This is the sixth in Penningtons Manches’ series of blogs explaining to overseas athletes and their advisors the key legal points they should consider when coming to compete in the UK. Here we explain the family law considerations relevant to sports professionals transferring to a team within the jurisdiction of England and Wales.
Whilst the intricacies of contractual clauses and the tax efficient structuring of their client's assets are undoubtedly at the forefront of many advisers' minds, their client's relationship status should similarly be overlooked at their peril. Sportspeople, and those advising them, must give careful consideration to the potential financial ramifications of such a transfer, given that England is widely regarded as “the divorce capital of the world”.
This blog therefore focuses on:
How is an entitlement to a divorce (and financial claims arising out of the divorce) determined in England?
An individual's entitlement to divorce depends on their "habitual residence" (in simple terms, where they usually live) and "domicile" (where they consider to be their permanent home), both of which are tied to an individual’s connection to England. The parties' nationalities, birthplaces, place of marriage and where they have lived for the majority of their lives, may prove irrelevant if one or both parties is habitually resident or domiciled here.
How will the English court divide capital assets upon a divorce?
English law is regarded as the world's most generous to the financially weaker party when determining settlements on divorce. English law regards "breadwinning" and "homemaking" as being of equal importance. Though arguments can be advanced to the contrary, the starting point is that the capital built up during a long marriage will be split 50/50 regardless of who 'earned' the money and the English Court has jurisdiction over assets held worldwide . In the example of Thierry Henry, he reportedly paid his model wife £8 million upon their divorce in 2008 in spite of the fact that they were only married for four years and that he had moved abroad to play for Barcelona.
How will the English court treat income upon a divorce?
A divorcing sportsperson is also likely to be liable to pay ongoing maintenance to their spouse and towards the upkeep of any children. The extent and duration of maintenance will be calculated by reference to the spouse's 'needs' and their earning capacity, but the court will have regard to what will often be a high standard of living enjoyed during the marriage. In some circumstances maintenance will be payable to a wife for the remainder of her life.
Will the circumstances of the relationship breakdown affect the divorce or impact upon the financial division?
The circumstances of the breakdown of a relationship are irrelevant, so even angelic behaviour on behalf of the sportsperson offers no guarantee of protection. If a sportsperson's spouse runs off with their gardener, their entitlement would be unaffected.
The above factors result in a phenomenon known as "forum shopping", in which couples and their legal teams battle about where the divorce should take place. Athletes and their advisers should be aware that a move to England may afford their spouse the eligibility to divorce them here and by doing so expose them to a substantial claim in the event that their marriage breaks down.
What steps should be taken if advising a married sportsperson, moving to England?
An English post-nuptial agreement, if properly drafted and appropriately executed, can be a persuasive tool in pursuit of asset protection on divorce. This option should be pursued even if a pre or post-nuptial agreement has already been signed abroad.
Such an agreement could deal with the various circumstances and consequences of a termination of the financial relationship between the parties, much in the same way that a commercial contract should.
Though not binding, such an agreement is likely to be upheld if the following criteria are met:
Sportspeople should try and avoid intermingling their and their partner's assets. It is easier to argue that resources are "non-matrimonial", and therefore should not be available for division, if they have not been drawn upon to fund everyday expenditure during the relationship.
What steps should be taken if the sportsperson is unmarried?
It is a common misconception that there is such a thing as a common law spouse. Unmarried couples have limited remedies compared to married couples, even if they live together. A sportsperson's unmarried partner cannot claim for maintenance in their own right. Nor (unlike married couples) can they obtain financial orders against their partner’s assets even if they have been in a long relationship or if they have had children together.
An unmarried sportsperson should therefore be advised to register all property and investments in their sole name. If a sportsperson names their partner as a joint tenant when they purchase a property, their partner would be entitled to a 50% share of the net proceeds of sale, even if they did not contribute any money towards the purchase price.
Even if their property is solely owned by them, sportspeople should also avoid their partner making any contribution towards household outgoings (such as mortgage repayments or refurbishing the property) which could substantiate a claim that their partner was beneficially entitled to a share of the property concerned.
If a sportsperson is considering getting married, a pre-nuptial agreement must be considered, along the lines of, and for the same reasons as, those outlined above.
The tabloid press is awash with kiss-and-tell stories detailing extra-marital trysts involving sportsmen. They should be aware that they have an obligation to provide financially for any children they father even if they are born outside of marriage following a very short relationship or a Boris Becker-esque dalliance in a broom cupboard. Provision could be in the form of:
Sportspeople should also be aware that, if they separate from their partner or spouse with whom they have children, they will be unable to move with their children if transferred abroad without their partner's agreement, or the permission of the court. Similarly, depending on the circumstances, the court may allow their partner to relocate abroad with the children in the event of a relationship breakdown whether they agree or not.
What steps can be taken to minimise the risk of adverse publicity about family issues?
Other areas of concern for high-profile individuals include the duty of full and frank disclosure of their worldwide financial assets placed upon them by the English courts, and the risk that the details of their private lives will be leaked to the tabloids. Parties should be aware that confidential alternative dispute resolution options are available, such as private arbitration, which can keep their case out of the press.
This blog is for your information only. Please always seek legal advice if you are uncertain about any of the points above. Affairs of the heart are notoriously difficult to control, but their financial implications can to some extent be mitigated with a degree of forethought, and specialist legal advice.
This article was first published as a blog on leading sports law website LawInSport in October 2017.