In English divorces when there are offshore assets, often held in offshore trusts, it is common for wives to meet with resistance when they try to find out information about those assets or trusts from their husband.

One way of remedying this is by issuing Letters of Request. These are letters from an English court to the appropriate authority (usually a court) in the other jurisdiction requesting information about the assets or trusts held in that country. The letter is written by your solicitors, who then apply to the English court for its approval and to request that it is sent. The English court can, and frequently does, amend the content of the letter.

After receiving the letter the authority in that other jurisdiction can choose to do three things:

• Tell someone (for example the trustee of a trust, or the husband’s accountant) to release the documents requested
• Make someone attend court in the other country to give evidence in person
• Tell the English court to effectively “get lost”.

Bermuda goes one way…

Over the last few years, Bermuda has acquired a reputation for being “trust friendly” by – amongst other things – rejecting letters of request out of hand.

The most famous example of this was in the case of Charman V Charman in 2005. The divorce’s financial settlement hung on a dispute over an offshore trust the husband had set-up in Bermuda.

The English High Court, and then the English Court of Appeal (after an unsuccessful appeal by the husband) issued letters of request to the Bermudian authorities, only to find that the Bermudian judge refused to order the trustees of Mr Charman’s massive trust (thought to be worth £67 million) to disclose any information.

When they heard that the Bermudian judge was refusing to budge the English courts described his behaviour as “somewhat churlish” and the decision as “rather parochial”.

However, the Bermudian courts, perhaps stung by this criticism, seem to have changed their view.  In the case of Sarah Felicity Jennings v Robert Albert Jennings, decided in December 2009, the Supreme Court of Bermuda decided that it had previously been wrong to refuse the English Court’s letters of request during the Charman V Charman proceedings. The Supreme Court concluded that the English Court of Appeal’s decision represented the correct law to be applied by the Bermudian courts when dealing with Letters of Request from English courts.

…And Jersey goes the other way

Historically, Jersey has been much more cooperative than other offshore jurisdictions when dealing with Letters of Request from English courts.

In the 2005 case of Minwalla v Minwalla [1 FLR 771] the Jersey Royal Court compelled the trustees of a large family trust to produce  information requested following a High Court decision in England.

The pendulum now seems to have swung the other way. In the Jersey Royal Court case of Deery v Continental Trust Company Limited and Peter Lawrence Watts, which was decided in January 2010, the Jersey Royal Court refused to grant the English court’s Letter of Request. The request was refused because the letter asked for disclosure of affidavits sworn by the trustees in separate Jersey court proceedings (brought by the trustees to ask for guidance in running the Trust).

The Jersey Royal Court said that if trustees thought such documents could be disclosed in different proceedings within another country, to someone who was hostile to the trust, they would no longer be “full and frank” in their disclosure to the Jersey Royal Court when taking part in proceedings about the running of the trust.

Constantly changing

The two recent decisions give an interesting insight into the constantly changing relationship between English courts and those of offshore jurisdictions.  The shifting dynamics provide a constant challenge to advisors when telling wealthy clients where it will be safest to set up an offshore trust.

They also go to show that you should never take a foreign court’s level of cooperation (or indeed non-cooperation) for granted.

Stowe Family Law is the UK’s largest specialist family law firm, with offices and divorce solicitors in London, Yorkshire and Cheshire.

With an outstanding national and international reputation, the firm provides a full range of private client family law services. Our divorce solicitors are praised by clients, the media and legal guides for their knowledge and expertise.

Marilyn Stowe and members of the Stowe Family Law team

Letter box image credit: Mike_Fleming.

This was the subject of my talk on Thursday evening, when Stowe Family Law and Lane-Smith & Shindler, a firm of specialist trusts and estates practitioners based in central Manchester, held a joint seminar (above) at the Marriott Hotel in Hale Barns. The audience comprised of retail and private banks, accountants, investment managers and IFAs.

