Catherine Lowther, Family Solicitor

Gates divorce shines light on Separation Agreements as tool for avoiding litigation

17
May

When news broke of Bill and Melinda Gates’ divorce last week, the first thought on many people’s minds was no doubt one of shock.  The Gates’ have always been the “poster couple” for marital stability; a couple whose philanthropic values and goals were so closely aligned that they formed what is now the world’s largest private charitable organisation, the Bill and Melinda Gates Foundation. 

The second thought may have been to wince at the protracted and adversarial legal proceedings which would surely follow as the billionaire couple – who have a combined net worth of c$100 billion and significant property, business interests and assets, both within the US and abroad – began the process of unpicking 27 years of marriage.  Particularly when we learned that there was no prenuptial agreement in place to guide the way.

And yet, maybe Bill and Melinda Gates aren’t so different to the rest of us after all.  In a move that has proven increasingly popular in the UK since the start of the pandemic last year, the Gates’ have instead chosen to settle their affairs outside of court.

There are various ways in which separating couples can avoid litigation through the courts – or certainly reduce the likelihood of this becoming necessary – and the benefits of doing so are immense.  For the Gates’, they chose to document the division of their assets in a private Separation Agreement, something which they will no doubt have been working on for some time prior to announcing their divorce.  In doing so, the couple was able to keep details of their matrimonial finances out of the public eye and ensure a modicum of privacy during this very high-profile divorce.   Melinda Gates’ divorce petition simply stated that the couple’s financial interests were to be divided “as set forth in our separation contract.”

So, what is a Separation Agreement and how can it be used to avoid litigation in divorce or dissolution of a civil partnership? 

 

Separation Agreements – What you need to know

  • A Separation Agreement is a written agreement (or contract) made between a couple on the breakdown of their relationship. The primary purpose of the agreement is to set out how their joint assets and responsibilities should be divided, however, the format is completely flexible and can include any information which is relevant to the parties at the end of their relationship.  For example:
  • The date of separation (which may prove relevant for tax and other reasons).
  • Whether the parties intend to proceed to divorce/dissolution at a later date.
  • What will happen to the family home (who will live there / who will be responsible for payment of the mortgage and household bills / how the equity will be divided in the event of a future sale).
  • How any debts will be allocated and repaid.
  • What will happen to savings and investments or other joint assets including cars or second homes etc.
  • Arrangements for childcare, including where children will live, how the parties will deal with parental access and whether any maintenance will need to be paid by either party. If so, for how long?
  • By allowing both parties the time to consider and discuss their individual needs, away from the stress of court hearings and the pressure of mounting legal costs, a Separation Agreement can help to take the heat out of the breakdown of a relationship.
  • The finished document can also provide clarity and certainty to both parties, giving them the confidence that they have a comprehensive written summary of their wishes and intentions which they can present to court if divorce/dissolution proceedings are issued at a later date.
  • By working through all of the key areas of concern in advance – and hopefully “flushing out” any contentious issues in the process – any matters which do crop up at a later stage can usually be resolved more efficiently, helping to avoid protracted arguments and unnecessary legal costs.
  • In a similar way to pre and post-nuptial agreements, Separation Agreements are not legally binding on divorce/dissolution. However, they do carry decisive weight and, provided that it has been drawn up correctly (see below), these agreements are usually recognised as a formal contract by the courts.  
  • Parties must exchange financial disclosure and receive specialist independent legal advice prior to entering into a Separation Agreement, and it must be clear that both parties entered into the agreement freely and with a full understanding of its content and consequences.

 

Full credit to Bill and Melinda Gates for once again leading by example and showing the world that courts should only ever be used as a last resort and that, even the most complex financial situations can be settled fairly and amicably without recourse to costly and protracted legal proceedings.

 

Swinburne Maddison’s Family team have a number of accredited specialist lawyers, as well as a trained Collaborative Lawyer and Mediator, all of whom will offer you a tailored service to guide you through divorce or separation in a fair and amicable manner.

Should you require any specialist legal advice in relation to divorce, separation or finances please contact either Kath Hill (kh@swinburnemaddison.co.uk) or Catherine Lowther (cel@swinburnemaddison.co.uk) either by email or on 0191 384 2441.

 

 

 

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