If you are looking for divorce settlement advice, do you want to know why hiding assets doesn't pay? The law in Scotland relating to separation and divorce settlements requires a split of all property that is 'matrimonial' in nature. Each spouse must openly and honestly disclose all assets held by them as at the date of their separation. Unfortunately, it seems that some people can't resist the temptation to lie or cheat in order to keep at least a portion of those assets to themselves.
Every major newspaper reported on the English case of Prest v Petrodel Resources Ltd, a landmark and unanimous decision by the Supreme Court which will undoubtedly set a precedent for anyone seeking to protect their assets from their spouse.
Mr Prest was an oil tycoon whose wife, on divorce, sought a share in seven properties owned by Petrodel Resources Limited, Mr Prest?s company. The court considered whether they had the power to order the transfer of those properties to the wife given they legally belonged to his company, not him.
The Supreme Court unanimously decided that the properties were held on trust for the husband, and were accordingly property to which he was entitled. The case effectively determined that the assets of a company owned by a divorcing couple may be added to their personal wealth when working out how much the other spouse should receive as a divorce settlement.
Whilst this is an English court decision, and therefore not binding on a Scottish court, should divorcing Scottish company owners be concerned? Not as a result of this decision, but there is a lesson to be learned.
- The English divorce legislation is wider than that in Scotland.
- In Scotland, the focus is on the extent of the parties' matrimonial property at the date of their separation. So, if a company's interest falls within the scope of matrimonial property then its value will be taken into account. If it does not, then it will not be considered.
- In addition, the wording of the Scottish legislation to be applied to separating and divorcing couples does not permit the transfer of a third parties (e.g. a company's) assets. It would, however, permit an order for a capital sum in favour of Mrs Prest using Mr Prest's company as a resource available to him.
If you have recently separated and are looking for divorce settlement advice, get in touch with one of our experienced lawyers (based in Glasgow and Edinburgh).