A recent case heard in the Court of Appeal provides a salutary reminder of the need to plan for the future – even when married.
The case involved Mr and Mrs Sharp who married in 2009 before ending their relationship in 2013. Throughout their marriage they had a similar basic salary; the key difference being that Mrs Sharp worked as a trader and was paid a considerable discretionary annual bonus. Over 5 years these bonuses amounted to over £10 million. These bonuses were used to buy homes, cars and various holidays for the family. Otherwise, the couple kept their financial affairs separate and contributed equally to daily living costs.
In its eagerly awaited judgment The Court of Appeal reduced the award to be paid to Mr Sharp from Mrs Sharp. In short marriages where both parties have a career, no children and arrange their finances separately the judgment suggests that a Court will be willing to depart from the normal equal sharing of assets built up during the marriage.
In the case of Mr Sharp, the Court of Appeal awarded him £1.3 million which amounted to half of the equity in two homes owned by the couple. The Court then awarded him a capital fund to enable him to live in one of the houses owned by the couple and a share in some of the assets held by Mrs Sharp (i.e. he was entitled to a share in his wife’s assets, just not an equal one). Mrs Sharp was allowed to retain the vast majority of her savings.
The Court offered no hard and fast guidance as to what amounts to a “short marriage” and the risk is that this judgment has given separating couples another ground on which to do battle when negotiating financial matters. The result may well be that it will become more difficult to settle these cases amicably.
One answer to avoiding this uncertainty is to enter into a properly negotiated, well-maintained nuptial agreement. A great deal of time and money spent on fighting a case in Court can be avoided if there is a document setting out how couples intend their finances to be organised in the event of separation. Whilst the judgment clearly bolsters financial independence in narrowly defined circumstances, leaving the result in the Court’s hands is akin to rolling the dice.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.