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  1. Wealth
September 28, 2021

Modern Families and the future of HNW divorce

By Spear's

As we emerge from the pandemic, how has UHNW divorce been affected, asks Alex Carruthers

We are (hopefully) now emerging from the Covid-ravaged world, but the future is still uncertain. How will the experiences of the last 18 months affect how we live in the future?

One new feature of life which appears to be destined to remain with us is that people are able to work and live their lives remotely and to re-evaluate their working lives and lifestyles. This will have a profound effect on most aspects of life including that of high-net-worth couples. They are now even more mobile than ever, able to live and work wherever they want. This may well lead to situations where a family is split across three different continents – children at boarding school in, for example, England, the mother in East Asia and the father in the Americas. They can all communicate and see each other with reasonable regularity. Of course, such families existed before the pandemic, but it may well be that such examples become more commonplace thanks to our new ways of living and working.

One knock-on effect is that, if the relationship between the husband and wife breaks down, jurisdictional issues may arise. For example, divorce proceedings could be issued in the Americas, the UK or in East Asia. Which is more beneficial to each party? Inevitably, more work for the lawyers…

Another facet of modern life is the ubiquitous nature of mobile phones with sophisticated cameras and recording devices. This makes it easier for one party to monitor, record and surveil the other. Conversely, such devices hold confidential information about the owner. This leads to the temptation (often accepted) by the other party to access illegally such confidential information from them.

Both of these traits – the ability to monitor one person and the desire to hack into a device, create significant legal issues. The high-net-worth individual is likely to need detailed advice about when the boundary set by the law in each individual country is broken, and when it is acceptable. Certainly, in the United Kingdom, the courts frown upon regular monitoring and recording of vulnerable parties – a critical phrase in the courts is “coercive control” behaviour within a relationship: this is a tell-tell sign of such behaviour.

Many ultra-high-net-worth couples are also concerned about anonymity. This concern can be exacerbated if the relationship breaks down and it is suggested that one party plans to go to the press. Issues about privacy of individuals and, more importantly, their children are also emphasised in divorce proceedings and the possibility of obtaining an injunction can be taken out to protect the identity of the parties and their wider family.

If the high-net-worth family does, unfortunately, split up, then the court in this country will try to ensure that both parties can remain on a level playing field so far as the negotiations and, if necessary, any court proceedings are concerned. There is now a wide variety of litigation funders who will enable funds to be available for the economically weaker party to instruct the best lawyers available. Alternatively, if the funders are unwilling to provide monies, then orders can be made against the economically stronger party that their legal costs be met, on an interim basis, by him/her.

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Such litigation funders are becoming ever more sophisticated. They are providing offerings that not only allow for the provision of legal fees but also, for example, a top up of maintenance and funding to try and resolve liquidity issues in divorce settlements. Although such funding can be expensive, they can, on occasion, cut out the need for significant litigation and therefore save on costs at the end of the day. They are certainly an option worth exploring.

Such funding is generally met from the settlement at the conclusion of proceedings and, if approached correctly, the interest on such funding can be a useful negotiating tool to use against the economically stronger party – it will be threatened that such interest be met by him/her alone.

Alex Carruthers is a partner at Hughes Fowler Carruthers

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