Divorce and Money

In the case of Shield v Shield [2014] EWCA Civ 1136, the Court of Appeal was called to decide upon the beneficial ownership of shares in a family company.

After 43 years of marriage the wife commenced divorce proceedings; the husband claimed that the large shareholding in the family business he owned were held on trust for his son at the husband's death (the son was running the family business.

The court had to decide whether there was an agreement between father and son that the shares registered to the father were indeed held on trust (so removing them from any claim by the wife).

Judge Mr. Nicholas Francis QC found that whilst there was an expectation that the son would, by their wills, receive the husband's and the wife's shares in the family business, there was no agreement between the husband and the son that the husband's shares were held on trust.

The hearing took 8 days and cost the parties over £1,000,000 in costs and the judge also noted that no attempt had been made at FDR (Financial Dispute Resolution) before going to law.

FitzHugh Gates Solicitors Comment

This case is a stark reminder that if assets are divided other than equally there should be a good reason such as if assets were inherited, established before the marriage or developed by the skill and aptitude of only one of the parties. Effective tax planning and proper asset protection concerns must be combined when running a family business in cases which may end up in divorce.

Julian Cioffi - Managing Partner