Preserving family wealth with a prenuptial agreement
This set up is still prevalent within modern Indian families living in the UK. Whilst at times culture plays a part, the difficulties of getting onto the housing ladder sees many newly married couples living with the parents, working within the family business and intertwining their individual and family wealth without much regard to legal ownership. In my experience as a divorce lawyer and with my Indian background, many joint families distribute and share assets in order to ensure that everyone’s needs are met as and when they arise whilst having a keen eye on the most tax efficient way in which to operate. However, this concept of ‘sharing as needed’ can place the family wealth under significant risk of attack upon divorce and create unnecessary (and often costly) complexity and financial uncertainty at an already difficult time.
When determining the division of assets following a divorce, the courts in England and Wales do look beyond the assets held legally by one party. The court can examine the resources of the wider family members if assets owned within the family unit have been a resource to one or both of the spouses or if the legal ownership does not reflect the understanding or agreement between family members.
In the case of Gadhavi v Gadhavi (2015), there was ample evidence which allowed the Judge to conclude that as the eldest son, the husband was the head of the family and as such a property in India, which was originally in his father’s name and then inherited by his mother, was an asset available to him and the court therefore took it into consideration when dividing the assets between the parties.
In an era where divorce amongst the Indian community is on the increase, it is important to plan ahead and protect beyond wealth preservation and consider the impact that a divorce could have on the family wealth and the joint living arrangements.
Some of the legal tools I often suggest and discuss with my clients include:
If separation of a family member is imminent, it is vital to seek urgent legal advice. Even in the absence of a prenuptial agreement and trusts, it is still possible to protect the joint family assets. Careful consideration should be given, however, on whether a divorce in India is possible, where the settlement is unlikely to be as generous to the weaker financial party as in England and Wales and where the court’s powers for disclosure are limited.
If you have any questions about ways of protecting “joint family” wealth, please contact Sital Fontenelle or a member of our family and divorce team. Alternatively, click here to get started online and find out where you stand.
We have a wealth of experience in advising Indian families on relationship breakdown and can draw on the experience from experts in our private client and corporate & commercial teams as well as finance professionals and overseas lawyers to ensure you receive comprehensive and strategic advice.
Sital Fontenelle is a partner in Kingsley Napley’s family team, where she specialises in complex financial matters within a divorce, including international jurisdictional cases, negotiating and drafting prenuptial and postnuptial agreements as well as every aspect of private children law cases.
Sital’s areas of practice include all aspects of private family work, with particular expertise in financial remedy proceedings often involving an international dimension, with a particular expertise in advising families of an Indian background. Sital has extensive experience in complex cases involving off-shore trusts, family businesses, tracing assets and inherited wealth.
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