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Focus on Family

Wealth Preservation Following Divorce

In 2011 Deborah Levy acted for Galina Besharova which was the largest divorce settlement (£100 million) at the time. This pales into insignificance when considering the assets and income in a recent case of Juffali v Juffali which received substantial press coverage at the end of June. Deborah reviews this case that has resurfaced in the media following Dr Juffali’s recent death.

Mrs Christina Estrada Juffali was a former model; she described her marital lifestyle as “magical”. The Judge in this case had to consider the extent to which Mrs Juffali should be entitled to continue within the “bubble of a magical existence” which included opulent houses and yachts, private jets, an entourage of staff and extensive and valuable jewellery. Mrs Juffali sought a London housing fund of £62.8m, retention of her Californian property (£11m), and funds to enable her to purchase a country home. She also sought £1/2m for cars, £1m for artwork, £2.1m to discharge her US mortgage, £50,000 for legal fees in St. Lucia and £7,000 for unrelated litigation costs. She engaged top accountants (PWC) to calculate her likely yearly budget which came in at £6.37m plus £150,000 to support her extended family. Instead of yearly maintenance, Mrs Juffali wanted a one-off capital sum of £127m which the court has power to award provided there is sufficient capital to do so and indeed, Dr Juffali had significant wealth.

Dr Juffali had disclosed personal assets worth £22.8m and an entitlement to trust assets worth £95.3m. Dr Juffali earned around USD 115 million between 2013 and 2015.

Dr Juffali had divorced his wife without her knowledge by pronouncing a Talaq, a controversial practice where the husband can divorce his wife, whilst in Jeddah, Saudi Arabia. The remedy available to those in receipt of a foreign decree is dealt with differently to those initiating proceedings in this country. There are a number of legal hurdles to jump through in order to be granted permission to pursue the matter in the courts of England and Wales. Mrs Juffali was given that permission.

Before the final hearing Dr Juffali tried to place another stumbling block in the way by seeking to strike out his wife’s application for financial relief by claiming diplomatic immunity. This claim was dismissed.

The standard of living the parties enjoyed during the marriage was a prominent feature in this case, as well as Mrs Juffali’s future needs. The court will consider the length of the marriage, the available resources and other factors which Irwin Mitchell’s family team frequently advise on. The court will also have regard to the welfare of children. This was relevant in this case as Dr and Mrs Juffali had a daughter aged 13. In another recent case , a Judge said ‘the having of children changes everything’.

The outcome was that Mrs Juffali received £18m to enable her to purchase a house. The court ordered that she should downsize her Beverley Hills property which would provide her with £6m. The judge also ruled that she could keep her jewellery which was worth £4.83m.

As to Mrs Juffali’s budget, the court decided that Mrs Juffali’s needed an annual budget of £2.5 million – a generous award by any stretch of the imagination! The court also ordered the maintenance to be reduced: by 33% when Mrs Juffali’s daughter completed university and by 25% when Mrs Juffali is 75. This figure was capitalised at £44.3m, representing a third of what she originally sought. The court was sympathetic to the fact that when Mrs Juffali compiled her budget she did so with the assistance of her accountants as she did not have access to records kept by the couple’s Family Office.

Irwin Mitchell Private Wealth acts for a number of high and ultra-high net worth clients in similar circumstances. However:

  1. Anyone contemplating or going through divorce needs to be aware that each case will turn on its own facts. Bespoke advice will always be required and is dependent on the individual’s personal circumstances.
  2. It is prudent for those about to embark on marriage and in particular second and subsequent marriages to give careful thought as to whether it would be in their best interests to enter to a Pre-Nuptial Agreement. Notwithstanding the marriage having already taken place, clients can also seek advice as to whether it is appropriate to enter into a Post-Nuptial Agreement.
  3. The timing in Mrs Juffali’s case was key. Had Mrs Juffali progressed matters sooner herself it may have been possible to issue a petition for divorce within this jurisdiction. When experiencing difficulties in a marriage, early and prompt advice can make a real difference.
  4. Given Dr Juffali’s untimely death, there will be questions now as to the enforceability of the settlement and whether remedies can be pursued against his estate.

Autumn 2016 

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