Protecting Family Funds: The Case for Nuptial Agreements

A case study highlights the resolution of a recent and controversial financial remedy case by legal director Nadia Davis, who specialises in divorce and financial remedy, based in Birmingham. Davis acted on behalf of the Wife, who married into a wealthy generational farming family, in a case that centred around a long-lasting marriage devoid of children. The Husband, who owned the farm, shared the business’s reins with his parents and the Wife. The Husband and Wife resided in a run-down manor house situated on the farm estate, which served as their family home.

Unbeknownst to the client, the Husband had received a substantial amount of money, roughly £750k, from his parents to carry out costly repairs and upgrades to the property. When financial information was exchanged during the divorce proceedings, there was limited and vague evidence regarding this matter. This was a significant and upsetting revelation for the client, who believed that a mortgage had been used to fund the work on the property.

The matter of the £750k advance became a contentious point between the parties. The Husband maintained that the funds were a loan from his parents and should be considered in the total asset pool for distribution. The Wife contended that even if the money was advanced (although the evidence was uncertain), it was not expected to be repaid and served as a reasonable measure for inheritance tax planning by the parents, who planned to leave the Farm to their son regardless.

As a practical outcome, the in-laws were added as third parties to the ongoing financial relief proceedings, leading to a three-day contested Court hearing. All parties were represented by legal teams, including costly specialist Barristers. The hearing involved strenuous cross-examinations into the circumstances surrounding the advance of the funds, causing distress for everyone involved. Eventually, Nadia’s client emerged victorious as the Court determined the funds provided by the in-laws as a soft loan, demonstratively unlikely to be paid back. This decision added £750k of further assets to the marital pot for division and the Husband and his parents were ordered to pay £50k towards the client’s legal costs for the hearing.