtained during the marriage alone.
Non-matrimonial assets can take many forms. A property acquired before the marriage by one spouse that does not become the parties’ home will likely be classified as non-matrimonial. Similarly, an asset acquired after the parties’ separation (but before divorce) may well be found to be non-matrimonial because it falls outside the time of the marriage.
Alternatively, the wealth of high-net-worth individuals deriving in whole or in part from their family wealth is likely to be characterised as non-matrimonial property. Greater complexity can arise if the wealth is held, for example, in long-established complex onshore and offshore structures. It is likely here that an application to the Financial Remedy’s unit of the Central Family Court will be required where any dispute arises as to matrimonial or non-matrimonial assets.
Often, high-net-worth individuals in England and Wales may be a foreign national or live overseas. It is common therefore, for a person who has residency in two countries e.g based on their nationality, time spent in each country or a party’s overall connection to the country to consider which jurisdiction will be the most advantageous when it comes to implementation of the law and potential tax implications.
England and Wales has broad powers to bring about a fair financial result on divorce compared to many other jurisdictions which can be more inflexible or provide far less generous financial provision.
Financial relief after an overseas divorce
If you have obtained a divorce overseas and a financial order was made in a court outside of the jurisdiction of the United Kingdom, you may be able to apply for further financial provision in England and Wales. The English Courts has the power to step in, in certain circumstances, and grant the same financial orders as if the divorce had been granted in England and Wales.
Our expert legal advisors at Ansham White Solicitors can give you clear and concise advice about what to expect from the Courts and how to effectively deal with any application from start to finish. Please get in touch to discuss your case today.