How the ruling changes settlements


Who will be affected by yesterday's ruling?

Those involved in marriages where there is a large amount of wealth at stake. This wealth must be excess wealth, including property, which is left over from any money used to pay for the maintenance of children and the non-earning spouse, usually the wife. Divorcing couples who have incomes totalling less than £100,000 will remain unaffected.

So why is the ruling important?

The House of Lords has used the judgment to lay down principles for the fair division of assets. It has introduced a new concept of compensation which can be used by the courts to financially remedy the situation where a wife (or husband) has given up a successful career in the interests of the marriage. This could mean ex-wives who feel they have missed out on high-flying careers, which the law has failed to address by ordering periodic payments under a maintenance scheme, will go back to court to vary the terms of the settlement.

How are rich husbands expected to react?

Shrewd husbands who wish to hold on to their wealth will try to get wives to sign pre-nuptial agreements which stipulate exactly what they are entitled to if the marriage breaks down. But since pre-nuptials are only persuasive, and not binding, on a court, some will try to hide the truth about their assets.

What about Sir Paul McCartney and Heather Mills McCartney and other short marriages?

The ruling will confirm any expectation Lady McCartney may have that she will be entitled to millions of pounds upon her divorce. Like Lady McCartney, Mellisa Miller was married only for a short time and had very little significant wealth of her own. But the judges said yesterday that she was still entitled to a fair share of her husband's assets. Because the McCartneys have a child the courts will also interpret her "financial needs" very generously. However, recent estimations that she can expect £200m are wildly exaggerated. A more accurate figure is between £25m and £50m.

What about wealth acquired before the marriage?

This is where the ruling becomes confusing. Lord Nicholls said that anything acquired before the marriage should remain outside the "pot" of marriage wealth but everything else is up for grabs. Lady Hale offers a more conservative approach, suggesting investments and business enterprises not part of any joint enterprise, should be excluded from the division even if acquired during the marriage.

What do the lawyers think?

Disappointment all round. Family lawyers say the principle of certainty has lost out to the need for flexibility in deciding settlements.

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