Applying the brakes

Following my last post, we saw a fast car and an open road for unscrupulous spouses who may wish to put assets beyond the reach of the family courts on divorce.

There is action that can be taken by the money-makers to make the most of any company structure but equally some things that the spouse chasing settlement might focus on for best effect – I use the example of wife in this post as chasing settlement, although it could just as easily be the husband.

So…how do we apply the brakes?

1. Look at the family home first…

Even where the Family Home is owned in the name of the company it is often possible to argue that, as the company has allowed the family to reside in the property, it has created a “settlement”.

2. Check the husband’s directors’ loan account

It is possible for the family court to order transfer of the loan account to the wife, who will then be able to enforce payment of the account against the company to extract the monies.

3. Look at Transfer of Shares…

Entirely possible for the family courts to make such an order but be careful…some company articles of association mean that the board has the discretion not to recognise any transfer of shares, which will render any such transfer pointless

4. Check the source of funds….

Check where money for the purchase of company assets came from. If it came from the husband then it may be possible to argue that those assets purchased in the company’s name but with the husband’s money are held on trust for him, therefore opening up the possibility of them being transferred to the wife

5. Prevention is better than a cure…

Ensure that any pre-nuptial agreement considers these issues. 

6. If all else fails...

Be very careful about the drafting of any family court order. Consider drafting a lump sum order in instalments, which will allow the possibility of applying to the court to commit the husband to prison for breach of each instalment, as opposed to one payment – which will allow only one committal application

There may be one large brake applied as I understand that permission has been given to Mrs Prest to appeal to the Supreme Court against the order of the Court of Appeal. We shall await with interest the outcome of that.