October 17, 2021

How the wealthy untie the knot

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_91330877_gettyimages-495998870By Jamie Robertson Business reporter, From BBC News

As Brad Pitt and Angelina Jolie are no doubt finding out, divorce is painful – and expensive.
While the pain is the same for rich and poor, the expense, for the rich, can be a lot, lot greater.
The numbers are eye-watering, from estimated £600 an hour top-tier divorce lawyers, to massive pay-outs at the end of the case.
Financier Sir Chris Hohn holds the record for a British settlement, paying £337 million to his former wife, Jamie Cooper-Hohn in 2014.
Last year Liam Gallagher and Nicole Appleton spent £800,000 on legal fees and ended up splitting his (or, perhaps more accurately, their) £11m fortune down the middle.

Although Ms Jolie filed for the “dissolution of marriage” on Monday in the Los Angeles Superior Court, it is London that has become the divorce capital of the world for the super-rich.
_91330707_gettyimages-450947746Michael Gouriet, family law partner at Withers law firm in London explains the city’s allure: “First, we have a system of sharing everything that has been built up in the marriage. All the assets are taken into account. Second, the courts have a very wide discretion, particularly on needs, which translates into much greater scope to be very generous to the financially weaker spouse.”
By contrast Europe has a far less flexible range regimes which divide assets along different lines.
For instance, in France, Spain and Italy, unless a couple go to the trouble of laying down something different in a marriage contract, the general rule is that all assets owned before a marriage, or which they inherit, remain in separate ownership. Those they acquire during marriage are treated as jointly owned.
_91330705_gettyimages-545495552-1Divorce Monaco-style
Inconveniently for the partners of the super-rich, Monaco has a similar regime which does them few favours .
Divorce in the Principality will only divide wealth that has been commonly created by the couple. If you had no money when you married someone rich, you’ll probably have not much more when you divorce.
The website Monaco Wealth Management says getting divorced there “can be very tricky” and lays out quite clearly what happens when rich marries poor – and then divorces: ” If you are a wealthy guy having €100m and you live with your wife from a monthly living cost of €5,000, then based on the standard law practice in Monaco the maximum you pay to your ex-wife is €300,000 Euro, which is the monthly living cost for five years. This means you will still keep 99.7% of your wealth.”
So any Monaco-resident billionaire being subtly persuaded by their spouse to up sticks to London might want to think carefully.
Residency is crucial
But just being in England or Wales doesn’t get you the right to have a divorce there. You don’t need citizenship, but you do need what is loosely called “residency”.
And the jurisdiction in which you file for divorce can be crucial.
Take the case of Pauline Chai and her estranged tycoon husband Khoo Kay Peng, who owns 40% of fashion retailer Laura Ashley. Ms Chai owns a £30m property in Hertfordshire.
_91330713_gettyimages-540667752Together they spent a reported £5-6m in legal fees simply fighting over whether to get divorced in England or Malaysia.
Ms Chai got her way and last year a High Court judge ruled that proceedings should be launched in England.
European regulations, under what’s called “Brussels II Revised”, cuts through the problem of jurisdiction by saying wherever a petition is filed in the EU’s 27 countries, that is where the case continues.
However, Brexit may undo that. Mr Gouriet says: “It’s not exactly clear how Brexit will change things but, it is possible that we may end up with a lot more fighting over jurisdictions, whether to hear cases in London, Rome, Paris or wherever.”
Second bite at the cherry
Another attraction of London for a wealthy couple in search of separation, is that you can get a divorce settlement in London, even when you have already been divorced in another country.
Barbara Reeves Family Partner at law firm Mishcon de Reya told the BBC: “Originally this statutory provision was intended to protect migrants to England from the Commonwealth in the post war years – particularly where their country of origin would not make financial orders following divorce.
“More recently, given England’s reputation as a generous divorce jurisdiction, this provision has been invoked by the spouses of internationally wealthy individuals who have made a home, or have a base, in London and surrounding counties.”
The most famous example of this so-called “second bite at the cherry” is the £53m ($69m) award to the former model Christina Estrada, which followed a divorce (without her knowledge) from businessman Sheikh Walid Juffali in Saudi Arabia in 2014.
Broad disclosure
London is also good for spouses who reckon their other halves have been less than honest about the extent of their wealth.
Mr Gouriet says: “English courts have very, very broad disclosure powers, not just in terms of individual wealth but also in terms of business interests and trusts, and decisions can be overturned five, ten years or even more after they were made, if a spouse is found not to have revealed the full extent of their wealth.”
Alison Sharland, from Wilmslow in Cheshire, accepted a £10m settlement in her 2010 divorce from her husband Charles, a software entrepreneur, representing, she thought, half of his wealth and 30% of the proceeds of shares held by her husband in his company when he sold them.
But Ms Sharland alleged that he had lied about his company’s value – which the financial press estimated to be worth about £600m, when the value used in the divorce case was £47m – as well as plans to float it on the stock market.
The Supreme Court found in Ms Sharland’s favour last year allowing her to claim a greater share of her former husband’s assets .
And the super-rich have become very proficient at finding obscure and distant mattresses under which they can stuff their wealth.
Some of them came to light through an unexpected source earlier this year – the Mossack Fonseca papers.
These secret “Panama Papers”, more than 11 million documents, leaked to the International Consortium of Investigative Journalists and the German newspaper, Süddeutsche Zeitung, showed how Mossack Fonseca, a global law firm based in Panama, shielded assets not just from the tax-man but from alimony-hungry spouses.
One email revealed in the leak reads: “A Dutch man married to a Dutch lady living in The Netherlands wants to protect part of his assets against the unpleasant results of a divorce (on the horizon!). What are your recommendations on this?”
Mossack Fonseca offered help to a husband in Thailand who wanted a “silver bullet” to protect his assets from his wife and an Ecuadorian customer was given assistance “to acquire a Panamanian corporation to transfer assets before the divorce.”
It is usually men who squirrel away assets from their wives, but the situation can be reversed. The Panama Papers also highlighted the case of a Peruvian woman who openly tells her financial consultants that she has hidden her assets in companies to prevent her husband from discovering that she had inherited money.
Mossack Fonseca representatives have said that they “regret any misuse of the companies we create or services we offer. Wherever possible we take steps to either uncover or stop such misuse.”

Angelina Jolie and Brad PittImage copyright tGETTY IMAGES
Image caption Split: Angelina Jolie and Brad Pitt
Mossack FonsecaImage copyright GETTY IMAGES
Image caption Mossack Fonseca: the rich hide their wealth from more than just the tax-man
Christina EstradaImage copyrightGETTY IMAGES
Image caption Christina Estrada, two divorces, one marriage
MonacoImage copyright GETTY IMAGES
Image caption Monaco: divorce here “can be very tricky”

For more on this story go to: http://www.bbc.com/news/business-37428492

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