One only has to look at the news, Internet or newspapers to confirm we are surrounded by doom and gloom; it is also a time for the entrepreneurs among you who have built up a property portfolio or a business/company during the course of a long marriage, to realise that now might be the best time to deal with what may be a longstanding period of unhappiness in the marriage.
Since the case of White v White in 2000 spouses of entrepreneurs can expect a far more generous approach to their claims by the Court than had been the case in previous years. Prior to that case the Courts attempted to meet the wife's “reasonable requirements”; since White the basic principle is that there should be an equal division. Recent judgments have merely served to both bolster and perhaps codify that approach. The sharing principle now dominates judicial thinking which dictates that even when a party's needs have been met there would, in a long marriage, have to be some strong measure of justification to depart from the fairness which is inherent in an equal division of the "matrimonial pot".
The entrepreneurial husband or wife should consider the following. Firstly, any business, properties or shareholdings in a company will need to be valued by an expert, be that by chartered surveyor or forensic accountant. Secondly the current economic doom and gloom might at least allow you to share some of notional monetary losses with a spouse. This in effect would crystallise those losses.
However, to those holding shares in trading companies or businesses where there is a significant measure of goodwill not attached to the owner of the business personally, a note of caution The Court's starting point, if imposing a settlement, would be to divide in similar proportion the "copper-bottomed" assets and those more inherently risk-laden, such as shares in trading companies.
Finally,if you wish to compromise a financial settlement with a spouse by retaining a property portfolio or shares in a trading company, you should more than cast an eye over the recent case of Myerson and Myerson. This case demonstrates that if financial shocks lie ahead, even though unforeseen when an agreement is reached, the Court will not be willing to in effect underwrite that risk at the other spouse's expense and set aside an agreed order.
Certainly, specialist legal advice as to any proposed settlement is required, preferably from a Resolution accredited specialist. Both partners in the Family Law Department at Clough & Willis are accredited, and they will ensure, so far as possible, some safeguards are engineered into any agreement.
Often such agreements will involve ongoing maintenance to compensate the other spouse as to loss of income - which can be varied if circumstances change. If, however, a clean financial break is to be achieved by a greater compensatory lump sum, we would seek to ensure it is set out in instalments over an appropriate period. This usually requires the closest possible liaison between us as your legal team, your accounting team and you, with all of us using our contacts and experience to predict insofar as possible the likely road ahead.
Hopefully, when the sun rises again and gloom has lifted, the benefits will be reaped by those entrepreneurs who realised that in all aspects of life and business, "timing is everything".
For further information contact Lee Marston, lee.marston@clough-willis.co.uk