Prenuptial agreements, trusts and the “Avon case”

 

The case of Ipekçi v McConnell [2019] EWFC 19 has hit the news recently but most people will have heard of it as “the Avon case”. That is not because the husband and wife come from Avon but because the wife is the great granddaughter of the founder of the Avon company.

The case is of interest to top London divorce solicitors because it looks at the treatment of family trusts and prenuptial agreements in divorce proceedings.

How can OTS Solicitors help?


The OTS Solicitors family law team advises on prenuptial agreements and financial settlements. The team provides representation in divorce and financial court proceedings.

To discuss how the family law team at OTS Solicitors can help you please call us on 0203 959 9123 to speak to one of our experienced family law solicitors.

The Avon case


A financial application was made by a husband, Anil Ipekçi, a hotel concierge, against his wife, Morgan McConnell, the great granddaughter of the founder of Avon Products.

What makes the case interesting to the best London divorce solicitors is that the judge, Mr Justice Mostyn, had to decide if:
• Money held in a family trust was available to the wife and thus could be given to the husband as part of his divorce financial claim; and
• The status of the prenuptial agreement signed by the husband and wife.
The Judge decided that the trust money was available to the wife and that the prenuptial agreement was invalid. The judge awarded the husband just over £1.3 million. Some question how this decision can be right but every top London divorce solicitor will tell you that the outcome of family cases are dependent on the individual “facts” of the case.

The Avon facts


In the case of Anil Ipekçi and Morgan McConnell, the couple began to live together in 2005 and married shortly afterwards. The couple had two children together. They separated in 2017.

The husband and wife had been together for twelve years, and by today’s standards that is classed by the family court as a “long marriage”. The length of the marriage is important, as it is a factor the court considers when deciding what financial court orders to make under section 25 of the Matrimonial Causes Act 1973.

Crucially, just before the marriage, the husband and wife signed a prenuptial agreement to protect the wife's family wealth. Twelve years after the marriage, the wife was a beneficiary of substantial family trusts (that provided her with an income) and the husband had few assets.

The Avon trusts


The top London divorce solicitors say that the wife was a beneficiary of several family trusts and these trusts provided her with an income. However, the wife asserted that she was not entitled to capital from the trusts. The husband said money could be taken from the trusts to fund his financial settlement.

The Judge had to decide if the wife could access the capital from the trusts before determining the husband's financial claims. The Judge concluded that the wife was solely entitled to the assets in one of the family trusts with a reported value of $4.45 million. The judge said the trustees would make the funds available to the wife to satisfy a financial court order made in favour of the husband.

The Avon pre-nuptial agreement


The best London divorce solicitors advise that after the judge decided that the money in one of the trusts was available for the wife to give to the husband to satisfy a financial court order, the next stage of the court case was to assess the relevance of the prenuptial agreement.

The divorce of Anil Ipekçi and his wife, Morgan McConnell, was an international divorce, involving a prenuptial agreement governed by New York state law. The prenuptial agreement said any divorce and financial proceedings should be decided under New York law, even if heard in another country.

If the London divorce court followed the prenuptial agreement, it would have limited the husband's claim to the increase in the value of three of the wife's properties. It was impossible to identify an increase in property value. Accordingly, under the terms of the New York pre-nuptial agreement, the husband would have received nothing after twelve years of marriage.

Prenuptial agreements and the law


Top London divorce solicitors will tell you that the leading English court decision on the status of prenuptial agreements in financial court proceedings remains the case of Radmacher v Granatino.

In the Avon case, the judge said the case of Radmacher held that despite the importance of holding husband's and wife's to their prenuptial agreements, the agreement should not leave one spouse in financial need.

As the husband had no assets and would not get anything under the terms of the New York prenuptial agreement the judge decided that it would be unfair to say the prenuptial agreement was valid and give the husband nothing. Therefore, the judge attributed no weight to the prenuptial agreement.

When making his decision about the status of the prenuptial agreement the judge said that his decision was based on:

• The fact that the prenuptial agreement did not have an authenticated certificate stating that it conformed to local New York law. This was important as the judge was told by an expert that without this certificate, under New York law, the prenuptial agreement would carry minimal weight;
• A finding that the husband did not fully understand the implications of signing the pre-nuptial agreement. Although the husband took legal advice, the advice came from an English solicitor on a New York prenuptial agreement and the solicitor had acted for the wife in her first divorce;
• If the pre-nuptial agreement was upheld it would leave the husband in financial need.

Having decided that the terms of the prenuptial agreement should be ignored the judge then had to decide on what financial court order should be made after taking into account the factors in section 25 of the Matrimonial Causes Act 1973.

The Avon financial court order


As the wife’s trust assets were acquired before the marriage the judge decided that the financial court order should be calculated based on the husband's needs alone rather than as a percentage of the family wealth on an entitlement basis.

The judge gave the husband just over £1.3 million because:

• The husband had no savings or pension;
• The couple had two children and the importance of the children having a comfortable home with both parents;
• The relatively high standard of living during the marriage.

However, given the source of the pre-marriage wealth the judge decided that half of the sum given to the husband to buy a house (£700,000) should be returned to the wife on the husband's death through a charge-back in favour of the wife. The balance of the £1.3 million was to be used to clear the husband's debts and to provide a capitalised spousal maintenance fund that on the judge’s calculations should provide the husband with an income of £50,000 a year, taking into account his earnings as a hotel concierge.

What can we learn from the Avon Case?


The top London divorce solicitors emphasise that prenuptial agreements can be upheld by the court or significantly reduce the size of a financial award provided that:

• Both husband and wife get proper independent legal advice;
• International aspects of prenuptial agreements are considered;
• Agreements are reviewed to make sure they meet need.

How can OTS Solicitors help?


If you need help with reaching a financial settlement, representation in divorce or financial court proceedings or advice on the preparation of a prenuptial agreement then OTS Solicitors family law team can help you. For more information on how the family law team can help you please call us on 0203 959 9123.

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