A number of ‘rich list’ divorce cases have confirmed that when making financial settlements, that the Courts will emphasise that marriage is a partnership and that the contributions of each spouse will be relevant in the divorce proceedings.
This is good news for spouses who have sacrificed their careers in the marriage, or who marry with the expectation of a well-to-do lifestyle but this does not occur.
Financial settlements in divorce
Stay at home spouse
In the case of McFarlane v McFarlane, the wife of a successful accountant had given up her career to help support him and look after their three children. They had been married for twenty years. Initially it was decided that Mrs McFarlane should receive £250,000 a year for five years, out of her husband’s income of £750,000. However on appeal the House of Lords decided that she should receive that sum for life. They also considered the loss Mrs McFarlane accepted by foregoing her own career.
This case confirms that for ‘stay at home’ spouses, financial settlements in divorce will not just be based on their needs, but also on their contribution to the family as a whole.
Spouse of a wealthy partner
In the case of Miller v Miller, the couple had been married for less than three years and had no children. The husband had a fortune estimated between £15million-£30million. The Court ruled that since the wife had a reasonable expectation of a wealthy lifestyle, she should be given a settlement of £5million, as Mr Miller earned a substantial amount of money during their marriage.
The Courts will look approach wealth accumulated during the marriage differently to wealth brought into the marriage.
In both of the above cases, the conduct of the spouses themselves was not considered.
Non-matrimonial property
Non-matrimonial property is property one partner owned prior to the marriage, rather than brought during it. Judges have stated that in short marriages, it might be fair for spouses not to be entitled to a share of the other’s non-matrimonial property.
Moreover, unless it is unavoidable to ignore misconduct by a spouse, it cannot be a factor in making financial settlements. This should encourage divorce proceedings to be more conciliatory and hopefully avoid Court.
Relevant circumstances
The Courts have the right to take account of all relevant circumstances when making divorce judgments. For example, in the divorce of Paul McCartney and Heather Mills, the Court decided that Ms Mills’s contribution to the wealth of the McCartney family was minimal. Therefore, the settlement Ms Mills received was only based on the needs of her and their daughter.
In one case, a husband whose wealth dramatically reduced after his divorce tried to overturn the settlement but failed. In another case, the husband who sold a company shortly after divorce for far more than it was valued during the divorce proceedings. His ex-wife sought a larger settlement but failed.
Pre-nuptial agreements
Although not legally binding, pre-nuptial agreements are gaining more significance when dividing assets. If you have substantial family wealth to protect it is advisable to consider a pre-nuptial agreement.
It was confirmed in the case of Radmacher v Granatino, that where a ‘pre-nup’ has been agreed by two consenting adults, without pressure and with the option to take professional advice, the Courts will generally uphold it, unless there is a good reason not to, such as child welfare issues.
If spouses try to hide assets during divorce proceedings, recent cases show that the Courts will take a strong line against this, and two men have been jailed for concealing assets from the Family Courts.
How can Nelsons help?
For more information or if you need help through the divorce or financial process, please contact a member of our expert Family Law team on 0800 024 1976 or via our online enquiry form.