As many as 550 couples in the UK with a net financial wealth of £1m ($1.29m, €1.15m) or more will divorce this year, according to data gathered by Succession Wealth.
The wealth management firm analysed Office of National Statistics (ONS) data on individual net financial wealth (excluding endowments), and data on divorces in England and Wales.
It estimates that collectively they will have around £1.91bn of net worth or £3.48m per couple.
In terms of how this wealth is broken down between different assets, its analysis suggests that 43% is held in private pensions, followed by 31% in property wealth.
Simon Bassett, partner in the Family Law team at Royds Withy King, told International Adviser: “In terms of how wealth is broken down between different asset classes, the research clearly highlights the important role that pensions can play in divorce.
“It is suggested that 43% of a couple’s assets are held in private pensions and this can sometimes be overlooked by those who are going through a divorce who wrongly take the view that their pensions will be of limited value and not worth considering.
“It is critical that, at the earliest opportunity, couples seek professional advice, both legal and financial, in respect to their pensions and how they can affect a financial settlement.”
| Assets | Percentage breakdown of net financial assets belonging to divorcing couples with net assets of £1 million or more | Estimated collective value of net assets belonging to divorcing couples with net assets of £1 million or more | Estimated average value of net assets belonging to typical divorcing couple with net assets of £1 million or more |
| Financial wealth | 20% | £390,694,631 | £712,291 |
| Property wealth | 31% | £589,709,104 | £1,075,122 |
| Physical wealth | 5% | £102,309,363 | £186,524 |
| Private pension wealth | 43% | £825,966,500 | £1,505,853 |
Source: Succession Wealth
Complex divorce cases
“When there are high levels of wealth tied up in pensions and/or property it potentially makes negotiations regarding financial settlements more complex,” Clare Wiseman, a specialist family and divorce lawyer at Irwin Mitchell Private Wealth, told IA.
“Add to that the involvement of owning or running businesses or company shareholdings and it can also be difficult to quantify the exact level of wealth involved, particularly if either party has taken any measures to attempt to move, secrete or minimise their wealth prior to or during divorce proceedings.
“In recent years the family courts have demonstrated that they take a very dim view of this behaviour and have even taken steps to commit offenders to prison.
“Agreeing a settlement fair to both parties as soon as possible keeps costs down, as well as making it easier on any children involved.
“That’s why there has been an increasing trend for wealthy people to separate more amicably, using processes other than court proceedings to resolve their finances, particularly when they are in the public eye.”
No-fault
Recently, the UK government confirmed that there will be legislation to reform no-fault divorces, which could replace the courtroom battles couples often face when separating.
The no-fault divorces will remove the need for separating couples to wait for years or allocate blame for the collapse of their relationship.
Could this have an impact on the number of people divorcing and the wealth involved?
Sarah Jane Boon, partner at Charles Russell Speechlys, told IA: “The expectation that the divorce rate will increase as a result of no-fault divorce is not borne out by the data from other countries, where there has been a similar change in the law.
“The introduction of no-fault divorce has been unfairly characterised as a means of making divorce easier, or even too easy.
“However, the reality is that the current system does not make it difficult to get divorced, and fewer than 1% of divorces are even defended.
“Those who campaigned for, and now support, the introduction of no-fault divorce did so because of the benefit to the parties, and their wider families, of having a less acrimonious process.”
