Home Finance Handbags at the ready – there’s a new battleground in wealthy divorces

Handbags at the ready – there’s a new battleground in wealthy divorces

by jcp
gawdo

By: Amanda Phillips-Wylds, Partner and Head of Reading, Stowe Family Law

As the price of luxury goods soars due to the global pandemic, high-end accessories are becoming some of the most fought-over assets when wealthy couples split. Handbags are selling for hundreds of thousands of pounds, making them one of the most substantial assets a couple has, taking place alongside pensions and large assets.

From Hermes handbags to Rolex watches, the battle over these hotly contested items has even been given its own name, the very media-friendly ‘handbag divorces.’

Many of us have weaknesses when it comes to luxury fashion items. As family lawyers, we are noticing that it is increasingly common for high-end items to become the cause of much contestation during divorce proceedings.

Sadly, it has never been unusual for divorcing couples to disagree over high-value assets such as the family home, pension plans and savings. In fact, it is estimated that last year, 4/10 divorce cases led to financial rows and disagreements, many of which ended up in court. However, with the value of designer goods increasing substantially since the pandemic began, they are now also becoming a key feature of a settlement.

Part of the process to obtain a financial settlement in a divorce is full disclosure of all of the assets and debts of a marriage. Within this, you must declare all personal belongings which have a value of £500 or more. Many designer handbags, watches and shoes fall comfortably within that bracket and, in some cases, significantly exceed it.

In some situations, there may be a valuable collection of items or a single item worth tens or hundreds of thousands of pounds, and these must also be considered as part of the asset base. If disputed, professional valuations may be needed to establish their true worth, just as you would a house or a pension.

I know from previous cases people often become fixated on personal belongings (such as handbags) when they have some form of sentimental value attached to them, for example, if it was a gift or marked a milestone. Sadly, this situation frequently results in divorces becoming more acrimonious, lengthy and expensive.

The law regarding gifts given between spouses during the marriage is clear; they count as matrimonial property and will be added to the pot. The position is different if you receive a gift from a third party during the marriage.  These do not count as matrimonial property and will not be added to the pot, so your spouse will not have any claim on them.

I once had a case involving a Mulberry handbag that the husband had gifted to the wife. The bag retailed at around £1500. The couple eventually agreed to auction it for charity. Whether it ever made it to the auction house, I don’t know. However, it does demonstrate the significance of such items in the breakdown of a relationship. Harmony can be reached, but more often than not, the case becomes increasingly costly and protracted.

People lose sight of the bigger picture very quickly: the house/s, pension/s, and capital, the usual big-ticket items, seem to cease to matter. Those cases can become very challenging to deal with and, without doubt, take up a significant amount of court time. People are far less likely to reach an agreement in the early stages of the divorce, and it can make the proceedings more litigious, spurring interim applications.

Prenuptial agreements (prenups)

Once the preserve of the super-wealthy, it is widely reported that Beyonce signed one that gives her $5 million for each child they have together; prenups are on the rise.

A prenup can be helpful in cases where the couple has or will acquire a significant number of high-value items during the marriage. They can specify what should happen to these items if they are gifted between spouses.

However, prenuptial agreements are not legally binding in England and Wales, although they will demonstrate to the court the parties’ intention if the marriage breaks down and if considered ‘fair’. Using the following criteria, they are likely to be upheld by the court.

  • Both parties received independent legal advice about the agreement at the outset.
  • Full and frank financial disclosure of both parties’ assets was made before the agreement.
  • Neither party was under pressure or duress to sign the agreement against their will.
  • There has been no significant change that would make the agreement inappropriate (for example, the birth of children)
  • The agreement should be prepared and signed in good time before the wedding/civil partnership.
  • The agreement is fair and realistic. If the division of assets is weighted too heavily in favour of one party, it may be judged to be unfair by the courts.

I always advise my clients that prenups should be reviewed and amended during the marriage, particularly when any children are born, or if there is a change in assets, including purchasing expensive designer goods.

Whilst a prenup may not be the first thing on a couple’s mind as they plan their wedding, a well-prepared agreement by a family lawyer can secure both parties’ position for the future and avoids uncertainty. Having one in place can also help to avoid protracted and costly litigation should they choose to divorce.

The impact of the Covid-19 pandemic has been far-reaching, yet not many of us expected it to impact the price of luxury goods. I anticipate the new coining of the term ‘handbag divorces’ may rise in popularity as this trend continues. However, the risk of giving up assets that you feel are rightfully yours can be mitigated with the right legal advice in place.

Amanda Phillips-Wylds, Partner and Head of Reading, Stowe Family Law

 

www.gawdo.com

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