Why breaking up can be a very costly affair
Although a deal has not yet been reached in the Paul McCartney and Heather Mills divorce battle, estimates suggest the former model could walk away with as much as £60 million (Dh429m) of the Beatles legend’s £825m fortune. Whatever the outcome the rollercoaster of their split is sure to have wreaked havoc with not only their emotions but also their finances.
From losing half the house, the car, access to the holiday home and bonds and shares to missing out on profits from a joint business, the cost of falling out of love can run into millions. Mark Nierada, head of the private client division at James Berry and Associates in Dubai, says if both parties agree on the terms of their divorce, it saves a lot of heartache and money, if they don’t it can drag on for years.
“No two cases are the same but for those who are in agreement it can happen fairly smoothly, in three to six months, and cost between Dh15,000 and Dh25,000, plus court fees. However, if there is not a quick agreement, court appearances and submissions can take a very long time and the case could run for years with both parties having to fork out huge amounts of money,” he explains.
According to recent figures, the divorce rate in the United Kingdom is 42 per cent, in the United States it is 45.8 per cent and in Australia it is 46 per cent. India has one of the lowest rates of divorce at just 1.1 per cent.
In the UAE, Dubai-based lawyer Sarachandra Bose says there has been a rise in the number of people wanting to end their marriage. But if the couple are of a different nationality or religion things can become difficult as the court recognises the status of the man over his wife.
“If you apply Islamic rules and there is mutual consent you can get divorced easily, but if there is a dispute and you bring in laws from the home country you may have a longer battle,” says Bose.
Nierada, who practised in the United Kingdom before moving to Dubai two years ago, says expats would be wise to conduct proceedings at home if they have not been out of the country for too long. A UAE court usually splits assets if the couple have played an equal financial role in the marriage. Individuals often get back what they had before the wedding, but because most things such as the house and its contents will have been bought together, they will be split.
In divorce the people who are worst hit are often those who have been together for some time. If one partner, usually the wife, has had a career break to bring up children, or given up work altogether, they might have taken a back seat in financial planning.
According to a new poll conducted by a UK-based networking website, a housewife’s work is worth £30,000 a year (Dh216,000). The poll of 4,000 housewives was conducted by alljoinon.com, which broke down the costs according to the average wages paid to professionals for daily household chores. Although this might be less in the UAE where home help is cheaper, there is no doubt that women contribute substantially to the household and could, therefore, look for financial rewards if they divorce.
One thing now helping couples in the Emirates is the introduction of the Family Laws Book. Since its publication in 2005 it has made life easier for lawyers and the courts by setting out the rules governing divorce and other family matters.
“It is the first book of its kind and stops disagreements because the court goes along with what it says. There were no written laws in the UAE before – just Shariah laws – but now we have this book so everything is clearer,” says Abdul Rahman Usman, a lawyer and legal consultant at Al Bawardi Advocates.
In a bid to prevent any acrimonious proceedings resulting from a divorce, pre-nuptial agreements have become increasingly popular over the past 20 years, as the wealthy partner aims to protect his or her fortune in the event of divorce. Such a document was the reason ex-model Ivana Trump only received $20m (Dh73.4m) when she and tycoon husband Donald got divorced in 1992.
However, pre-nuptial agreements are not cheap – to prepare they could cost in the region of Dh7,500.
“It’s not the most romantic thing to raise before the wedding and not as many people have one as you would think. Those who do normally have their own business and know how they want it to grow in the future,” explains lawyer Nierada. “There’s no point doing it a week or two before the wedding because both parties must have independent legal advice, and if it appears that one party is bullied into it, it’s no good.”
But even if there is a pre-nuptial agreement, there is no guarantee it will stand up in court. As yet there is no test case in the UAE to prove whether is works. However, in other countries they act as a persuasive for the judge rather than being the deciding factor.
Nierada says a better idea would be to have a post-nuptial agreement, “so if one person contributes something significant during the marriage they are guaranteed to retain it.
“When people draw up a pre-nup they don’t take into account that children may be born, one of them might become ill or could receive an inheritance,” he says.
“You have to spend a lot of time on it, it’s not just a one-page document that can be drawn up quickly.”
Richie Vs Richie
When Lionel Richie and his second wife, Diane, got divorced in 2004, she wanted $300,000 (Dh110,100) a month for maintenance and support payments, which included $20,000 (Dh73,400) a year for plastic surgery and $15,000 (Dh55,050) a month for clothes, jewellery and accessories. She was also reported to have been awarded the couple’s $5m (Dh18.35m) Beverly Hills mansion.
Redstone Vs Raphael
When Sumner Murray Redstone, the chairman of Viacom International, divorced his wife Phyllis Gloria Raphael in 1999, he had to pay her $1 billion (Dh3.67bn). Viacom International owns a number of TV channels including Nickelodeon, VH1 and Paramount.
Montgomerie Vs Montgomerie
Colin Montgomerie and his ex-wife Eimear were reported to have reached an out-of-court agreement worth £15m (Dh708m). Eimear agreed to the one-off payment from the golfer in return for waiving the right to claim part of his future earnings.
Abramovich Vs Malandina
Oil tycoon Roman Abramovich had to pay his ex-wife, Irina, $2.5bn (Dh9.18bn) when they divorced last year. It is reportedly the biggest payout ever. But the owner of Chelsea football club managed to have the proceedings take place in his native Russia, which proved cheaper.
Parlour Vs Parlour
In a landmark case, the UK Court of Appeal ruled that Karen Parlour was entitled to receive one-third of her ex-Arsenal footballer husband Ray Parlour’s future earnings to acknowledge the role she played in his success.
This equated to about £406,500 (Dh2.9m) a year for four years and is due to be reviewed.
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