Couples of High Net Worth (HNW) going through the divorce process may face a unique set of challenges due to the level of their wealth and also the complex structures these assets are held in. Frequently, there is a mixture of both onshore and offshore assets, trusts, investments, privately held business(es) and even substantial inherited wealth, all of which need to be taken into consideration when determining what is and is not a marital asset. We represent both those seeking to obtain their lawful entitlement of the marital assets, and those seeking to protect their wealth as the financially stronger party to the marriage.
Marital and Non-Marital Assets
High Net Worth divorce cases differ from others as the assets available to the couple will usually be sufficient to satisfy the ‘needs basis’ of both parties. This need basis is the first consideration of the court when deciding how to divide assets. What wealth remains beyond this will then be carefully examined to determine whether or not it should be considered a matrimonial asset or a non-matrimonial asset. What’s more, where assets were acquired prior to marriage by one spouse, consideration will be given as to how that asset has been used, shared or provided financial benefit to either or both party in determining whether it should now be considered ‘marital property’ and as such, part of a communal pot for division.
Where offshore assets exist, be they in the form of trusts, property or businesses, the court still has the power to make orders against them in the equitable division of assets. Many countries maintain reciprocal enforcement agreements with the UK which ensures that a UK order can be registered and enforced under local jurisdictions. Spouses seeking to hide assets overseas in an attempt to circumnavigate full and frank disclosure of the total assets will likely incur the consequences in terms of costs and even conduct which could be seen by the court as contempt and punishable accordingly.
Like all other assets, onshore and offshore trusts will need to be evaluated to determine whether or not there is a nuptial element to the trust, and whether it should be considered a financial provision that it would be inequitable to disregard. If there is a nuptial element, the court could look at varying it for the provision of either of the parties or their children. The disclosure required ahead of such decisions can prove more cumbersome to obtain if that trust is offshore. It may be that separate orders for disclosure need to be made either in the UK court or within the court of the local jurisdiction. Whether attacking or defending a trust, early advice from experienced lawyers on the subject is always advisable in divorce and can go a long way to minimise the costs involved.
Privately owned businesses, and the assets they hold can be complex structures in themselves and include both onshore and offshore company assets, all of which need to be accounted for in reaching a true valuation of wealth. Depending on the type of business - partnership, company or trading firm, interested parties such as trustees can ask to be joined to divorce proceedings as a means of protecting their own interests, but the family courts rather than the commercial courts will ultimately deal with the proceedings in relation to the business and its role in the divorce. There are a number of options available to the courts in dealing with businesses. One remedy may be to leave the business with the owner and off-set the value of the other spouse against other assets, or divide shares in the business or indeed, create a dividend from cash held by the company. As each company and divorce circumstance is unique, these will be weighed up against the broad picture of marital wealth in reaching a fair conclusion.
First Steps in HNW Divorce
Where complicated asset structures or assets exist that can include high value pensions, properties, trusts, inherited wealth and so on, immediate and independent legal advice is recommended. Your solicitor will be able to identify any potential issues at an early stage and discuss your options when seeking a financial settlement with your spouse.
Contact us to make your confidential first appointment.