201710.26

Divorce and Inheritance – Who should support the former spouse?

Achieving a Divorce settlement is always tricky but it can get even trickier when you are about to receive an inheritance or have already received one.

In 2015, a High Court ruling awarded Ms Alireza from her banker ex-husband Hossam Radwan a lump sum of £2 million and the right to stay in the former matrimonial home in Central London. The court refused to grant a larger settlement on the basis that she would inherit an estimated 20% of her Saudi multimillionaire father’s estate, worth around £500 million

During the marriage, the couple lived in an apartment next to the Royal Albert Hall in London. The original judge, Mrs Justice Roberts, decided that on top of the £2 million income fund, Ms Alireza should be able to continue to live in the flat until her father died. As Mr Radwan wasn’t ordered to provide cash so that Ms Alireza could buy a home for herself and the children the wife thought the decision was unfair and asked the Court of Appeal for an extra £5.5 million, her plan being that she would buy a house and later downsize, using the surplus cash to provide an extra income fund.

On the face of things, after a 14 year marriage, with three children, and with Mr Radwan being worth a reported £14 million, Ms Alireza’s request doesn’t seem that unreasonable, as in the absence of a pre-nup agreement or pre marriage contributions, the divorce Court would normally start from the premise that assets should be divided equally between a husband and wife, unless there are good reasons to depart from equality.

In July 2017, Ms Alireza appealed and resumed her legal battle for more cash, saying she couldn’t rely on support from her father. She is seeking a further £5.5 million on the basis that the £2 million will be insufficient as her father who is in his 70’s may live for decades and therefore his wealth should not be considered when determining the division of the matrimonial pot. She also claims that the flat is too small and furthermore, that she will run out of money from the £2 million income fund if she doesn’t inherit within the next 14 years.

This case has raised some interesting queries as to whether a former spouse may rely on their birth family for financial support post-divorce.   Under English law, courts consider the standard of living enjoyed by the family during the marriage when granting a settlement. The starting presumption is that assets should be divided in a way that facilitates equality between the parties unless there are valid reasons to depart from that.

When a Court hears arguments about the relevance of future inheritance, the sums are usually not so significant and, more importantly, the point is normally made that a parent may choose to disinherit their child, with the familiar line being that a parent may elect to give their wealth to the local cats’ home or whoever they want.

Under Saudi law, however, Ms Alireza will inherit 20% of her father’s estate of £500 million, so about £100 million. The first judge referred to this as an “enormous fortune” when making the decision not to give the ex-wife anything other than a right to stay at the family home until her father died.

The Court looks at the standard of living enjoyed by a family when considering the wife’s assertion that the income fund may well be used up prior to her father’s death leaving Ms Alireza with no means to provide for her and no money to pay the bills on the flat.

Ms Alireza contends that the decision not to give her a share of the family wealth is placing her father under an obligation to support her if the money runs out before his death or to enable her to move house.

What is agreed is that there is no principle of law that a husband or wife should become the financial responsibility of their birth family on divorce.  Ms Alireza therefore says the judge was wrong to take into account the wealth of her father when making the order.

Contesting the appeal the husband says that he may be rich but he is much poorer than his ex-wife’s rich family and that the wife’s father has financially supported her in the past by paying over a million pounds in lawyer’s fees and will continue to do so. He contends that the inheritance is both an existing and a future resource and that Ms Alireza should be able to rely on her father’s financial support during his life and upon his death.

The appeal judges have reserved their decision on the case until a later date.

As a Family Solicitor, it is not unusual to come across cases where a husband or wife knows that they will automatically inherit property abroad as a result of succession laws in the relevant country.   The Court of Appeal decision may give guidance that will help in a number of similar scenarios, such as where a family have put money into trust for the benefit of a son or daughter and distributions of income or capital or both have been made to the child.

The relevance of trust assets is a surprisingly common issue in divorce proceedings and we are often asked to represent a husband, wife or trustees who are joined to the financial proceedings or an intervening family member. Many families try to ring fence assets to protect family wealth from future generations by using an agreement but it is equally important that ongoing advice is taken about the trustees making capital or income contributions or, in Ms Alireza’s case her father paying legal fees and making a £20 million house available to his daughter during her estrangement from her husband.

Whether it is a Saudi inheritance or a potential trust distribution, a lot of the issues about how the money should be split could be avoided by a couple doing a prenuptial  or postnuptial agreement, setting out who should get what in the event of a marriage breakdown.

With this case hinging upon the inheritance of property situated in Saudi Arabia, we await the judgement of this case as it is expected to be one of particular significance for divorcing parties. While each individual case is different, a decision in favour of Mr Radwan will no doubt play a role in the extent to which one is expected to financially provide for their former partner after divorce.

Vijaya (Asha) Sumputh (vijaya.sumputh@curwens.co.uk)

Family Law solicitor at Curwens LLP.

Vijaya offers both fixed fees and flexible pricing for all family law services.

For an initial consultation, call Vijaya on 0208 884 7221 and she will be happy to help you with all your family law queries.