2010 divorce settlement was ‘fair’ despite undisclosed trusts
November 28, 2016 0 comments
A divorce settlement originally agreed in 2010 “was and remains fair” , the High Court has ruled, despite the husband’s failure to declare some assets.
A legal order finalising the settlement was set aside last year due the ‘material non-disclosure’ by the husband: he had not fully disclosed two financial trusts.
In court, the wife’s legal counsel argued that the entire division of the couple’s assets agreed in 2010 should be cancelled due to the non-disclosure, and a new sum fixed based on the husband’s current financial position. Consequently she sought no less than £14 million, along with an additional amount dependent on the sale of a company.
Her wealthy former husband, by contrast, argued that she should receive a division of the assets based on their value in 2010, as this was when she had effectively lost out due to his failure to disclose the trusts, along with an additional sum to reflect the fact that she had been forced to wait for the full amount. Via his legal team her therefore proposed that she receive £3.65 million – or one third of the trust’s value in 2010 – along with a compensation payment of 15 per cent.
The former couple had married in 1996 after living together for a number of years. They went on to have three children, now in their late teens and early 20s, before separating in 2009. The former husband has since had two further children with a new partner.
The husband transformed what was originally his parents’ company into a successful DIY business which was sold in 2009. He used the £15 million he received to buy another company of which he is still the majority shareholder. Meanwhile, his brother established a tool business which the husband helped to fund. Later he was granted shares in that firm.
The brothers’ parents, having received inheritance planning advice, then established financial trusts involving investments in these businesses and the transfer of shares in them.
Later still, the husband bought another business in a related field and remains the sole shareholder of this.
During the couple’s divorce proceedings, his now ex-wife received approximately half the couple’s assets as disclosed by the husband at that time. This included the former matrimonial home and a lump sum of £4 million – for a total of approximately £7.25 million. Around £1 million of this is payable in instalments over eight years because there was reportedly not enough liquid cash available.
Around this time the husband moved to Switzerland and the negotiations were concluded there, at a meeting with lawyers and accountants. The wife was aware of the two trusts but was led to believe that these were to provide for the children.
Some years later the wife discovered that the trusts were actually owned by the husband.
Back in court, the husband argued that the wife had taken too long to act on her findings. But the Judge concluded that the undisclosed monies in the trusts came to £7 million and that this was too large a sum to ignore. The case therefore went to a rehearing.
In the High Court Mr Justice Moylan ruled that the division of “the disclosed assets” which had been agreed in 2010 was still a fair one and should remain in place, but the former wife was entitled to a share of the trusts which had not been fully disclosed at the time. If they had been, he said, she would have received partial ownership but not actual funds back in 2010 because those were still pending.
The trusts have since received a total of £21 million. Mr Justice Moylan fenced off 35 per cent of that as ‘non-marital’ and therefore not subject to division in divorce, because those funds had come from the brothers’ parents. Of the remaining £12 million, the wife was awarded half, along with a payment of £200,000 in compensation for the fact that she had not received these monies earlier. The Judge also accelerated the separate instalment payments.
“It is clear to me, as I have said, that the division of the non-trust assets which was effected in 2010 was fair and remains fair save in one respect. The one aspect is that, if the truth had been known about the husband’s interest in Trusts, I doubt whether part of the wife’s lump sum (£1 million) would have been payable over 8 years.”
Read the judgement here.
Photo courtesy of TaxRebate.org.uk via Flickr
November 28, 2016
Categories: Finances and Divorce