How To Get Divorced Without Losing Your Shirt

So you’re a private equity or hedge fund bigshot – maybe an ex-Beatle with a cool £800 million fortune. You’ve made your money; you’re admired and respected; when you walk into a room, people pay attention. At home, however, your marriage is on the rocks. The trophy wife (or husband) doesn’t seem so much of a trophy any more. Thing is, you’ve heard that Britain is among the most generous jurisdictions in the world when it comes to favouring the weaker party in a divorce, and that has you worried. John Charman, the insurance magnate, was ordered to pay £48 million to his ex-wife - and few are rich enough for that not to hurt. So what do you do? Will the courts take away half your fortune? Should you start protecting your assets in an offshore trust?

Sounds like you need a divorce lawyer. And if they’re honest, here’s what they’ll tell you.

1. It will not be fun. Dont underestimate the rollercoaster of emotions you will have to grapple with, even if it is your decision to end the marriage. You will be required to make life-changing decisions in relation to your future financial security and, possibly, your relationship with your children. Even the most successful businessmen, the toughest negotiators can lose their objectivity. The most submissive of wives can turn into harridans. Matters are likely to take longer to resolve than you first think, particularly if you are at loggerheads and communication has broken down. So be prepared to be in it for the long-haul – divorce will dominate your life and everything else will come second.

2. From the start, consider a prenuptial agreement. The court’s starting point is an even split of the marital assets, but it retains wide discretion and must take various factors into account. If your romance is destined to last and you’ve got assets to protect, consider entering into a prenuptial agreement before heading down the aisle – particularly if you’ve been married before. Although prenups are still not binding in the UK, the court will place considerable weight on them if it can be shown that the agreement is fair. That means both parties had independent legal advice, both parties provided full disclosure of their assets, neither party was placed under pressure to enter into the agreement, and the agreement was made at least three weeks before the marriage. Don’t turn up at the ceremony with a hastily drawn-up agreement. It won’t be worth the paper it’s written on.

3. If you’re divorcing, don’t try to hide your assets. One of the first questions a divorce lawyer is often asked by a wealthy husband is, “How can I hide my money?” Don’t risk it. It is highly likely they will be traced. And if a court considers that assets are being placed beyond its reach in an attempt to defeat your spouse’s claim, it is likely to freeze your assets altogether.

4. Don’t fool yourself into thinking that putting your assets into a trust will save them. Trusts established for tax planning purposes are not immune from the court’s jurisdiction and can be attacked. If you are seriously considering putting your assets into a trust so that they are beyond the reach of a spouse, they must be beyond your reach, too. John Charman moved assets offshore and argued that they should be excluded from the marital pot. It didn’t work.

5. Don’t try any artistic editing of your bank statements or other documents. That won’t wash, either. If the court considers there has been non-disclosure, it will come down like a tonne of bricks on the offending party and may order them to pay the all the costs of the proceedings.

6. Try to resolve disputes over the division of the contents of the home between yourselves. Don’t let things get out of perspective. It is usually cheaper to replace an item you’re arguing over than to fight about it through your solicitors. One couple incurred significant legal costs arguing over who should retain ownership of a favourite painting, even though neither of them could actually see it. They were both blind.

7. Every penny you spend on lawyers shrinks the marital pot you’re fighting over. Divorce is expensive, both in terms of time and money. An amicable divorce, including the resolution of the financial issues, will take between four and six months. A fully contested divorce, in which all the financial matters are disputed, may cost more than £50,000 and even run into hundreds of thousands of pounds, depending on the complexity of the case, and could take 18 months to get to trial. Don’t fritter away that pot. Legal costs can quickly mount up with needless correspondence passing between solicitors. One couple spend hundreds arguing on who should pay the vet’s bill for the family hamster.

8. Make sure you get early legal advice, particularly if there is a jurisdictional issue at stake. Some people have more than one habitual residence, so more than one court may have jurisdiction. It is therefore essential that you seek advice as soon as possible – timing will be key when it comes to where you issue your proceedings. Different jurisdictions deal with finances in very different ways, so it’s important to get it right. Jim Moore, founder of the property education group Inside Track, and his wife Kim have already spent over £1.5 million arguing over whether their divorce should be heard in England and Spain.

9. Don’t move out of the matrimonial home unless your sanity is truly at stake. If you are meeting the outgoings on the house your spouse will have no incentive to resolve matters swiftly if you move out.

10. Don’t cut your spouse off financially without warning. It might be tempting to put a stop to a joint credit card, for example, or to freeze a joint bank account. This is likely to be met with an immediate application for interim maintenance. If you are concerned with your spouse’s level of spending, speak to your lawyer; they will advise you as to whether your spouse’s spending is excessive and the level of financial contributions you should be making pending the resolution of financial matters.

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