Divorce settlements: How do you split the bill, when you split up?
On 7 August Roman Abramovich and Dasha Zhukova announced their separation. Since the announcement speculation has been rife as to the potential size…
On 7 August 2017 Roman Abramovich and Dasha Zhukova formally announced their separation after a nine year marriage. Since the announcement speculation has been rife as to the potential size of the divorce settlement, focusing mostly on the extent of Abramovich’s wealth, estimated at £7 billion.
High divorce settlements always attract attention. As recently as May 2017 a settlement of £453 million, awarded to the wife of an oil and gas trader, was widely considered to be the largest settlement the courts of England and Wales have ever granted. As not all divorce settlements are publicly reported, there is no way of knowing this for certain. This settlement involved the unnamed wife receiving 41.5% of the overall assets.
Is it really the case, however, that Zhukova stands to receive close to half of Abramovich’s fortune?
Pre marital agreements
Zhukova is Abramovich’s third wife. It is inconceivable that he did not receive strong advice to obtain a pre marital agreement. If an agreement exists then the next question, if one party wishes to challenge it, will be is it binding and does it dictate which jurisdiction will hear the divorce and which law will governs the financial aspects of the settlement.
In the absence of a binding pre marital agreement, where the parties get divorced could be crucial. Both are Russian nationals, reported to have homes in Russia, England, U.S.A, France and the Caribbean. Different jurisdictions have different criteria as to whether they can deal with a divorce and can take different approaches to calculating what an appropriate settlement should be.
Of all jurisdictions, England and Wales is frequently cited as the most generous to the party who did not generate the wealth. This is sometimes referred to as the distinction between the homemaker and the breadwinner, although in cases like this, where Zhukova is also a business woman and the parties have worked on projects together, those clear labels are not as helpful. Zhukova is also the daughter of an oil magnate and may have financial resources in her own right to be factored in and may reduce the settlement.
The starting point is to divide wealth equally unless there is a reason this would result in an unfair outcome. In terms of fairness, where the court comfortably finds that both parties’ financial needs and those of the children will be met for less than half the overall assets then the source of the wealth will be looked at, and decisions made as to whether any of it should rightly be excluded from consideration. One example, would be whether wealth accumulated prior to the marriage should be ring-fenced and treated separately. This would clearly be an attractive argument for Abramovich but if pre-acquired wealth has been invested in joint property, new projects which Zhukova or generally been used for the benefit of the family, the argument is not guaranteed to protect his fortune.
In this jurisdiction, a pre marital agreement entered into freely with independent legal advice would likely be upheld, unless it was insufficient to meet Zhukova’s financial needs. It is recommended that anyone seeking peace of mind in respect of protecting wealth seeks specialist independent legal advice concerning the merits of pre marital and post marital agreements.
Lottie Tyler is Associate in the Private Client team at national law firm Weightmans LLP