Although there is no legal definition to determine what constitutes a High-net-worth (HNW) divorce, these are typically characterised as divorces that involve high-value or complex marital assets, such as substantial family wealth, property portfolios, businesses, trusts, and investments exceeding £1,000,000. HNW divorces can also involve cases where one or both spouses are classed as high earners, with annual incomes exceeding £200,000.
Regardless of whether there are limited or extensive assets involved, financial arrangements and asset distribution in a divorce settlement are complex matters, and specialist guidance is essential.
In this article, our family law team looks at how complex assets might be handled in a high-net-worth divorce.
What Happens to Assets in a High-net-worth Divorce?
The financial needs of the parties involved, regardless of whether these involve high-net-worth individuals or those with minimal financial assets, is one of the factors a court will consider. Section 25 of the Matrimonial Causes Act 1973 provides a type of checklist that the court shall regard in deciding how to exercise its powers, including:
- the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including, in the case of earning capacity, any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;
- the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
- the standard of living enjoyed by the family before the breakdown of the marriage;
- the age of each party to the marriage and the duration of the marriage;
- any physical or mental disability of either of the parties to the marriage;
- the contributions that each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family
This is a non-exhaustive list, and there are other factors the court must consider in all financial remedy cases, including, most importantly, the welfare of any child of the family. This includes cases involving blended families, for example, where there is a child from a previous relationship or marriage.
In high-net-worth cases, these considerations become more difficult and focus often shifts to determining the value and fair distribution of complex assets, such as:
- Business or investments
- Trusts
- Pensions
- Property portfolios in the UK and abroad
For further information on financial settlements in divorce, read one of our previous articles: Importance Of Using a Regulated Professional for Financial Settlements in Divorce.
How Are Complex Assets Valued?
In cases involving HNW matters, the accurate valuation and assessment of complex assets is crucial, and the court will often rely on expert guidance from professionals such as;
- Forensic accountants – these specialists are used to identify and provide expert valuation of complex assets, including those that may be concealed or undervalued.
- Pensions Actuaries – provide expert valuations, assessments and reports on pensions, especially in cases of complex and high-value pension schemes.
- Valuation experts – can help to value high-value or complex tangible assets such as art, jewellery, cars or property.
Can Non-Matrimonial Assets be Excluded from a Divorce Settlement?
It is possible to exclude non-matrimonial assets, such as inherited wealth or pre-marital property, from a divorce settlement. However, the court will need to determine several factors, including whether this exclusion is appropriate and fair to do so and whether it will impact the financial needs of the other party.
Some couples may choose to set up a pre-nuptial or post-nuptial agreement to protect pre-marital assets. While these agreements are not currently legally binding in the UK or Wales, if correctly drafted, the English courts increasingly recognise their importance, and the circumstances under which they will not be upheld are limited. Read some of our previous articles for further information:
Navigating Nuptial Agreements: A Positive Evolution Since Radmacher v Granatino.
Kevin Costner’s Divorce Saga: A UK Perspective on Pre-nuptial Agreements.
Specialist Family Law Services for High-Value, Complex Family Matters
Our highly experienced family law team at Rose & Rose offers specialist advice in high-net-worth or complex family law matters and cross-border divorce. Our team regularly acts for affluent individuals and families and in divorce cases where one or both parties have significant financial wealth. From handling cases involving complex trusts, property in the UK or abroad, inherited wealth or business interests, our high-net-worth divorce solicitors offer robust, confidential and specialist legal advice and representation.
This is a complex area of the law and requires expert advice. Please contact a member of our team below or email info@roselegal.co.uk to arrange an initial consultation to discuss the best way forward for you, and we will provide you with further and specific advice tailored to your circumstances.
For further insights into divorce and separation matters, you can explore our previous articles:
- Property Settlement Agreement After Divorce
- Who Gets the Dog in a Separation or Divorce?
- How Are Pensions Divided on Divorce?
This blog post is not intended to be taken as advice or acted upon. If you are seeking legal advice, please contact our team of solicitors.
