Nov. 29, 2006 – Two ground breaking appeal decisions of the House of Lords in May 2006 have wide ranging implications for the distribution of a married couple’s assets on divorce.
In the case of McFarlane v McFarlane, Mrs McFarlane persuaded the court to award her maintenance of £250,000 per year for the rest of her life, from her ex husband who was a successful tax accountant, earning £750,000 a year.
The Court of Appeal had previously awarded her the same sum, but limited to a period of 5 years. One of the main reasons for the award was that Mrs McFarlane had given up her successful career as a lawyer to support her husband and to raise a family. The House of Lords made the award to compensate Mrs McFarlane for sacrificing her career to be a homemaker and mother.
The concept of providing compensation to a wife on divorce is entirely new. Previously maintenance was normally awarded according to the wife’s reasonable needs. This gives food for thought to husbands about agreeing to raise a family, where the wife has been a reasonable earner during the earlier part of the marriage.
The other case involved Mr and Mrs Miller. After a childless marriage lasting just 2 years 9 months, Mrs Miller was awarded £5m from Mr Miller’s wealth estimated at between £17.5m and £32m. Mrs Miller had come to the marriage from a cramped rented flat and worked as a PR executive.
The case saw a huge change of approach by the Court on the basis for making an award to the wife of a very short marriage. The previous state of the law was to award a relatively small settlement in a short childless marriage on the basis that the wife had had less time to build up a contribution in the marriage. Mrs Miller had previously been awarded £5m by the Court of Appeal, but on the basis that by marrying she had a legitimate expectation of a long marriage and a high standard of living.
The marriage came to an end when Mr Miller formed a new relationship. The Court of Appeal reasoned that his infidelity had shortened what would otherwise have been a long marriage, and this was conduct that should be taken into account. This argument was rejected by the House of Lords as their award was made purely on the basis that much of Mr Miller’s wealth had accrued during the short marriage, and Mrs Miller was entitled to a fair share of that accrued wealth.
Both cases have wide reaching implications, and not just for the very wealthy.
The question will now be whether it is possible to protect the bread winner or wealth creator’s position, by entering into a pre nuptial agreement. These agreements are not yet fully recognised by the Courts as having binding affect, but are increasingly being taken into account where the following apply:-
• Both parties have taken independent legal advice.
• Both parties have made full and frank disclosure of their financial worth.
• The agreement has been signed at least 28 days before the marriage.
For further Information…
Name: Peter Davies
Tel: 01452 508800
— End —