Janet Tresman, expert family law solicitor at Altermans Law in Finchley, frequently considers these questions when a spouse benefits from a significant improvement in their financial circumstances due to the success of a business or growth in property values. Janet also advises on how to ring fence existing settlements and orders to avoid them unravelling in the future.
Can a financial settlement be overturned?
It is crucial that any divorcees who do not have financial orders in place review their situation, as they may now face claims based on wealth acquired after the divorce.
One effect of the upturn in the economy has been that the family courts have seen an influx of cases where spouses, either apply for final settlements or revisit their previous divorce settlement in order to negotiate an improved financial arrangement from those ordered or negotiated during the recession.
Resolving how property and finances are to be separated is one of the most important decisions in any separation or divorce. The court must, if possible, achieve a ‘clean break’ between the couple, which means that they cannot make any further claims against each other in the future.
The court’s criteria for the division of assets are set out by statute, but this in turn depends on full and frank disclosure of all assets by the couple.
Avoid delaying tactics
As the price of property rises, property investors may find themselves with an increasing asset base that is subject to being split.
Dragging out the process to agree your divorce settlement may work against you if you cannot come to an agreement yourselves. The court process can often take in excess of 12 months to reach a final order.
Historically, assets held under the name of a company have usually been protected under English law and could not be used to indemnify shareholders. In a rare exception to the rule, in Petrodel v Prest  the court ‘pierced the corporate veil’ to release those assets and make them available to the spouse. The distinction in this case was that there was a dishonest attempt by Mr Prest to conceal the assets from his wife as a strategy to reduce the divorce settlement.
The case of Stephen and Ellen Debruin is also likely to have far reaching implications, especially for anyone with a portfolio that includes property and business assets.
In the Debruin case, Mr Debruin is applying for permission to appeal the decision in his divorce settlement. He argues that the court did not make a fair division of the assets at the time and did not properly explain its decision. He argues that the matrimonial home was owned by his company and should not have been taken into account.
Mrs Debruin, who 18 months later has still not received any of her settlement and is still relying on benefits, says that her husband has not disclosed all his assets and has hidden wealth.
Keep the court papers safe
Last year Ecotricity multi-millionaire Dale Vince, learnt how important it is to keep your divorce documents safe.
In 2014 the Supreme Court allowed Mr Vince’s ex-wife, Kathleen Wyatt, to make a claim for financial support because neither of the couple could produce evidence to show that a ‘clean break’ order had been made when they divorced 23 years earlier.
At the time of their divorce in 1992, Dale Vince was a new age traveller and had little money. More recently, Mr Vince went on to found the green energy company Ecotricity, making a fortune estimated to be worth around £57 million.
In contrast, Ms Wyatt lived a ‘hand to mouth’ existence on welfare benefits and low pay while raising their son (and children from other relationships). Hearing of Mr Vince’s success, she made a claim for retrospective financial support claiming part of his capital, even though neither of them had capital at the time of their separation and divorce. This case essentially paves the way for anyone without a completed financial order to bring a claim against their former spouse regardless of how long ago they divorced, or separated.
Lord Wilson in the Supreme Court said,
“While any good divorce lawyer should ensure that all financial matters are finalised and immune to future claims, it is crucial that any divorcees who don’t have financial orders in place, review their situation as they may now face claims based on wealth acquired after the divorce.”
Take advice from an experienced family solicitor
Janet says “These cases highlight the need for divorcing couples to seek professional legal advice at the earliest opportunity on all the options, in order to make informed decisions and to obtain a binding court order to settle their financial claims, no matter what their circumstances.”
If you are separating from your partner, instruct an experienced family law solicitor to advise and prepare all the required paperwork, to negotiate a tailored settlement to your circumstances, and obtain a final court order by consent to allow you to move on with your life.
Janet Tresman is a highly experienced family law mediator and collaborative family law solicitor, representing amongst others, high net worth individuals. She is a founding member of Resolution and has served as a Deputy District Judge. Janet delivers a first class service in all aspects of family law, with minimum court intervention.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should.