Speakers from both firms discussed the impact of relationship breakdown on family wealth, and advised on steps to protect family wealth. Marilyn Stowe spoke about the changes in ancillary relief law over the last 10 years, which have led to far larger payouts to spouses in big money cases. Geoffrey Shindler of Lane-Smith & Shindler explored the impact of this change in the law on family trusts, and described how trusts could be vulnerable to different forms of attack from spouses. Paul Davies of Lane-Smith & Shindler explained how different drafting techniques can be used to provide added protection to trusts.

I chose to speak about the rise of prenuptial and postnuptial agreements to their current status, and described the mechanics by which the agreements are constructed. At the time of writing, such agreements are extremely influential on decisions made by our family courts in England and Wales.

Because of the level of interest in this talk, and the question and answers that followed, we are reprinting the accompanying handout here. If you are considering a prenuptial or postnuptial agreement, we hope that this information is useful. This is an area in which Stowe Family Law specialises, so you can always leave a comment or contact us directly with any additional queries.

Prenuptial and postnuptial agreements: are they any good?

A recent seismic shift in the law

Historically, the UK courts, and UK legislation have paid scant, if any, regard to pre-nuptial agreements. However, the UK courts have, over several years, radically changed their views, largely as a result of changing attitudes within society. In particular, there have been three cases during 2008 and 2009 that have changed the landscape.

Where are you without one?

Usually in court! The courts have wide discretionary powers, and they take into account a whole host of factors, so therefore the results are very hard to predict. Delay (18-24 months is not unusual). Very significant legal costs. The starting point is capital split 50:50, but there can be departures from this. There may also need to be a substantial division of future income.

How effective are prenuptial agreements?

Legally: A prenuptial agreement cannot completely exclude any involvement by the family court. However, a properly done agreement will carry substantial weight with the courts. It was said to be: “A factor of magnetic importance” in the 2008 Court of Appeal case of Crossley v Crossley (involving a ‘career divorcee’).

Psychologically: The agreement will manage expectations. Who would risk trying to get out of one?

What makes an effective prenuptial agreement?

1. Independent specialist legal advice – on both sides.

2. Financial disclosure.

3. Reasonable financial provision

4. Not at the altar!

…although there may even be a relaxation of those criteria

In the Court of Appeal case of Radmacher v Granatino in July 2009 the husband (the poorer party) had not received legal advice, there had been no proper financial disclosure, and the financial provision for the husband was not reasonable, yet the court still upheld the prenuptial agreement to a large extent. However, the husband is taking his case to the Supreme Court later this year.

Prenuptial agreements can be linked with the creation of Trusts.

This can add another layer of protection. The trusts can be created at the same time. Their existence would be disclosed during the negotiations for the pre-nuptial agreement. One should choose the legal jurisdiction for the trust carefully. Perhaps a selection? Dynastic trusts are better.

Are prenuptial agreements useful for everyone?

They are of considerable benefit where either or both of the couple are wealthy, or have very high incomes, or where either or both expect to acquire family money at some stage in the future.

Even if the couple are not wealthy and don’t expect to come into money, it may well be useful to have a short, low cost agreement which deals only with issues of principle, e.g. the parties will have shared care of the children.

Limited shelf life?

The value of a prenuptial agreement is likely to fall away after 20+ years of marriage.

Postnuptial agreements are even more influential than prenuptial agreements

Exactly the same concept as a prenuptial agreement,only done after the wedding. This can be done whether the marriage is in trouble or not. If the parties have independent legal advice, if they provide financial disclosure, if there is no duress, and as long as there is reasonable financial provision for any children, the House of Lords decided (in the Privy Council case of MacLeod v MacLeod in December 2008) that a post-nuptial agreement should be upheld: “However lacking in generosity the provision made for the wife…”. However, the family courts do still have power to vary them, so they cannot be seen as a guarantee of a particular result, particularly if they do not even meet the poorer party’s financial needs.

Keep them under review

If the family’s circumstances change considerably, the pre- or postnuptial agreement might need to be reviewed and altered. However a well drafted agreement can normally take account of most potential changes. There could even be a periodic review clause in the original agreement. However, even if the agreement does not properly allow for changes, or is not reviewed, it can still be of persuasive value to the court.

A word on cohabitation.

The government’s plans to change the current unclear and outdated law were shelved in 2008. It is not clear whether a Conservative government would take them off the shelf!

