When Jerry Hall filed for divorce in California last Friday, 1st July 2022, her and ex-partner Rupert Murdoch joined a long line of ultra-high-net worth couples who have separated in recent years.
Following a six year marriage, it is reported Hall is seeking spousal support and legal fees from the billionaire media mogul.
Estimated to be worth over £14 billion, Murdoch, and other ultra-high-net worth individuals face unique challenges due to the level of their wealth and complex structures of their assets if they divorce.
Today, we revisit a previous blog article from Ciara Pugh in our London team looking at the unique issues faced by the ultra-wealthy when they divorce.
The importance of a prenuptial agreement (prenup) in an ultra-wealthy divorce
It has been reported in the press that the Hall did sign a prenup before their marriage. This is reflective of the increasing popularity of prenups, particularly for ultra-high-net-worth couples.
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.
In the petition filed with the Los Angeles Superior Court, Hall said she was “unaware of the full nature and extent of all [Murdoch’s] assets and debts, and will amend this petition when the information has been ascertained”.
The majority of Murdoch’s fortune was accumulated before his marriage and could be ring-fenced as an asset outside the matrimonial pot.
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.
Stowe Family Law has 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.
Notoriously tricky to value, the complex business structures in place for high-net-worth individuals make this a difficult area of a divorce settlement.
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.
In this case, it has been reported that the divorce is unlikely to impact his media empire, with control over the businesses resting in trust, with voting rights split between Mr Murdoch and his four eldest children.
Divorce in the public eye
For most high-profile couples separating, the details of the divorce settlement are rarely made public.
With both parties still declining to comment, time will tell how this one will play out, but if we have learnt anything from recent billionaire divorces, the details will be kept strictly private and out of the public eye.
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.