Every divorce brings its own emotional challenges. However, when couples with substantial wealth decide to part ways in the UK, the situation becomes more complex. The courts then face an added layer of intricate financial matters. These matters demand careful attention.
What the Research Tells Us
ONS data reveals some interesting trends. In 2022, the median length of marriages ending in divorce reached 12.9 years. This is the longest average duration on record. This increasing duration is particularly relevant in high net worth cases, where longer marriages often lead to more complex asset division and a stronger presumption of equal sharing. In these situations, an equal sharing of assets is more strongly presumed.
Beyond marriage duration, research by the University of Bristol also highlights significant differences in asset values and awareness. Their study found that median total assets for divorcing couples is just £135,000. This figure is vastly different from high net worth divorces. The study also found something critical about pensions.
What is a High Net Worth Divorce in the UK?
There’s no single legal definition for a high net worth divorce in the UK. However, here’s how it’s generally understood:
Financial Industry View
The Financial Conduct Authority (FCA) often considers someone “high net worth” if they earn at least £100,000 annually or have £250,000 or more in assets (not counting their main home or pension).
Legal Practice View
In divorce cases, “high net worth” usually refers to situations where combined assets are much larger, often in the millions of pounds. These cases often involve:
- Complex business structures
- International properties
- Trusts
Because of this complexity, these cases need a more specialised legal approach.
High Court Involvement
The High Court typically handles these cases when:
- Overall net assets are more than £15 million.
- Overall net earned income is over £1 million.
However, these are guidelines, and the court also considers how complex the specific case is.
The Court Process for High Net Worth Divorces
The divorce process begins with an online application and a £593 court fee. Since 2022 and the introduction of no-fault divorce, you only need to state the marriage has irretrievably broken down, not provide specific reasons.
Complex financial matters in high net worth cases often lead to them being handled by the High Court, not the Family Court as outlined in the definition of high net worth, these include:
- Assets exceeding £15 million
- Annual income over £1 million
- Complex business or trust structures
- International assets
Both parties must provide full financial details in a Form E, covering all worldwide assets, debts, business interests, income, taxes, and pensions, with supporting documents. This financial disclosure can take 3-6 months, longer with international or complex business assets.
After disclosure, a “First Appointment” identifies disputed issues and what expert evidence is needed. This is followed by a “Financial Dispute Resolution” (FDR) hearing where a judge offers an opinion on potential outcomes to encourage settlement. About 70% of high net worth cases settle around the FDR stage, avoiding a full trial.
If no settlement is reached, a final hearing takes place (2-10 days). The judge hears evidence and makes a final decision, usually delivered in writing 4-8 weeks later.
The Legal Cornerstone
The foundation of the court’s approach to financial settlements in high net worth divorces is Section 25 of the Matrimonial Causes Act 1973. This legislation gives judges discretionary powers while requiring them to consider specific factors to achieve fairness.
The court’s primary consideration is always the welfare of any child under eighteen.
When making financial orders, courts must consider eight key factors:
- financial resources (including complex remuneration packages and investment portfolios);
- financial needs (interpreted generously for affluent couples);
- standard of living during marriage;
- age and duration of marriage;
- any physical or mental disability;
- contributions to family welfare (including non-financial);
- relevant conduct;
- and potential loss of benefits due to divorce.
The court weighs these factors to ensure equitable and practical asset division.
How Judges Make Decisions in High Net Worth Divorces
Judges follow key principles when deciding on financial matters in a divorce, especially those involving significant wealth:
The Needs Principle
The court first ensures both spouses (and any children) have their financial needs met. In high net worth cases, “needs” are often interpreted broadly to cover things like suitable housing, living expenses that match their lifestyle during the marriage, and future financial security.
The Sharing Principle
This is often the starting point for dividing significant assets built up during the marriage. It suggests that these assets should be divided equally, recognising marriage as a partnership where both financial and non-financial contributions are valuable.
The Compensation Principle
This principle is used less frequently. It applies when one spouse has significantly sacrificed their career or earning potential to benefit the family or support the other’s career, leading to an economic disadvantage that can’t be fixed by just meeting needs or sharing assets.
How Courts Handle Pensions and Other Property in Divorce
Pension Division
Pensions are often a significant asset, especially in long marriages. UK courts have ways to divide them, such as:
- Pension sharing orders : Splitting the pension fund itself.
- Offsetting: One person keeps the pension, and the other gets a larger share of different assets.
Many people don’t fully understand the value of their own or their partner’s pensions. However, in high net worth cases, courts ensure pensions are properly valued and fairly distributed as part of the overall financial settlement.
Non-Matrimonial Property
Non-matrimonial property includes assets acquired before the marriage, through inheritance, or as gifts during the marriage.
While assets built up during the marriage are often split equally, non-matrimonial assets might be treated differently. However, the longer the marriage and the more these assets have been mixed with shared assets or used for the family, the more likely they are to be included in the division.
The court will carefully look at where these assets came from and how they were used.
Outcomes and What To Expect in High Net Worth Cases
Looking at High Court judgments in high net worth cases in more detail, there are several notable patterns in financial outcomes:
- Long Marriages (over 15 years): In about 85% of these cases, matrimonial assets (wealth built during the marriage) are split nearly equally, usually between 45% and 55% for each party.
- Shorter Marriages (under 10 years): The spouse with less financial power typically receives 25-40% of the total assets. Contributions made before the marriage are given more weight here.
- Business Preservation: If a case involves a business, courts rarely order its sale (under 15% of cases). Instead, they prefer solutions that keep the business running while ensuring a fair division of its value.
What This Means For You
A high net worth divorce in the UK involves complex assets, and the court aims for fair outcomes based on contributions, future needs, and the welfare of children.
The process includes extensive financial disclosure, expert valuations, and careful negotiations. If an agreement isn’t reached, the court makes the final decision.
Understanding how the court operates can help you prepare and work towards a settlement that secures your financial future.
The court’s goal is to divide assets in a way that gives both parties financial clarity to move forward. With high stakes involved, especially for wealthy individuals, getting expert legal advice is essential.
At Maguire Family Law, our team of experienced divorce solicitors specialises in high net worth divorce cases, offering discreet, comprehensive support throughout the process.
Contact us today to discuss how we can help you achieve clarity and confidence during this challenging time, ensuring your case receives the expert attention it deserves.
References
FT Adviser. (2019). Pension biggest asset in millionaires’ divorces. https://www.ftadviser.com/pensions/2019/04/23/pension-biggest-asset-in-millionaires-divorces/
Hitchings, E. (2023). Fair Shares? Dividing Assets on Divorce in England and Wales. University of Bristol. Retrieved from https://www.bristol.ac.uk/news/2023/november/divorce-research.html
Institute for Family Studies. (2024). Why wealthy people are less likely to divorce. https://ifstudies.org/in-the-news/why-wealthy-people-are-less-likely-to-divorce
Matrimonial Causes Act 1973, c. 18, § 25 (UK). https://www.legislation.gov.uk/ukpga/1973/18/section/25
Office for National Statistics. (2022). Divorces including same- and opposite-sex marriages, sex and age of people divorcing, children of divorced couples and previous marital status. Retrieved from https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/divorce
For specialist advice on any family law related issue contact Maguire Family Law by email: james.maguire@family-law.co.uk or telephone:
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