Cohabitation agreements, either before or after the cohabitation has actually started, can be drawn up in a very similar way to pre or post nuptial agreements, and can deal with the same issues. Similar procedures to the creation of pre and post nuptial agreements should be followed

They have not yet been fully tested by the courts, but they are likely to be highly persuasive.

Stowe Family Law is the UK’s largest specialist family law firm, with offices and divorce solicitors in London, Yorkshire and Cheshire.

With an outstanding national and international reputation, the firm provides a full range of private client family law services. Our divorce solicitors are praised by clients, the media and legal guides for their knowledge and expertise.

Marilyn Stowe and members of the Stowe Family Law team

I have noticed that many new visitors arrive at this blog after entering questions about their predicaments into Google. I asked Cheshire divorce lawyer Robin Charrot if he could help out with some answers.

For most court hearings, you will not play a speaking role. However there are still a few rules to follow. Use common sense: don’t lose your temper, don’t glare at your spouse and don’t sigh, tut or mutter when your spouse’s lawyer is speaking. Pay attention to what is being said. To get your lawyer’s attention, write a short note and tap them on the shoulder. But please don’t do this every five minutes! For further tips see Marilyn Stowe’s post, How To Act In Court.

how to explain to children adultery divorce

However much you blame your spouse for having an affair, resist telling your children “the simple truth”. This will always do more harm than good, because it will give them hopelessly conflicted loyalties. Your children have the right to have the best possible relationship with both their parents. Tell the children that their mum and dad are going to be happier living in different homes. Avoid the emphasis on your spouse’s new partner. In turn, your spouse should not bring his or her new partner onto the scene until the children are used to their parents living apart. Even then it should be done gradually.

how do i get my wife of 20+ years sexually attracted to me again

Not the usual kind of question asked of a family lawyer! One of the most important things is that you have to show that you are sexually attracted to her.

how can you tell if your husband is cheating on you

Having an affair usually means spending more money; have his patterns of cash withdrawal or credit card spending changed? Other tell-tale signs are described in Marilyn Stowe’s post, Ten Ways To Tell He’s Cheating On You.

how do i obtain a mesher order against my husband

By reaching an agreement with your husband, which is then translated into the wording of a court order and approved by the court. If you cannot reach agreement, a court order may be imposed on both of you after a final hearing. Often a Mesher order is agreed upon when the wife cannot afford to “buy out” the husband’s interest in the property.

how does csa calculate self employed net income

Your net income is the profit from your activities after tax, National Insurance and pension contributions. If your net income is more than £2,000 per week, it is capped at that amount for the purpose of the maintenance calculation. However it is still possible that the resident parent could apply to the court for more maintenance or other financial orders against you.

how does the judge in a divorce case present his decision

It depends. If the case is fairly simple, and there is enough time left on the day of the hearing, the judge will tell you what his decision is there and then. In doing so, the judge must summarise the arguments and explain why they have reached their decision, so it takes a little time. If the case is complex or it is late in the day, the judge might “reserve” judgment, which often means that you have to wait several weeks. Then the decision will be issued in writing, or the parties will have to return to court to hear the judge pronounce his judgment.

how to change wife’s mind about divorce

You may not be able to! The most important thing is to keep communicating in a civil and constructive way. An independent third party can help you to do this: visit Relate for further information.

how to deal with anxiety and divorce hearing

Look after yourself: Don’t smoke, keep alcohol to a minimum and get as much sleep as possible. Ask lots of questions of your solicitor: what is the format of the hearing? Will I need to speak? Who will be representing me? What will be decided? When will it start and finish? Where should we meet? What do I wear? Feel free to bring a friend or family member with you for support, but note that they will not be allowed into the courtroom. If the hearing is likely to last all day, force yourself to have lunch!

how to know if marriage is invalid?

