Economic disruption increasingly relied on to reduce large divorce settlements
By Nicola Laver
The family courts are using the threat of a no deal Brexit to reduce the value of some larger divorce settlements, says Boodle Hatfield
The family courts are using the threat of a no deal Brexit to reduce the value of some larger divorce settlements, Boodle Hatfield said.
The private wealth firm has identified a growing intention for divorcing parties who own a business to use Brexit to pay less money to their ex-spouse.
It has reported that in a recent high net worth divorce hearing, a judge ordered that the value of a jointly owned business should be discounted by 10 per cent to allow for the possibility of a no deal Brexit and the economic downturn caused by covid-19.
The firm said that ultimately, one party could be left disadvantaged if the value of the business subsequently rises rather than falls.
It expects an increasing number of divorcing business owners to use the economic disruption of Brexit and covid-19 in an attempt to justify paying less money for their spouse's share in their business.
The family team at Boodle Hatfield said some business owners are attempting to reduce the size of their divorce settlement by arguing that the value of their business/es has been substantially affected by the lockdown; and is at further risk if there is a no deal Brexit with the aim
There was a similar trend following the 2008 financial crisis.
Family law partner Emily Brand said the firm expects more of these no deal Brexit and covid-19 arguments to be deployed over the coming months, adding that a no deal Brexit “could cause business values to drop further, potentially reducing the value of divorce settlements even more”.
“Given the clear economic uncertainties ahead, it is only reasonable to highlight the obvious risks which will potentially affect a business' value”, she commented.
Brand suggested that to avoid one divorcing spouse being left considerably worse off following a divorce – particularly if a risk-laden asset fails to provide the anticipated returns – both parties should share in each different asset class to diversify their risks.