Company directors are being urged to consider prenuptial agreements to protect their corporate assets after a landmark divorce case ruling in the UK Supreme Court.
Family law solicitors Coles Miller are warning company owners and critical decision makers to review their situation after the court’s ruling in the Prest v Petrodel appeal.
The Supreme Court allowed estranged wife Yasmin Prest’s appeal over assets she said were owned by her oil tycoon husband Michael Prest.
Judges ruled that seven disputed properties could be counted as his assets in a divorce claim. Mr Prest had argued that the multi-million pound properties were not his but instead owned by off-shore companies.
Coles Miller Partner Emma Hamilton Cole, head of the Dorset firm’s family law department, said the landmark case had significant implications for divorcing couples contesting financial settlements.
“This is an important ruling because it shows that judges can look beyond the corporate veil that separates company assets from an individual’s assets,” she said.
Although the protagonists in the case were exceedingly wealthy, the case raised important questions for company owners and couples at all levels of society:
- How far could spouses go when claiming assets that their husband or wife had placed within a company?
- How could company directors protect business assets from claims by a spouse that they were not company but personal property?
Ms Hamilton Cole recommended that company directors planning to marry should think about taking out a prenuptial agreement.
She also recommended that business owners speak with Coles Miller’s commercial solicitors to look at reviewing the structure of their company or group from a legal standpoint.
“Prenuptial agreements are becoming increasingly important. We still don’t have the legislation from the government but courts are looking at them more and more since the Supreme Court ruled on them in the Radmacher case in 2010.”
Various factors will determine how much weight a court places on a prenuptial agreement, including:
- When was it taken out, how long has it been in existence? If it were signed the night before the wedding then there may have been undue pressure from one of the parties.
- Were all the assets fully disclosed at the time of signature? If either or both parties had concealed assets from the other then it would weaken the agreement.
“If a prenuptial agreement seems reasonable and fair, the court will stick to it - or something very similar,” said Ms Hamilton Cole.
Even more important were post-nuptial agreements, which the courts were even more likely to uphold, she added.
But is there the danger that simply raising the possibility of a pre- or post-nuptial agreement with a partner or spouse could itself trigger suspicions, rows and ultimately a call to the divorce solicitors?
“There’s no question that these agreements are a sensitive issue but they are increasingly something which is acceptable for people to talk about - particularly if they have been in previous long term relationships,” said Ms Hamilton Cole.
Leaving assets for future generations was a particularly important question: “Each parent may have children or grandchildren that they are seeking to protect and provide for.
“Money doesn’t buy you love but it can protect your children and grandchildren,” she added.
Coles Miller’s family and matrimonial law solicitors are members of Resolution (formerly the Solicitors Family Law Association) and also the Law Society's Family Law Panel.
The firm’s specialist team is expert in all areas of family law and helps clients with professional and sensitive legal advice.
They will work to help clients avoid confrontational and damaging divorce cases by recommending mediation, negotiation and collaborative law.
Mediation involves an impartial mediator guiding both sides in a dispute to an agreement.
Collaborative law aims to achieve the same effect - agreement without confrontation and without having to go to court.
Collaborative law differs slightly in that it is a four-way process involving the two sides’ solicitors working together and their two clients. It can be used to help families going through divorce, separation and children issues.
Negotiation can be via face to face meetings, video conferencing, letters, phone calls, emails and faxes.
Other family law services offered by Coles Miller include change of name deeds for both adults (fixed fee) and children (variable fee).
Coles Miller can also help victims of abuse or harassment by taking out an injunction to give them greater legal protection.
For further information about family law, please contact Coles Miller Solicitors Partner Emma Hamilton Cole.