High Net Worth Clients

Question 1

Matrimonial Property Regimes

Answer 1

-Separate Property Regimes

-Community of Property Regimes

Question 2

BACKGROUND TO HNW FINANCIAL ORDER PROCEEDINGS

Answer 2

• Law and procedure is the same in all financial order proceedings:
  – Section 25 factors
  – FPR 2010
• In HNW cases needs is not such an issue
  – Surplus assets over needs
  – Allows courts to consider arguments on what assets should be included in the pot

Question 3

White v white 2000

Answer 3

• Court’s objective is to achieve a ‘fair outcome’
• No longer exclusively focusing on the needs and reasonable requirements of the financially weaker party
• Any award to be measured against the ‘yardstick of equality’
• A departure from equality to be justified by good reason
  
  • No discrimination between homemaker and breadwinner

Question 4

The sharing principle

Answer 4

• White v White

– Establishes the concept of the ‘yardstick of equality’

• Miller v Miller;
  McFarlane v McFarlane [2006]
  – Develops this idea of an equal entitlement to share the
  assets of the partnership
  – Also looking at how best to achieve ‘fairness’ * Needs, compensation, sharing

charman v charman 2007
- confirms that the yardstick of equality has now been elevated to ‘the sharing principle’

-The starting point should be an equal division of the assets unless there is good reason to reason to depart from equality.

Question 5

NON-Matrimonial Property

Answer 5

Miller v Miller; McFarlane v McFarlane 2006

• the court considered the possibility of distinguishing between matrimonial and non- matrimonial property
• in HNW cases pre-marital and inherited assets are to be considered a different class of asset to those that are clearly matrimonial
• the priniciple of equal division may not apply to non- matrimonial property with the same force
• the length of the marriage and the way the assets are dealt with during the marriage may erode the distinction

Question 6

Pre-martial assets

Answer 6

-Pre-martial assets often treated as non-matrimonial property in HNW cases and carved out from the matrimonial pot

• when deciding what amount to exclude the court look at:
• Duration of the marriage
  -Mingling of assets
  -Needs of both parties
  -Allowances for potential growth in the pre -martial assets

-THe court is trying to achieve fairness.

Question 7

Inherited assets

Answer 7

Inherited assets seen as an unmatched contribution made by the party who brings it to the marriage and often treated as non-matrimonial property.

not excluded from the courts powers to distribute the assets but are often treated differently depending on:

– Duration of the marriage
-Mingling of assets
-Needs of both parties
-Allowances for potential growth in the pre -martial assets

-THe court is trying to achieve fairness.

Question 8

s.25 Factors

Answer 8

s.25(2)(a) assets and resources of the parties

court will consider distinction between matrimonial and non mat property
s.25(2)(b) needs and s.25(2)(c) standard ion living

• needs will be generously assessed
• High standard of living impacts upon quantification of ‘needs’

s.25(2)(d) age and duration

Miller v Miller (2006)

short marriage no bar to equal division of the assets

Question 9

s.25 Factors

Answer 9

s.25(2)(f) contributions

Lambert v Lambert 2003
-only in very limited and exceptional circumstances will contributions be a reason for departing from equality

sorrel v Sorell 2005
husband demonstrated a ‘spark’ of genius
-non -matrimonial property

S25(2)(g) conduct
-conduct only be taken into account where it is inequitable to disregard it and

• in general, the conduct will have a financial implication

Question 10

Clean break in HNW FO proceedings

Answer 10

-Where possible courts will try and attain a clean break

-If there are sufficient funds the courts might try to capitalise maintenance payments

• application of Duxbury calculations which assesses the lump sum that an individual will need to provide an income for life

Question 11

Duxbury calculations

Answer 11

map like co ordinates

Question 12

Maintenance awards in HNW cases

Answer 12

Mc Farlance v Mc Farlane 2006
- needs
-compensation
- sharing the funds of the Matrimonial partnership

VB v JB 2008
-compensation should not be treated as a new ‘head of claim’
-in ordinary circumstances no party has a right to expect partly of income

Question 13

Background to PNAS

Answer 13

What is PNA?
- contract
-entered into by parties to forthcoming marriage
-TO settle and regulate financial rights and obligations of parties
- in the event of the breakdown of the marriage

Question 14

Are PNAs enforceable?

Answer 14

In Many countries - yes

in England and Wales - No

Contrary to Public Policy

• cannot oust jurisdiction of divorce court
• institution of marriage undermined

Question 15

Pros of PNAs

Answer 15

-certainty
-more assets preserved for family members
-contract made at a time when parties are able to negotiate a settlement without animosity
- 2 in 5 marriages fail - so sensible to try and limit animosity, cost and time in reaching settlement

Question 16

Cons of PNAS

Answer 16

-goes against the principle of equal sharing
- unfair on the party in the weaker bargaining position?
- It is not possible to predict the parties’ circumstances in the future?
- Disclaimers necessary to prevent negligence claims

Question 17

RADMACHER V GRANATINO

Answer 17

“The court should give effect to a Nuptial Agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement”

• Were there circumstances attending the making of the agreement that detracted from the weight that should be accorded to it?
• Were there circumstances attending the making of the agreement that enhance the weight that should be accorded to it: the foreign element?
• Did the circumstances prevailing at the time the court made its order make it fair or just to depart from the agreement?
• Were there circumstances attending the making of the agreement that detracted from the weight that should be accorded to it?
  – Duress, fraud and misrepresentation
  – Exploitation of a dominant position
  – Parties’ circumstances
  – Legal advice and disclosure at the time the
  PNA was entered into

Factors enhancing the weight afforded to the PNA: the foreign element
– i.e were both parties from and was the agreement made where PNAs are enforceable?
– Foreign element less relevant post
Radmacher

• Did the circumstances prevailing at the time the court made its order make it fair or just to depart from the agreement?
  – Children
  – Autonomy
  – Non-matrimonial property – Changes in circumstances

Question 18

Landscape post Radmacher

Answer 18

cases where PNAs. given weight
Z v Z [2011]
V v V [2011]
- Pna deemed a ‘good and powerful’ reason to depart from equal division
-needs a critical factors in both cases

Luckwell v Limate [2014]
cases where PNAs given little /no we weight

Kremen v Agrest [2012]
-To uphold the agreement would be grossly unfair
-PNA not entered into freely with a full appreciation of its terms
-PNA did not come close to meeting the needs of the wife and children

Question 19

LA commission and PNAs

Answer 19

Matrimonial Property, Needs and Agreements

• Made recommendations including the introduction of Qualify Nuptial Agreement (QNAs)
• set out certain preconditions for QNAs:

contractually valid

statement of understanding of implications

made no less than 28 days before the marriage or civil partnership

full disclosure

independant legal advice.

Question 20

Drafting a PNA

Answer 20

Disclosure
- full financial disclosure of both parties assets
- usually done by Form E

Independent legal advice
- Helps avoid arguments of undue pressure/ duress
- shows they understand what they are agreeing to

Timing and Duress
Ideally PNA to be signed not less than 28 days before the date of the marriage