Marrying rich? Better safe than sorry.

Feb122016

Ranking 3rd in Forbes’s “Cities With The Most Billionaires In 2015”, it is common for married couples in Hong Kong to live lavishly through the generosity of family members but with no absolute entitlement to wealth.

This begs the million dollar question, for spouses who become accustomed to a certain lifestyle afforded only by the support of their in-laws, what is their entitlement to the family fortune in the event of divorce?

Whether, and to what extent, is a party to a divorce entitled to financial support from their previous in-laws?

The landmark case KEWS v NCHC [2013] 2 HKLRD 314 held that in considering ancillary relief, the financial resources of a party are not confined to assets which in law represent the property of that party. These resources will include those assets or resources to which the relevant spouse has or is likely to have access but to which he or she may not have legal entitlement.

The court must consider two evidential questions when assessing whether and to what extent should third party financial assistance be factored into ancillary relief applications:-

(1) What is the extent of the financial assistance provided by the third party to the husband or wife?

(2) What is the likelihood of such assistance continuing in the foreseeable future?

The court will look at the reality of the situation and have regard to matters of substance and not just form. This may take into account not only what a party actually had, but what might reasonably be made available to him or her if a request for assistance were to be made. As to what may occur in the foreseeable future, the court found that past conduct was often a useful guide to what might occur in the foreseeable future.

In answering the two questions, the court is essentially embarking on a fact finding exercise. If the court is satisfied that on the balance of probabilities the third party will continue to provide financial assistance in the foreseeable future, then the court can make an award for ancillary relief that the payer cannot afford alone on the basis that the third party will continue paying.

On the other hand, if it becomes clear that the third party, reasonably or unreasonably, will not come to the aid of the payer, then there is little that the court can do about it and the payer can apply to court to have the order modified.

As the Court of Appeal aptly puts it in TCWF v LKKS & Ors [2014] 1 HKLRD 896:

“One of the frustrations of family law, as well as one of its fascinations, is that no two cases are ever the same. Since the essence of any judicial discretion lies in its application to particular facts, and since each case requires its own particular resolution, the concept of fairness becomes, essentially a matter of judgment.”

What can be done to protect both parties’ interest?

There is no hard and fast rule to whether a party is entitled to financial assistance previously enjoyed during the marriage. To avoid the uncertainty involved in the court’s determination of ancillary relief, the parties may consider entering into a pre-nuptial agreement prior to entering into a marriage or a post-nuptial agreement if already married.

The stigma of pre-nuptial agreements is as old as the concept itself. It is a misconception that entering into a pre-nuptial agreement leaves the financially weaker spouse vulnerable.

Pre-nuptial agreements allow all parties involved to discuss and determine amicably their respective financial arrangements in the event of dissolution of their relationship. This includes what a party will and will not receive with the added benefit of avoiding the uncertainty involved in lengthy, strenuous and costly court proceedings.

Joanne Brown

The above is not intended to be relied on as legal advice and specific legal advice should be sought at all times in relation to the above.

If you have enquiries about pre-nuptial agreements, please contact:

Joanne Brown
Partner | Email

Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.