After 27 years of marriage, Bill and Melinda Gates have announced (via Twitter) to the world, they are to divorce, releasing a statement that “they no longer believe we can grow together as a couple.”
Bill, who co-founded Microsoft in 1975, was already a billionaire when the pair got married in 1994. He met Melinda in 1987 when she joined the company. Bill is the fourth richest person in the world with an estimated $124bn fortune, with Melinda in her own right having a speculated net worth of $70 million.
They jointly run the Bill and Melinda Gates Foundations, a huge funder of global health and disease and have three children together, Jennifer (25), Rory (21) and Phoebe (18).
Ultra-high-net-worth individuals, akin to Bill and Melina Gates, face a unique set of challenges due to the level of their wealth and the complex structures of their assets should they choose to divorce, especially when the couple has been married for a long time.
The importance of a prenuptial agreement (prenup) in an ultra-wealthy divorce
It has been reported in the press that the Gates did not sign a prenup before their marriage in 1994; however, the use of a prenup, particularly for ultra-high-net-worth couples, has soared in popularity since then.
Although pre-nuptial agreements are not legally binding in England and Wales (In Scotland, properly prepared prenups are enforceable and legally binding), they will demonstrate to the court the intention of the parties if the marriage breaks down.
A prenup is more likely to be considered ‘fair’ if,
Both parties received independent legal advice about the agreement at the outset
Full and frank financial disclosure of both parties’ assets was made before the agreement
Neither party was under pressure or duress to sign the agreement against their will
There has been no significant change that would make the agreement inappropriate (for example, the birth of children)
The agreement is fair and realistic. If the division of assets is weighted too heavily in favour of one party, it may be judged to be unfair by the courts
Prenups should be reviewed periodically and amended during the marriage, particularly when any child or children are born
Providing some of these ‘fairness’ criteria are met, the court has the discretion to apply weight to the agreement, and it may be upheld.
Marital and non-marital assets
One of the most common issues that need to be considered in an ultra-high-net-worth divorce is which assets are matrimonial and which may be excluded from the settlement as non-matrimonial property.
The majority of Bill’s fortune was accumulated during his marriage. However, he was already a billionaire, and this money could be ring-fenced as an asset outside of the matrimonial pot.
The likelihood is that the longer the marriage, the more the assets will have intermingled and form matrimonial assets.
Hiding assets in an ultra-wealthy divorce
It is not uncommon for ultra-high-net-worth individuals to conceal or attempt to hide assets.
In these cases, an independent Forensic Accountant is often instructed to look at the assets disclosed by each party to ensure transparency and fairness.
At Stowe Family Law, we have an in-house Forensic Accountant in our team who can support you if you believe your ex is hiding assets, stalling with information, the business or asset valuations seem low or the declared income does not match the lifestyle and more.
Special considerations in ultra-wealthy divorces
In ultra-high-net-worth cases, particular regard may be paid to the contributions of each party over the course of the marriage.
While section 25 of the Matrimonial Causes Act 1973 (MCA 1973) refers to contributions in broader terms, including ‘any contribution by looking after the home or caring for the family, inevitably in ultra-high-net-worth cases much of the focus will be on financial contributions made, usually, by one of the parties in particular.
Like the Amazon owner, Jeff Bezo’s divorce in 2019, one solution can be to leave the business with the owner and offset the value against other assets, divide shares in the business, or create a dividend from cash held by the company for the other party.
As each company and divorce circumstance is unique, these will be weighed against the broad picture of marital wealth in reaching a fair conclusion.
Divorce in the public eye
As with most high-profile couples separating, the details of the divorce settlement are rarely made public.
Interestingly, the press coverages talks of a separation agreement the couple has entered into, finalised before the media announcement.
It is believed this agreement set out how the couple’s property, business interests and assets are to be divided. It has not been or is likely to be made public.
Get in touch
If you would like advice on ultra-wealthy divorce, please contact our Client Care Team to speak to one of our lawyers here.