High net worth divorce in the UK: A specialist solicitor’s guide
Divorce is never an easy process, and when significant wealth is involved, it can become even more complex. High net worth divorce requires careful consideration and expert legal guidance to navigate the intricacies of asset division, taxation, and financial planning.
Written by specialist high net worth divorce lawyer, Hardeep Dhillon, this guide addresses some key questions you might have about how the process works in the UK.
What is a high net worth divorce?
A high net worth divorce is one involving individuals or couples who own substantial assets such as businesses, properties (including hereditary land), trusts, stocks and shares as well as other investments, usually exceeding £1 million. However, there is no fixed limit or definition as to what is categorised as a high net worth divorce when it comes to financial settlements.
Like with any divorcing couple, the division of wealth and assets in a divorce is a multifaceted process that involves careful evaluation and equitable distribution. The law relating to the division of assets between the couple is the same for high net worth couples as it is for all couples.
The court is still guided by S25 of the Matrimonial Causes Act 1973, therefore the first consideration will be the welfare of any child of the family who has not attained the age of 18 and there will be consideration of various factors to include, the financial needs of both parties, the contributions each has made to the marriage, and the welfare of any children.
However, for high net worth individuals, this process can be more challenging. Let’s explore the additional challenges they can entail.
The complexities of high net worth divorce
High net worth divorces present several unique complications:
1. Case management
Whilst there is no fixed definition of high net worth, the complexity of the case and value of assets will often result in the case being allocated to the High Court. The basic thresholds are overall net assets exceeding £15 million and/or overall net earned income exceeding £1 million – but that figure is not necessarily determinative. The Allocation to the High Court must be considered proportionate, therefore the case management is incredibly important.
In a high net worth asset portfolio, there may be various others who retain an interest in the financial proceedings, who may seek to join the proceedings to preserve their interest for example trustees. If this is the case, then all parties involved must ensure that this aspect is managed proportionately.
Litigation misconduct is an element of high net worth cases, and this can range from material non-disclosure or dissipation of assets. Such matters can complicate proceedings as emergency applications will be necessary.
2. Valuing assets in a high net worth divorce
Accurate asset valuation is a critical aspect of high net worth divorces, often requiring the expertise of appraisers, accountants, and financial analysts to assess the value of various assets. This is particularly relevant when there is a need to establish the value of businesses, properties, investments (including crypto assets), and personal property such as watches, jewellery, art, and other collectors items.
Therefore, at the early stages of the proceedings, it is crucial to instruct professionals with the necessary experience and expertise. The court will direct that these experts should carry out valuations for both parties, unless there are specific circumstances justifying separate instructions.
3. Tax implications
High net worth individuals often face complex tax implications during divorce. Understanding and managing these tax consequences is essential to avoid unexpected financial burdens. At Richard Nelson LLP, our high net worth divorce solicitors work alongside tax specialists, forensic accountants, and other experts to ensure that you fully understand the tax implications of any settlement or court order.
4. Privacy and confidentiality
Given the visibility of substantial wealth, safeguarding the privacy and confidentiality of financial details is of utmost importance. Legal experts play a key role in maintaining this privacy.
To ensure that matters remain confidential, you may wish to consider opting for an alternative dispute resolution such as mediation or collaborative law. These routes can be more discreet than a public court hearing – bear in mind that, should your case lead to an important judgement, there is no guarantee that your identity will be anonymised.
5. International considerations and determining jurisdiction
High net worth individuals may have assets and interests that cross international borders, adding complexity to the divorce process. Addressing these international aspects requires specialised legal knowledge to include determination of the correct jurisdiction within which to issue proceedings. Our high net worth divorce lawyers are well versed in such matters.
6. Protecting inheritance in a high net worth divorce
Protecting your inheritance during a high net worth divorce requires careful planning. One effective way is to maintain clear records and documentation that distinguish between inherited assets and marital property. You can safeguard your inheritance through a prenuptial agreement – or postnuptial agreement, for that matter – by specifying how these assets should be treated in the event of a divorce.
7. Scrutinising asset protection provisions
It is common for high net worth individuals to protect their assets when marrying. For example, there may be prenuptial agreements, postnuptial agreements or trusts in place. Such provisions must be scrutinised to assess their validity and the impact on the net effect of any settlement.
8. Children in a high net worth divorce
When children are involved in a high net worth divorce, their welfare remains a top priority. The court’s primary concern is the best interests of the child.
In cases where substantial assets are available, provisions for school fees and other educational expenses are often included in child maintenance agreements. Courts aim to ensure that children’s access to education is not compromised due to the divorce.
9. Planning for life after divorce
Post-divorce financial planning is essential in any high net worth divorce. It is prudent to update your Will, trusts, and other estate planning documents to reflect your changed circumstances. Expert legal guidance is essential in ensuring your financial security in the years to come.
Our high net worth divorce solicitors can help
High net worth divorces in the UK present unique challenges that require specialised legal expertise. When substantial assets are at stake, ensuring a fair and equitable settlement is paramount. By working with the experienced team of high net worth divorce solicitors at Richard Nelson LLP, you can be sure that we understand the nuances and intricacies of your situation, enabling you to protect your interests and plan for a secure financial future.
If you have further questions or require assistance with a high net worth divorce, don’t hesitate to get in touch with our team for a confidential discussion about your situation.