Every year The Times publishes its list of the wealthiest people in the UK. Its most recent list has just been published. It contains many household names, such as James Dyson, Richard Branson and Paul McCartney. Its members have acquired their wealth in many ways. There are entrepreneurs, property developers, financiers, entertainers and those who have inherited wealth. Each year there are also a number of members whose wealth is stated to have come from their divorce settlement. Here, Fiona Wood explores how divorcees have made it onto the prestigious list after benefiting from their divorce settlement, and how you can best protect your assets both before and during the marriage.
In the latest list Slavica Ecclestone is stated to be worth £730 million as a result of her divorce. Her former husband, Bernie Eccleston, is also in the list and is stated to be worth £2.499 billion. Princes Haya Bint Al-Hussein is a new entry to the list, as a result of her divorce last year from Sheikh Mohammed bin Rashid al-Maktoum, the ruler of Dubai. She is stated to be worth £670 million. Whilst the level of wealth these people have is huge, it does highlight the financial impact that divorce settlements can have and raises the question “how can the wealthier spouse protect their wealth if they divorce?”.
Many couples who divorce do not have significant assets and if they divorce a judge has to decide how best to divide the assets, so that the couple and their minor children’s needs are met. For those couples that have more than enough money to meet their reasonable needs on divorce, there is scope to raise legal arguments about assets that were brought into the marriage by one spouse, or assets that were inherited by one spouse, which may convince a judge that one spouse is entitled to a greater share of the matrimonial assets than the other.
One way to help protect wealth that one spouse has at the time of the marriage, is to have a pre-nuptial agreement. A pre-nuptial agreement can ring fence specific assets that one spouse brings into the marriage and take them out of the asset pool for division between the couple if they divorce. Provided that the pre-nuptial agreement was entered into correctly, ideally at least three months before the wedding, with the couple both disclosing their assets and both having independent legal advice on the agreement before it is signed, a pre-nuptial agreement is one of the important factors that a judge will consider if a couple divorce, under English law. If both spouse’s needs can be met if the pre-nuptial agreement is followed, a judge will take it into account when deciding a fair financial settlement. There are many cases where one spouse has received a lesser financial settlement on divorce than they would have if they had not signed a pre-nuptial agreement.
What if a couple do not have any wealth when they marry, but one acquires significant wealth during the marriage? In that scenario it is possible for a couple to have a post nuptial agreement, which is similar to a pre-nuptial agreement, only it is signed during the marriage. The main problem with both pre-nuptial and post-nuptial agreements is that they can only happen if both of the couple agree to sign them.
Whilst it is possible to protect your wealth from divorce, as detailed above, you cannot force your other half to agree to a pre-nuptial or a post-nuptial agreement. Also, under English law, even if you have such an agreement, it is up to a judge to decide if it should be followed. In other countries pre-nuptial agreements are fully binding. This may explain why London is considered the divorce capital for the spouses of the very wealthy and why there are still members of The Times Rich List who have become wealthy enough to be in the list in their own right, as a result of their divorce.
