Rich pickings

Murdoch, divorce and prenups. Sarah Anticoni looks at how the situation would fare in England

Taking useful professional guidance from high-profile announcements about relationship breakdown is a dangerous trend. While it's sad to hear that Wendi Deng and Rupert Murdoch are divorcing in New York, the financial division of their assets has little bearing on most people's lives or developments in family law in another jurisdiction.

The more available in the family pot, the easier it is to divide it and provide for both spouses and their offspring. Both parties have, in the case of Murdoch and Deng, unlimited access to specialist financial, legal and other professional advice in any jurisdiction they choose and a pot that could meet it.

There are, however, a number of features of this reported divorce that do raise challenging questions. Where one or both parties have intertwined business and corporate interests, the level of advice and chronology of events has to be handled very carefully. It is reported that, notwithstanding a prenuptial agreement, Murdoch and Deng's marital dissolution arrangements are part of a wider tax planning picture and linked to the restructuring of News Corporation.

Such integration of commercial and personal financial planning requires a high level of cooperation between both parties. How can the emotional needs of a divorcing couple and their children be best protected ahead of the demands of shareholders and other stakeholders?

It is reported that the parties have a prenuptial agreement. Such documents front-load any financial disclosure and negotiation at the outset of the marital commitment. At present, they are not fully binding in England, despite the Supreme Court decision in the case of Radmacher.

The Law Commission will report in autumn 2013 with a draft bill. As with all such legislation, there must be a Treasury impact assessment to demonstrate the benefit of the bill. How will that be collated when there is no baseline data held in place in the court system? It also seems challenging to expect such legislation to be a priority of a coalition government unless it can be amply justified to benefit the wider community and not just those with assets to protect.

Clarity and certainty

Prenuptial agreements aim to provide clarity and certainty for both parties at a difficult and emotional time but tend to be of interest to only the wealthy. In England, where the division of capital, property and pension assets is broadly an equal one, unless there is a reason to depart from it, such documents are attractive. They may be bolstered with wills and trust structures too. Whatever the level of wealth, protecting it from each other may not be as strong a motivator as protecting from the incidence of tax.

There is no reported mention of pension provision in the Murdoch case and how it is dealt with in any prenuptial agreement. This is commonly the most valuable family asset. Any proposed pension share in England must first be approved by the pension provider before being agreed by both parties and then ordered by the court. It is not implemented until there is a decree absolute and a financial order served on the pension trustees.

Had Murdoch and Deng not had an agreement in place, their 38-year age disparity would have raised other challenges for English divorce practitioners. Murdoch's resources are vast, but at 82 he only has an actuarial life expectancy, of approximately eight years while Deng has approximately 41. Would this factor mean a departure from an equal share of the assets for the younger person? Would it make a difference if the younger spouse was male? How, in our discretionary approach to dividing assets and income streams upon divorce in accordance with section 25 of the Matrimonial Causes Act 1973, would Murdoch's pre-acquired assets be treated?

Relieving the state

If Murdoch predeceases Deng, she will have to parent their two young children, Grace and Chloe. While the assets in this case will justify a clean break, in most households such an age disparity would have meant very expensive life insurance having to be funded to provide security for the ongoing maintenance of the younger surviving spouse and children, as well as school fees. Unless Deng would be expected to return to maximise her earning capacity.

Murdoch has now been married and divorced three times. He is in the privileged position that such life decisions have not completely decimated his own financial security and that his ex-wives and children have been properly provided for.

In England, the financial burden may very well have fallen on the state.

Sarah Anticoni is a partner at Charles Russell

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