High net worth divorces are relatively uncommon (1.3% of HNW individuals in the UK are divorced, rising to 5% among those over 45), but these cases carry exceptionally high stakes.
Almost half of all HNW divorces involving assets of £10 million are resolved via private financial dispute resolution (referred to a ‘pFDR’), highlighting the sensitivity required in managing them.
Navigating a high net worth divorce requires a careful balance of legal, financial, and personal considerations. Understanding the key issues at the outset can help individuals and couples with significant wealth minimise risk and safeguard their future security.
This guide explores some of the critical aspects of high-net-worth divorces and how expert legal advice can help secure the best possible outcome.
What Is Considered A High Net Worth Divorce?
There is no single legal definition of a high net worth divorce, but the term generally applies where a couple’s combined assets exceed £2million – £5million. These cases differ significantly from standard divorces, as they involve complex financial arrangements and a wide range of high-value assets.
The complexity increases when the marital estate includes business interests, international properties, trusts, or intricate investment portfolios.
In some instances, assets acquired before the marriage or received after separation may be treated as non-matrimonial property, which can influence how the court approaches the division of wealth.
At the upper end, ultra-high net worth divorces, typically involving assets in excess of £25 million, present even greater challenges. These cases often span multiple jurisdictions, involve cross-border tax issues, and require detailed analysis of sophisticated income structures.
In such circumstances, specialist legal advice is vital to protect your position and ensure a fair settlement.
Key Considerations In A High Net Worth Divorce
Once it is established that a case falls into the high net worth category, the scale and complexity of the estate require careful financial and legal planning.
Business Interests and Assets
In high-net-worth divorces, properly valuing and dividing assets is essential to achieving a fair settlement.
- Business interests require careful assessment to determine current market value and future earnings. When both spouses hold stakes in a company, or where third-party shareholders are involved, decisions must be handled with precision to avoid jeopardising the business and to ensure the outcome is fair.
- Pensions and investment portfolios are frequently significant in high-net-worth divorces. Proper valuation and equitable division, potentially through pension sharing arrangements, can prevent future disputes and ensure both parties receive a fair outcome.
- Real estate holdings often form part of the marital estate. Decisions around who retains the family home and other properties must balance financial considerations with practical needs, while also distinguishing between marital and non-marital assets.
Trusts
Trusts can make high-net-worth divorces more complex. Courts will look closely at whether a trust forms part of the marital estate and whether it has provided benefits to the family.
Trusts established during the marriage, sometimes called ‘nuptial settlements’, can be considered when determining what financial provision should be made. It’s important to distinguish between assets that are matrimonial (shared) and non-matrimonial (personal or pre-marriage), because this can affect how assets are divided.
Courts are also alert to situations where trusts are used to conceal wealth. For that reason, full and transparent disclosure of all trust assets, income streams, and available capital is essential to achieving a fair resolution.
Offshore trusts also introduce additional legal and financial considerations for high-net-worth individuals. These arrangements often involve multiple jurisdictions and complex tax rules, which require expert handling.
A specialist divorce solicitor can help navigate these issues, ensuring that trusts are properly accounted for and that financial settlements reflect all available resources.
It is also crucial that your solicitor signposts high net worth individuals to advice and support from other qualified professionals, such as financial advisors. This is essential to preserve wealth and maximise retention of the right assets.
Child Maintenance and Arrangements
In high net worth divorces, financial provision for children often goes well beyond basic maintenance. The focus involves meeting essential needs and preserving the standard of living the child has been accustomed to during the marriage.
Beyond basic child maintenance often includes expenses such as private school fees, extracurricular activities, and additional costs associated with their upbringing. It can also include a Schedule 1 claim, if your annual income exceeds £156,000.
Courts take a comprehensive view when determining child maintenance, factoring in both parents’ income, overall financial resources, and the child’s standard of living. Disputes can arise over private school tuition, especially if one parent has a higher disposable income.
In such cases, school fees may be incorporated into regular maintenance payments or dealt with as a separate financial obligation, depending on what is deemed fair and practical.
Ultimately, the guiding principle is always the best interests of the child, ensuring they continue to receive stability and support, despite the changes brought about by divorce.
International Assets and Jurisdiction
For high-net-worth couples, assets are often held across multiple countries, adding significant complexity to divorce proceedings. Different jurisdictions have varying laws regarding asset division and taxation, making careful legal planning essential.
International divorces can involve foreign property, investment portfolios, businesses, and offshore trusts. These assets require careful assessment as their valuation and division may be influenced by local legal frameworks, tax regulations, and prior agreements between spouses.
It is essential that you obtain specialist legal advice early on, where there are issues relating to international assets and jurisdiction. This ensures that the right forum is selected initially in the proceedings to ensure the best outcome.
Enforcing divorce orders across borders presents additional challenges, particularly when dealing with multiple legal systems. Maintaining thorough documentation, such as bank statements, property deeds, share certificates, and business records, is critical to ensure assets are valued accurately.
In cases where records are incomplete or difficult to obtain, experienced legal teams can collaborate with financial experts to reconstruct asset histories and clarify entitlements.
How Can We Help
At Harding Evans, our specialist team of Family and Matrimonial solicitors provides tailored guidance on divorce for high-net-worth individuals.
Our Head of Department, Leah Thomas, is a Legal 500-ranked Solicitor, due to her experience with high-net-worth clients. She has had significant experience in farming estates and in dealing with large companies in divorce.
We understand that when substantial assets, businesses, or international holdings are involved, the stakes are higher, and the process more intricate.
Our approach combines expert legal knowledge with a compassionate understanding of your circumstances. We guide you through all stages of the process to ensure your interests are protected and your wealth is managed appropriately.
To contact a solicitor for high-net-worth divorce advice, get in touch with us today.
