What Kim Kardashian and Kanye West need for an amicable divorce - Denise Laverty

With a reported $6.7 billion combined wealth, the divorce of Kim Kardashian and Kanye West will undoubtedly remain in the headlines for some time yet.

Kim Kardashian and Kanye West attend the 2020 Vanity Fair Oscar Party
Kim Kardashian and Kanye West attend the 2020 Vanity Fair Oscar Party

According to Yahoo Entertainment, Kanye (or Ye) is the richest black man in America. While this title is disputed by Forbes, the world’s media will be watching closely to see how the divorce settlement pans out, and particularly how they separate their various business affairs.

There are often significant complexities in high-value matters involving family-owned companies and partnerships. However, pre-emptive arrangements can help to avert the need for adversarial legal encounters if a relationship breaks down.

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Key to this is ensuring that both client and adviser understand what constitutes a matrimonial asset, especially where there is a company or partnership involved.

Denise Laverty is a Partner, Gilson Gray

Essentially, anything acquired prior to marriage, including a business, is not a matrimonial asset. But if, say, a partnership was set up prior to marriage, retains the same name and there has been no restructuring, it’s likely the partnership accounts will still be scrutinised by the lawyer for the non-owning spouse to ascertain whether there is any value in the partnership that could be deemed to be matrimonial property.

If a business is set up before marriage but later incorporated during the marriage, it becomes a matrimonial asset and available for sharing after divorce. The business-owning spouse may have arguments for why the value of the business should not be shared equally but a departure from equal sharing of the matrimonial assets is totally at the discretion of the court and cannot be guaranteed.

Issues also arise where a company is restructured during the marriage. An example I have seen involved a family-owned company that grew into a large international company. As a result of corporate advice, the husband had sold back some of his shares and was issued shares in a newly created subsidiary of the company.

The original shares were all acquired prior to marriage and therefore not matrimonial property. However, the reissued shares became matrimonial property, and accordingly, some £22 million fell into the matrimonial pot.

The company had been restructured as a result of good corporate and tax advice but the lack of awareness of the potential consequences if the husband’s marriage failed resulted in a lot of acrimony and extensive legal costs.

While separation is a difficult thing to consider when everything is going well, it is vitally important that it becomes part of the due diligence in any business restructuring.

There may also be situations in which a spouse is an employee of the company. On separation, any attempt to remove them from the payroll could result in an unfair dismissal claim. Or the employee spouse may argue that they have made a significant contribution to the success of the business and thus should share in its value, even if it was set up before the marriage.

Such examples could have been avoided by a pre-or post-nuptial agreement. Discussing and establishing what is – or what might potentially become – a matrimonial asset is a valuable part of the process when making a pre-or post-nuptial agreement. It can cover a wide range of scenarios and not just those relating to business interests.

With reports that Kim and Ye did have a pre-nuptial agreement, will this be the key to a potential peaceful divorce?

Denise Laverty is a Partner, Gilson Gray

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