The Ultimate Guide To High Net Worth Divorce

The divorce process can be an emotive and stressful time, and this is before consideration has been given to the division of the assets between you. In cases where there are significant assets, acrimony between parties can build if one party feels that they have brought into the marriage the lion’s share of the wealth. A case in which there are vast assets, some of which may not be held in England and Wales, and a range in the type of assets held between the parties can often be very complex.

What is a high net worth divorce?

A High net worth (HNW) divorce is a common phrase used in the legal sector, but there is no specific definition of what constitutes a HNW divorce. Although generally speaking, solicitors will consider a divorce which involves assets totalling in excess of £5million as a HNW divorce. In some cases, dependent upon the total asset value and complexity of the case, the matter would be dealt with by the High Court.

How is a high net worth divorce different to a normal divorce?

In many ways the division of assets and case management of a HNW divorce is no different to a case with more modest assets, including the requirement for full and frank disclosure of all assets between the parties at the earliest opportunity. However, it is at the point of disclosure that an assessment is required as to whether other experts need to be instructed to assist, such as a forensic accountant, a pension expert, a tax specialist, financial advisers and a company lawyer, to ensure that there is a full understanding of all assets and potential liabilities, and to ensure that all assets have been disclosed. At Consilia Legal we have a body of experts in different specialisms that we can call upon to assist in cases where needed as it is imperative that the appropriate advice is provided to our clients so that they can make a fully informed decision moving forward.

In HNW cases it is likely that there will be a business, and other assets that are not as transparent such as offshore assets, trusts, farming land, and extensive investment funds, and these assets need careful consideration. In the majority of HNW cases there is often a pursuit by one party to try and ringfence certain assets which they may say are non-matrimonial and therefore should not be included within the matrimonial pot to be shared between the parties. These assets can include inheritance or property that one party acquired before the relationship or post separation. The pursuit of ringfencing certain assets has a greater prospect of success in a HNW case in which there is sufficient income and capital to enable the parties continuation of their lifestyle, but this is fact specific and each case turns on its own facts.

How are assets divided in a high net worth divorce?

The division of matrimonial assets upon divorce has changed from the assessment as to what someone’s reasonable needs are to an approach based on fairness. The change in approach was due to the imbalance between the bread winner and the home maker, particularly in long marriages, and is referred to as the sharing principle.

The sharing principle reflects the view that a marriage is a partnership between two equals irrespective of the financial contributions that the respective parties bring to the marriage, and that as a result of this, each party should have an equal share of the matrimonial assets unless it can be shown that there is a good reason to depart from this approach. There are relevant factors that can be brought into play in the pursuit of a departure from the sharing principle and they can include a short marriage, no children or the parties having kept all their financial resources entirely separate of one another. However, in the vast majority of cases, there will only be sufficient capital between the parties to enable their needs to be met and therefore the party’s needs would prevail over the pursuit of one party to ringfence any of the assets between them, this is not the case in a HNW case.

The sharing principle is one that will not be welcome to those who bring into the marriage significant or greater assets, or that have acquired assets during the marriage through external means such as inheritance from family. In cases where the assets exceed the amount needed to meet the party’s needs, i.e. their ongoing housing and income needs, then a case can be constructed to pursue a departure from the sharing principle in favour of the party that is seeking to ringfence pre-acquired assets, inheritance or assets that have been acquired post-separation.

There are a number of factors that need to be considered, including whether the assets have been intermingled within matrimonial assets and when the asset was acquired.

In exceptional cases the court may give consideration to one party’s “special contribution” although it is rare. This is where one party has made a significant or substantive contribution to the parties wealth, to such an extent that it would be unfair to ignore.

How do you protect your wealth in a high net worth divorce?

The best way to protect wealth is to enter into a pre-nuptial agreement before marriage, or a post nuptial agreement once married. Whilst it may be seen as an uncomfortable discussion to have when approaching marriage or during a happy and stable marriage, it prevents potential dispute and acrimony should the marriage fail. The preparation of a nuptial agreement can be done swiftly to avoid a prolonged process and dealt with as sensitively as possible. Whilst nuptial agreements are not legally binding, they are very persuasive on a court if prepared properly and embodying a fair settlement.

How can you maintain your privacy during a high net worth divorce?

There is a higher public interest in HMW divorce cases, but traditionally, reporting is subject to strict rules of anonymity. However, a presiding judge can agree to vary automatic reporting restrictions, even where hearings are closed to the public. This is becoming increasingly common to satisfy the need for transparency and consistency, particularly where child arrangements are concerned. To avoid this there is a strong emphasis on encouraging HNW divorces to consider alternate dispute resolution such as arbitration, resolving a case outside of the court remit.
At Consilia Legal we can offer expert advice and explore all available options to resolve your case as amicably as possible. So if you are faced with a HNW divorce contact the family law and divorce experts at Consilia Law today.