It still matters where the money came from
- AuthorPhilip Hoddell
There has been a growing trend for spouses to claim that the origins of family wealth are unimportant and that any increase in assets which correlates with the time of the marriage should, without exception, be shared equally. Now the High Court has confirmed that is not the correct approach in the recent high net worth case of XW v. XH (the identity of the parties being kept secret).
Following a 7 year marriage, W and H separated in 2015 and H’s company was sold a year later. It was not in dispute that the value of his shareholding had increased substantially during the time of the marriage and he realised about $540m on sale.
It was also agreed that W was very wealthy in her own right. She was the beneficiary of a trust fund worth £23m and, although she tried to argue that so was her mother and therefore there was no guarantee she would get any of the money, the judge pointed out somewhat scathingly that the fund was set up by her mother who was herself very wealthy, even without recourse to the trust.
H and W had actually married in Italy and had signed a marriage deed which said that they would keep their own assets in the event of a divorce. Despite this, W contended for one half of the increase in the value of H’s business and wanted an overall settlement of £235m. H offered her £20m!
The judge held that whereas he did not have to follow the Italian agreement, it would be entirely wrong to ignore the fact that the only reason the shareholding was worth so much money was because of H’s own expertise. In what looks like a fairly broad brush compromise, the judge ordered H to pay W 25% and therefore a lump sum of £115m overall. This was less than one third of the total assets, although she would still be left with overall assets herself of more than £150m. Perhaps, unsurprisingly in the light of the amounts at stake (or perhaps surprisingly in the light of the amount that W could have had, ending the court action once and for all), W has appealed. I suspect she will be unsuccessful, but watch this space.
Your company does not have to be worth half a billion dollars to need protecting, so if any of the issues raised in this article reflect your situation then why not give us a call for a free initial chat. I am based at our Colchester office and can be reached on 01206 217 320 or firstname.lastname@example.org.