A marriage may be invalid if the ceremony did not comply with the formalities to make it legally recognised in the country in which the ceremony took place. For example, you may be in trouble if the venue is not licensed to hold marriages, or if the person conducting the ceremony is not licensed to do so. The most common problem is when couples go through a religious ceremony that is not recognised as a legally binding marriage in that country, and omit to follow it up with a civil ceremony.

ex partner lives with his mother how does that affect csa

It doesn’t.

how to withdraw from a sears tooth agreement

In short, you can’t. If you have signed up to a Sears Tooth Agreement, you have entered into an agreement with your solicitor to pay your legal fees from any money awarded to you at the end of your case. Your solicitor has carried out the work for you on that basis. The only way to “withdraw” is to settle the solicitor’s outstanding charges. If clients could withdraw from a Sears Tooth Agreement, then solicitors wouldn’t offer them!

how to write your own prenuptial agreements

Don’t bother. The current law on prenuptial agreements is that if the agreement is to hold water in any subsequent divorce proceedings, both parties must have had independent legal advice when it was entered into.

how you know he wants a trophy girlfriend

Ask yourself a few questions. Does he set great store by what his friends and associates think of him? Do some of them have trophy girlfriends? Has he said that he is not happy with his life? Has he started to spend more on clothes? Does he want a flashier car than he already has? If you are answering “Yes, Yes, YES!”, then watch out.

how to tell your wife you want a divorce younger women

This news is going to hurt big time – however you phrase it. However there is no point in lying or dressing your reasons up with excuses, because your wife will learn the truth soon enough. If you haven’t been honest, her reaction will be ten times worse.

how to make a good impression on your first day at work law student

Don’t try to impress everyone with your legal skills and knowledge: even if you know more than the people who work there, they will not like you for it! Dress smartly, be punctual, look interested and do exactly what you’re asked to do. Always ask what the deadline is for any work you are given. Don’t be afraid to ask questions about the work if you are not exactly sure what is expected of you.

how to protect money if wife is unfaithful

Limit the amount of money going into joint accounts, or accounts in your wife’s sole name. Make sure that she cannot run up overdrafts or credit card debts that are in your name or joint names.

Stowe Family Law is the UK’s largest specialist family law firm, with offices and divorce solicitors in London, Yorkshire and Cheshire.

With an outstanding national and international reputation, the firm provides a full range of private client family law services. Our divorce solicitors are praised by clients, the media and legal guides for their knowledge and expertise.

Marilyn Stowe and members of the Stowe Family Law team

Question mark image credit: Xurble.

divorce cheshire

We opened our family law office in Cheshire just over a year ago. How time flies! Our Hale team is now eight-strong. We field divorce enquiries from across the North West region and take on new family law cases in Cheshire, Manchester and beyond.  Despite the challenging financial climate, our newest office has been busy from the word go.

Stowe Family Law celebrated the office’s first anniversary with a birthday drinks event, which was attended by the Mayor and Mayoress of Trafford, along with local business leaders.

It is an exciting time for our firm, with plenty of dynamic developments in the pipeline, and I am confident that our Hale office will continue to achieve fabulous results for our North West clients.

Now that Brian Myerson’s economic circumstances are transformed, he has tried, and failed, to overturn his original financial agreement.

Robin Charrot writes: Ingrid and Brian Myerson have recently hit the headlines. Brian Myerson is a fund manager who – needless to say – is going through tough times. His former wife Ingrid is a sculptor. Their divorce is at the head of a queue of cases and financial deals completed on the cusp of the world’s financial meltdown, when people like Mr Myerson were still seen as “masters of the universe”. His economic circumstances have since transformed and he wanted to unravel the original deal.

When the deal was agreed, Brian was doing quite well, having accrued assets in the region of £26m. The value of his shares in the company which he ran amounted to £15m. It is not reported what his annual income was, but I would wager that it was more than £1m a year.

Brian and Ingrid were married for 26 years. It was therefore a lengthy marriage, and Ingrid almost certainly had a claim to half of the assets. She may also have had a claim to a substantial part of Bryin’s annual income. I suspect that Ingrid sought financial security, and that Brian expected that his company would continue to make considerable amounts of money. Perhaps he did not like the prospect of having to pay out a significant percentage of his future income to Ingrid.

