Relationship breakups dealing with the assets of high net-worth couples have been under discussion in the media. Managing Partner of Nicholes Family Lawyers, Sally Nicholes, was recently invited to comment on the break-up of celebrity fitness couple Kayla Itsines and Tobi Pearce. Quoted recently in News Corporation (Aug 24 2020) she sounded a note of caution.
This is no ordinary break-up. In the eight years in which they have been together, Itsines and Pearce have built an online fitness business venture which, according to Forbes, is worth close to $700 million.
Described as “influential fitness moguls”, this couple developed an app known as SWEAT which has been downloaded by more than 30 million participants. Unusually, these two are planning to preserve their business partnership whilst on a personal level, going their separate ways.
Although not involved legally with this particular break-up, Sally Nicholes has frequently represented high net-worth individuals in their divorce settlements. She warns that for a wealthy couple who together own a flourishing business, the terms of the particular business relationship going forward will need careful consideration, both within the context of family law and also in terms of commercial arrangements.
“Usually one party will take the business and there will be a payout to the other”, she says. Less usual is the plan to preserve the business relationship whilst departing the personal one. With this couple, another consideration, at a personal level, is the presence of the couple’s baby daughter, Arna Leia Pearce.
Itsines informed her 12.6 million followers that “our friendship remains strong as we parent Arna and run SWEAT as business partners. We will always be a family, and remain good friends and devoted parents to Arna”.
As Sally Nicholes points out, it is to be hoped that this high net-worth couple have taken seriously, in terms of making plans for the future, the business of separating their business activities from their private lives.
There is clearly interest at the moment in property and financial agreements (often known as Binding Financial Agreements) as they are dealt with in Family Law. The claim by the daughter of former Australian PM Bob Hawke against his widow Blanche D’Alpuget was given extensive media coverage.
The Australian High Court and Family Court recently ruled that agreements which had been the subject of undue influence of one party used to obtain the agreement of the other party could not be upheld.
Another of NFL’s partners, Keturah Sageman, interviewed by the Australian Financial Review (Aug 25 2020), was asked about such agreements. She said that agreements at risk of being declared illegal include those where there is either no disclosure or inadequate disclosure, or an agreement which inaccurately estimates the value of assets. She gave as an example an agreement which grossly underestimates the value of assets, which “could be considered fraud or non-disclosure” and if so judged, would be set aside by a Court.
With these cautions in mind, Nicholes Family Lawyers recommends that those parties entering a new relationship should seek both legal and financial advice before signing a Binding Financial Agreement. Consideration should be given to existing property ownership, and property which might be acquired during the relationship, such property being widely-defined, even including family pets.
Assets which should be considered are not just the ownership of a residence, but a car, furniture, superannuation, life insurance, equities and even a possible future inheritance.
At the other end of the relationship, for high net-worth couples who are separating, the division and future ownership of previously jointly-held assets will require significant legal advice.