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Avon heiress divorce – no weight attached to pre-nuptial agreement…but it could have worked

Morgan McConnell is the great-granddaughter of Avon founder, David H McConnell, and, along with other relatives, the beneficiary of trust funds worth at least $65m. Back in 2003, she met her future husband, a hotel concierge. They began living together in 2005 and married later that year. They have two children aged 11 and 7. The relationship ended in 2016.

As might be expected, the parties had entered into a pre-nuptial agreement to protect the wife’s substantial wealth in the event of divorce. This would have been the perfect case for an effective, realistic pre-nuptial agreement: very substantial, easy to identify, pre-acquired wealth and sufficient funds to obtain the best professional advice for both parties. However, there were real problems with it:

  • The agreement was concluded in the State of New York. It was agreed that any dispute was to be determined in accordance with the laws of that state, as were any divorce and financial proceedings. That notwithstanding, the agreement itself lacked a certificate confirming that it conformed to local laws. As such, an expert appointed by the court found that it would almost certainly carry no weight in New York State

  • The husband (to be) received legal advice on the terms of the agreement from an English solicitor. Not only was the solicitor unqualified to advise on the laws of New York State, he had acted for the wife in her previous divorce and was therefore not independent

  • Timescales between the conclusion of the agreement (11 November 2005) and the wedding (26 November 2005) were dangerously tight. The agreement failed for other reasons but the small gap between these two events was far from ideal

  • Finally, the agreement itself in fact left the husband with nothing. The agreement provided that the husband would share equally any increase in value of three properties owned by the wife and receive no alimony/maintenance. By the time of the divorce those properties had been sold and the proceeds rolled (the court assumed) into the family home. There was therefore nothing for the husband to share under the terms of the agreement itself

Mr Justice Mostyn found that the agreement was a complete non-starter, although the parties agreed that any award to the husband should be based solely on his “needs”, rather than any entitlement to share in the wife’s familial wealth, which was “non-matrimonial”, being entirely pre-acquired and held in trusts. Once his housing needs (£750,000), debts, legal fees and maintenance requirements were taken into account, the wife was ordered to pay him £1.34m, of which £375,000 would be returned to the wife or her estate after the husband’s death.

Are pre-nuptial agreements worth the paper they are written on? Absolutely, yes. Since 2010, the Supreme Court decision in Radmacher v Granatino has boosted the status of well-thought out pre-nups. In the words of Lord Phillips in Radmacher:

The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.

However, a good pre-nup has to be put together properly. This means:

  • Independent, competent legal advice for both parties, particularly the financially weaker fiancé(e)

  • Sufficient time between the agreement and the wedding to avoid any suggestion of undue pressure to sign and sign quickly

  • A full consideration of the international dimension and making sure the laws of any particularly relevant countries are complied with so far as possible

  • Sufficient financial disclosure to enable the parties to make an informed decision

  • Careful analysis of the outcome upon divorce envisaged by the agreement, making sure that it leaves neither party in a “predicament of real need”

Ms McConnell was and is a very wealthy woman. Nevertheless, pre-nups are not the preserve of the very rich. Anyone marrying today should consider getting one, particularly if there is a wealth imbalance between the parties, business or personal assets built up before a relationship began, familial wealth, trust interests, a divorce settlement from an earlier marriage.

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