Capitalisation of maintenance

So this is what they did. Brian handed over to Ingrid the couple’s London home and a property in South Africa. He agreed to hand over a second property in South Africa (but hasn’t done so yet), and also agreed to pay her a lump sum of £9.5m cash, in instalments, over four years. He has already paid £7m of this, so £2.5m remains owing. Brian kept all of the shares in his company. In short, the wife received 47% of the assets and the husband kept 53% of the assets. As part of the deal, Ingrid also agreed to terminate her maintenance claims against Brian; this process is known as ‘capitalisation of maintenance‘.

This must have seemed like a pretty good deal for Brian Myerson at the time: he was left with the riskier assets but his wife kept fewer than 50% of the overall assets and he was poised to keep all of his future income.

What has happened since?

Well, the share price of Brian’s company (and remember, these shares were his only remaining assets, pretty much) has collapsed by 90%. This has left him worse off than his former wife. Furthermore, he still has to find £2.5m cash to give to her. Even if he sold all of his shares in the company, he would still have to borrow money to pay the last lump sum instalment that is due.

So, Brian first asked the courts to vary the payments which he is still due to make to Ingrid and the South African property transfer that he still has to do. That request is yet to be decided, and probably won’t be until July or August 2009. However, he then asked the courts to effectively cancel the original order and start again. If he had won with this, Ingrid would have had to pay money back to him, or even take some of the shares in his company

The Court of Appeal decided on Brian’s second request today, and rejected it. I have to say that that result was entirely predictable. Let me explain:

Overturning an original order due to a change in circumstances

The law generally says that capital deals cannot be changed at a later date due to a change in circumstances. There is only one exception to this rule, namely that if an unforeseen event occurs soon after the settlement, which dramatically alters the landscape of the deal and makes it unworkable, the deal can be changed. This applies to any aspect of a financial settlement, including capital that has already paid over. This kind of event is often referred to as a ‘Barder event‘ after the name of the case in which it first arose.

Brian was saying that the dramatic fall in the share price of his company was just such an event, so why did the Court of Appeal reject Brian’s request to overturn the original order for this reason?

Firstly, there is already 20 years’ worth of court decisions which say that if an asset was taken into account and correctly valued at the time of the original decision, any subsequent change in the value of the asset, however dramatic, will not be a good enough reason to overturn the original decision.

Secondly, the original decision was an agreement between Brian and Ingrid. It was not imposed on them by the court. Brian chose to take the risk of keeping his shares in the company. The court was not impressed with Brian effectively asking them to have another go at the agreement because the risk that he had accepted had in fact turned bad.

Thirdly, the court felt that Brian was still in a position to turn his company’s fortunes around. He is certainly making statements to the press to that effect.

Finally, the court decided that the judge who deals with Brian’s first request, to vary the future payments (which will be dealt with by the court in late summer 2009) would be able to give Brian sufficient relief due to Brian’s change in circumstances, if the judge feels that it would be fair and reasonable for him to do so.

Varying future lump sum instalments

So, how will Brian make out on his first request?

If a capital settlement is structured so that lump sums are payable by future instalments, those future instalments can be varied, suspended or even cancelled if circumstances change. This applies to lump sums that represent a split of the assets of the marriage, and to lump sums that represent the ‘capitalisation’ of spousal maintenance.

Brian may have more luck trying to reduce the future lump sum instalments that are due. Perhaps the court will be persuaded to give him more time to pay, or even to reduce or cancel that £2.5m lump sum. Such a decision will probably depend on his ability – or inability – to raise the money. I am sure that the court would have to look quite closely at his income and his prospects before making any final decision. I think he will have an uphill battle (remember, he took on the risk of keeping his shares) but he has a better chance than with overturning the original deal.

Whatever happens, the very high level of costs incurred by Brian and Ingrid Myerson are an expensive reminder that a divorcing couple should not agree to a financial settlement before its advantages and disadvantages have been carefully assessed.

Stowe Family Law is the UK’s largest specialist family law firm, with offices and divorce solicitors in London, Yorkshire and Cheshire.

With an outstanding national and international reputation, the firm provides a full range of private client family law services. Our divorce solicitors are praised by clients, the media and legal guides for their knowledge and expertise.

Marilyn Stowe and members of the Stowe Family Law team